Entrepreneurial Firms’ Impact on Larger Firms

Entrepreneurial Firms’ Impact on Larger Firms
In addition to the impact that entrepreneurial firms have on the economy and society, they also have a positive impact on the effectiveness of larger firms. For example, some entrepreneurial firms are original equipment manufacturers, producing parts that go into products that larger firms manufacture and sell. Thus, many exciting new products, such as smartphones, digital cameras, and improved prescription drugs, are not solely the result of the efforts of larger companies with strong brand names, such as Samsung, Canon, and Johnson & Johnson. They were produced with the cutting-edge component parts or research and development efforts provided by entrepreneurial firms.
The evidence shows that many entrepreneurial firms have built their entire business models around producing products and services that help larger firms be more efficient or effective. For example, an increasing number of U.S. firms are competing in foreign markets. These initiatives often require firms to employ translators to help them communicate with their foreign counterparts. SpeakLike, a 2008 start-up, has created an online service that provides realtime translation services for two or more people who speak different languages, at a cost considerably below what it costs to employ human translators. Similarly, Equipois, a 2007 start-up and the focus of the “You Be the VC 3.2” feature, sells mechanical arms that hold objects such as heavy tools as if they were weightless while allowing them to be maneuvered by tradesmen doing precise work such as riveting fuselages and grinding metal. Equipois’s products, which are used primarily by large firms in factory settings, increase productivity and help reduce manufacturing-related injuries.
In many instances, entrepreneurial firms partner with larger companies to reach mutually beneficial goals. Participation in business partnerships accelerates a firm’s growth by giving it access to some of its partner’s resources, managerial talent, and intellectual capacities. We examine the idea of partnering throughout this book. In each chapter, look for the boxed feature titled “Partnering for Success,” which illustrates how entrepreneurial firms use business partnerships to boost their chances for success. The feature in this chapter discusses how small biotechnology firms and large drug companies partner with one another to bring pharmaceutical products to market.