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New research from York University’s Schulich School of Business shows that one of the most critical success factors for startups in corporate accelerator programs is corporate attention.
The research findings are contained in an article published in the Strategic Entrepreneurship Journal, titled “Corporate – Startup partnering: Exploring attention dynamics and relational outcomes in asymmetric settings.” The article was co-written by Anoop Madhok, a professor of strategy and the Scotiabank Chair in International Business and Entrepreneurship at Schulich, together with Shameen Prashantham, a professor of international business and strategy at the China Europe International Business School in Shanghai.
According to Madhok, large corporations and innovative startups increasingly engage in partnerships to remain competitive. For corporations, collaborations with startups help them remain at the technological forefront. For startups, large, established firms provide access to much-needed legitimacy, funds and market reach.
The researchers investigated a large, established global firm with several startup partners who were part of a corporate accelerator program. Working on the assumption that corporate attention was an underappreciated but critical resource, the researchers explored how startups differ in terms of: the attention (given by and) received from the established firm; the actions on their part to attract and sustain its attention; and the impact of attention dynamics on how the partnership unfolds.
The researchers found that some startups, dubbed “hares,” got off to a fast start in terms of attracting attention from corporate managers running the startup partnering program, but subsequently became dissatisfied with the attention received from divisional managers in business units, eventually falling short of the original intent of developing a go-to-market strategy with support from the corporation. By contrast, other startups, dubbed “tortoises,” after a relatively slow start in terms of attracting corporate headquarters’ attention, were able to subsequently attract divisional managers’ attention and ultimately attain the original goal. A third set of ventures, dubbed “non-starters,” failed to build momentum from start to finish and ultimately withdrew from the program.
In examining these partnerships, the researchers found two separate contests for attention: the first entailing the corporate managers running the program; and the second entailing divisional managers in business units who were crucial to the go-to-market planning and execution. The transition from the corporate to the divisional manager’s attention was critical in this regard. Having attracted the attention of the corporate managers, the hares, who saw themselves as winners in the first contest, neglected the priorities of the divisional managers. It was the opposite for the tortoises. Ultimately, it was the high level of attention from divisional managers that was the most important factor when it came to realizing the full potential of the partnership.
“This research has valuable implications for practitioners,” says Madhok. “Current work on collaboration between corporations and startups has tended to focus on the impact of trust dynamics on outcomes. In contrast, our research is among the first to establish the importance of attention dynamics. Attention is a fundamental resource in that all other resources flow from it.”
Adds Madhok: “Successfully striking a pathway through the different players and the different types of attention at play in large corporations is a delicate and complex dance. Startups able to navigate through such a dance are much more likely to realize value from these partnerships.”