What are the barriers to start-up and scale-up in R&D intensive firms?

Abstract

R&D investments enhance knowledge, underpin innovation and facilitate the creation of new firms; this recognised source of economic development has become integral to government policy in many countries. While all firms face difficulties engaging in R&D, new and young firms are most affected, facing internal and external factors that inhibit investment or impede the process. A decision to invest in R&D often stalls due to concerns about appropriation and/or limited access to appropriate finance, but once engaged the barriers are found in the nexus of knowledge, networks and skills that underpin dynamic capabilities and the enhancement of a firm’s absorptive capacity. In particular, the emphasis placed in the beginning upon science/technology expertise, at the expense of managerial acumen, undermines a firm’s ability to recognise and exploit commercial opportunities. Accepting that knowledge, network and skills are significantly influenced from the imprint established at start-up; it is the opportunity to learn during the reconfiguring process, as the firm seeks to commercialise the opportunity, that underpins scale-up. Although it is possible to identify individual barriers, this fails to recognise how they coalesce to create complex problems that require bespoke solutions.