Early stage resource allocation in specialized supplier firms

This research examines: (i) change in the budget allocations to research and development, and sales and marketing and (ii) the importance of founders’ ability to change internal processes and company values during the earliest stage of development of specialized supplier firms. Results of interviews with 10 managers of specialized supplier firms suggest that a high proportion of the company’s budget is allocated to R&D initially, that this proportion decreases with time as a result of carrying out activities to prepare for initial sales, and that senior management’s ability to transition the company from one that is learning to master a technology to one that can sell product is a highly valuable resource. These results can be used by start-ups to allocate budgets during the early stages of development and to recruit the right top management team.