IST Institute

    The Institute for Strategic Innovation and Technology Management is the competence center for innovation and strategy. Research focuses on Strategic Transformation, Corporate Entrepreneurship, Startups, Ambidextrie, Agility and Digitalization.

    Dekoratives grafisches Element

    Venture Coaching

    Project Overview

    Analyzing the impact of business coaching on innovative technology ventures is in the focus of this research project. In cooperation with the business initiative bwcon GmbH, we are identifying network-based leveraging factors which enable offering and performing more effective business coaching activities in the future.

    For this innovative project in the field of entrepreneurship research the IST Institute was awarded a grant by the Innovation Growth Lab Grants Programme, an initiative of the Argidius Foundation, the KauffmanProject  Foundation and Nesta. As part of the Innovation Growth Lab (IGL), the IST institute will investigate the effectiveness of business coaching as support intervention for technology-based ventures at least over the next three years. Based on a sample of nearly 1,000 newly founded businesses, indicators for the maturity of the ventures’ value-networks in different categories are empirically identified, which also represent the basis for the analysis of coaching effectiveness. 

    It is the first time that the IGL Grants Programme supports a German research initiative within the scope of the IGL. The program aims at promoting randomized controlled trials (RCTs) as a method in entrepreneurship research. Development and realization of the study was enabled by the close cooperation with bwcon.

    Details

    • Background and Relevance

      Fostering economic growth by supporting innovation is an increasingly relevant impact of public sector activity. Particularly technology-based ventures have the potential to accelerate knowledge-transfer to the market. Various support schemes focusing on advice-oriented services have emerged, yet little is known about their effect. This research project addresses the challenge of how to effectively allocate scarce public financial resources to support regional innovation by quantitatively measuring the effect of tactical business coaching on venture survival. 

      Planning and conducting a Randomized Controlled Trial using a unique database of early-stage technology-based ventures originating from the German regional state Baden-Württemberg, the effectiveness of coaching as a support intervention is being researched over the next three years. New firm failure rates are high, making insights into effective support interventions valuable to a range of stakeholders such as the public sector being interested in yielding positive returns on investments. Little quantitative research has been conducted on the effectiveness of advice concepts in supporting founders. Coaching fosters learning, enabling entrepreneurial teams to acquire needed skills to successfully run their business and deal with organizational change. Though literature suggests various effects of coaching in different case settings, empirical studies hardly exist.

      Presumably due to a lack of suitable data, literature generally lacks quantitative research on technological ventures. This study has the potential to provide very valuable insights into factors relevant for ventures to acquire survival capabilities. The planned RCT aims at addressing a research gap rendered by business coaching being accepted as important support intervention for venture teams while being only marginally researched with respect to identifying causal effects. A deeper understanding of the impact of coaching activities and underlying reasons may enable accelerators and entrepreneurship program providers to optimize their activities, which would in the long-run accelerate startup business growth.

      The research project investigates the relationship between tactical knowledge coaching and survival capabilities of newly founded technological businesses, which builds the basis for the RCT design. The research project is deemed successful when a deeper understanding of the correlation between tactical coaching and the survival capabilities of newly founded firms is gained and empirical insights into effective business coaching for technology-based ventures is obtained. 

      Baden-Württemberg, one of the most innovative regions within the EU, is spending 12 million Euros on supporting local early-stage ventures with individual coaching and consulting between 2015 and 2017, in collaboration with the European Social Fund (ESF). Within the scope of that initiative, our delivery partner bwcon GmbH, Baden-Württemberg’s leading business initiative in high-tech industries with longstanding experience in supporting early-stage technology-based ventures, is providing such support for that segment. The program budget of 1.75 million Euros is distributed by allocating so-called EXI-Hightech founder vouchers. This early-stage startup support initiative combined with the related business plan competition CyberOne Hightech award covers most of the technology-based venture activities in Baden-Württemberg, according to estimates about 50% of all newly founded technological businesses approach bwcon. For the RCT study, a longitudinal sample of 450 early-stage startups will be recruited over three years by our project delivery partner bwcon. The IST Institute has been granted access to venture data representing the basis for data analysis. 

    • Research Team

      Principal Investigator

      Prof. Dr.-Ing. Guido H. Baltes, Director of the IST Innovation Institute and Professor for Strategic Management and Innovation Marketing at Constance University of Applied Sciences

      Junior Researcher

      Christina Ungerer, PhD student at the IST Innovation Institute (full-time)

      Junior Researcher

      Marc König, external PhD student at the IST Innovation Institute (part-time) and Head of Coaching and Finance at bwcon GmbH

    • Project Partner

      bwcon GmbH

      The bwcon GmbH is a service provider for ventures, driving innovation by fostering interdisciplinary collaboration between developers, users and investors. Activities encompass innovation management as well as founder support and consulting. Within this context, bwcon currently works on several projects being funded by the State and the EU. Holistic support is realized here with the Venture Development System. It supports venture teams in the process of progressing from a business idea to a business model and finally to the business plan. Quality and efficiency of the ongoing auditing is increased with a scoring system based on expert knowledge.

    • Research Design

      Experimental Design

      A pragmatic two-armed Randomized Controlled Trial represents the basic study design testing the effect of tactical knowledge coaching on the survival capabilities of technology-based early-stage ventures. Over three years, 450 ventures from the German regional state Baden-Württemberg will be recruited. Accredited, experienced coaches are imparting certain tactical knowledge to the founder teams in the form of individual support sessions. The treatment group (T) encompasses 150 startups in total, each year about 50 being subject to the intervention. Not having been coached with a focus on tactical knowledge, another 300 ventures serve as the control group (C). After three years, ventures' survival capability (total score) six months post-intervention is compared.

      Randomization

      Randomization takes place on a venture team level. Restricted blocked randomization will be used to ensure the budget-limited number of interventions (50/year) is entirely reached. One ‘block’ in this specific context refers to a one-year budget of 50 coaching contracts, randonly allocated to venture teams by bwcon consultants.

      Intervention

      External support is needed to enable venture teams to develop their business activities efficiently. The coaching intervention will focus on tactical knowledge, which is designed to help founders building appropriate networks and enhance their know-how where needed capabilities cannot be derived from books. Our delivery partner bwcon has had an efficient business coaching concept in place since 2005 which serves as support intervention in the planned RCT. Content-wise, the coaching sessions do not only provide business and technological expertise to new business founders, but particularly aim at accelerating the creation of networks and tactical implementation of venture development activities during the growth phase. Business as usual refers to venture teams with different levels and exposure to explicit business knowledge gained for instance through prior work experience or by non-tactical coaching input.

      Outcome

      The primary outcome of interest to the research team is venture survival capability. In conformity with the main research goal and the primary research question, the effectiveness of tactical business coaching in increasing survival capabilities of newly founded businesses is detected. Measuring the absolute rate of survival entails the challenge of limited comparing opportunities due to the fact that the sample is drawn over time. A more refined measurement of survival thus was introduced by breaking down the outcome measure ‘survival’ into survival capability classes. Based on network theory and the assumption that the likelihood of survival increases as the venture’s value-network of transactions with partners in various dimensions (selling, procurement, HR, and capital markets) matures, we are measuring five distinct survival capability classes in these four categories summing up to a total survival capability score.

      Statistical Power

      The trial design provides adequate statistical power. In a very conservative setting assuming an unrealistically high pooled standard deviation (4.2) drawn from an extreme-outcome pre-sample, a two-sided t-test, ?=0.05, and power against alternative hypothesis = 0.8, results suggest that the minimum required sample size to detect an effect size of 0.2 (comparison of groups 6 months after the intervention) is 321, meaning 107 for the treatment group and 214 for the control group. Given a sample size of 360 (conservative estimation of sample size reached at the time the final analysis for the RCT is planned) and an allocation ratio of ventures receiving tactical coaching to those of the control group of 1:2, the minimum detectable effect size (MDES) is 0.18.

    • Publications
      • König, M., Gudd, G., Ungerer, C., Baltes, G. (2017): Business Model Validity in Early-Stage Technology Ventures’ Business Plans, 2017 IEEE-ITMC & 23th ICE conference, Madeira (PT), p. 1-8
      • Hornberger, L., König, M., Zerr, K., Baltes, G. (2017): Growth Factors of Early-Stage Technology Ventures: A Life cycle Model for Business Strategy, 2017 IEEE-ITMC & 23th ICE conference, Madeira (PT), p. 1-8
      • Ungerer, C., König, M., Maki, K.M., Baltes, G. (2017): On the Interconnectedness of Value Network Maturity and New Technology-Based Firm Survival, 2017 IEEE-ITMC & 23th ICE conference, Madeira (PT), p. 1-8
      • Unterkalmsteiner, M., Abrahamsson, P. et al. (2016): Software Startups – A Research Agenda, e-Informatica Software Engineering Journal, Vol. 10 Issue 1, p. 89-123
      • Ungerer, C., König, M., Giones, F., Baltes, G. (2016): Reliably Reading Venture Survival from the Business Plan: Determining Venture Emergence and Survival with Computer-Based Content Analysis of Business Plan Text. 2016 IEEE-ITMC & 22th ICE conference, Trondheim (NOR), p. 1-8
      • König, M., Ungerer, C., Büchele, R., Baltes, G. (2016): Agreement on the Venture’s Reality Presented in Business Plans. 2016 IEEE-ITMC & 22th ICE conference, Trondheim (NOR), p. 1-9
      • Giones, F., Miralles, F., König, M., Baltes, G. (2015): Do all paths lead to Rome? Technology and Market Orientation influence on the growth of new technology-based firms. 2015 IEEE-ITMC & 21th ICE conference, Belfast (IRL)
      • König, M., Baltes, G., Katzy, B. (2015): On the role of value-network strength as an indicator of technology-based venture´s survival and growth. 2015 IEEE-ITMC & 21th ICE conference, Belfast (IRL)