Designing a Strategy Formulation Process for New, Technology-Based Firms: a Knowledge-based Approach.

In the knowledge-based economy the nature of what is strategic has been modified along with the importance of knowledge and its management. One of the most important implications of these changes is the expansion of resources and products that are globally tradable, highlighting the importance of knowledge as the key economic resource of lasting competitive advantage. As a consequence of this shift in the economy, an increasing number of industries are moving from the closed innovation model to the open innovation model that created porous boundaries between the innovative company and its surrounding environment, changing the inter- and intra-organizational modes of coordination. In an environment where knowledge is the key economic resource and the open innovation model is applied in more and more industries, we are experiencing the increasing importance of the New Technology-Based Firm (NTBF). NTBFs face a number of difficulties mainly associated with a lack of resources and entrepreneurial skills and in order overcome the difficulties NTBFs strive towards flexibility while accelerating the development and commercialization processes by creating and/or entering business networks. By adopting a knowledge-based view for NTBFs and consequently placing knowledge in the centre of a systemic innovation model, knowledge networks constitute an asset for NTBFs. As this new form of cooperation takes multiple and often unpredictable forms it is thus essential to develop strategy formulation tools and processes that can help NTBFs to face their challenges. Until now little attention has been given to the development of strategy tools and processes tailored for the requirements of NTBFs. The present paper presents a concept to cope with NTBFs' by developing a generic process for strategy formulation. In this respect, an action research project was initiated. The proposed concept was initially designed, although not exclusively, for a Greek NTBF, Astrofos Ltd. The author, who is coordinator of the incubator where Astrofos is sited, is acting as a strategy consultant for the firm and has taken part in all its major decisions since summer 2007. In order to build the strategy formulation process, this paper proposes a mapping technique that attempts to depict a NTBF's tangible and intangible transactions as well as the strength of ties between the focal NTBF and its partners and the complexity of the knowledge. In developing the mapping technique, we have used a combination of the concept of weak ties, derived from social network analysis, with the notion of complex knowledge, as this combination was initially proposed by Hansen (1999). Additionally, a set of questions is proposed that have to be answered in order to pass from knowledge identification to knowledge transfer, from a strategic point of view. In this regard, the presented methodology constitutes an effort, on the one hand, to study the emergent patterns in what is considered to be a chaotic or disordered system and, on the other, to stimulate the creation of new patterns in the system that would be consistent with the NTBF's strategy. [ABSTRACT FROM AUTHOR]