Resource interaction in relation to power: how startups strategize to cope with the challenges of mobilizing and leveraging resources in asymmetrical power relationships

The resource interaction approach provides a set of basic principles concerning how resources interact at a network level. This paper further elaborates on the resource interaction approach by investigating the role of power in the technological development of a medical device over time. In the medical device development process resources, such as intellectual property, distribution networks and production facilities, are largely controlled by established organizations. Consequently, small start-ups often have to collaborate with these players to successfully innovate. However, when a startup is engaged in a relationship with a large, established and powerful partner it is faced with several discrete challenges. These challenges make it difficult to mobilize and leverage the necessary resources to innovate. Therefore, the question is how a startup can take deliberate strategic actions to better mobilize and leverage the resources in their asymmetrical relationships. The answer to this question is explored through an embedded case study of a small Dutch company collaborating with a few dominant organizations to develop a new medical device. Firstly, the 4R model is used to establish the power position of the startup and its counterparts in the product development network over time. Secondly, it is investigated which strategic actions the startup took to conquer the challenges it faced in its asymmetric power relationships. The findings show that the startup uses five strategies to cope with these challenges: visibility, sharing, compatibility, informality and formalization. Thirdly, it is researched how these strategies influenced the resource interaction process between the startup and the powerful partner. The first two strategies have a positive effect on the ability of the startup to mobilize and leverage the resources of an established firm. The third strategy ensures a stable of flow of resources into the organization. The fourth has both of the aforementioned advantages. The last has a dual effect on resources interaction; it improves the startup’s ability to mobilize and leverage resources, but makes it harder for the established organization.