Industrial Marketing Management 70 (2018) 13–24

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Industrial Marketing Management

journal homepage: www.elsevier.com/locate/indmarman

Business creation in networks: How a technology-based start-up collaborates T

with customers in product development
Jens Laage-Hellman, Maria Landqvist, Frida Lind⁎
Department of Technology Management and Economics, Chalmers University of Technology, 412 96 Gothenburg, Sweden

A R T I C L E I N F O A B S T R A C T

Keywords: This paper deals with business creation in networks by setting the focus on how technology- based start-up
Start-ups companies collaborate with customers in product development. The aim is to analyze the pattern of customer
University spin-offs collaboration by using the industrial network approach as theoretical point of departure. The method consists of
R & D collaboration a process-based single case study. The focal case is Oxeon, a Swedish rapidly growing university spin-off com-
Customer relationships
pany commercializing a new technology for making carbon fiber composites. The development of products and
Business networks
applications has taken place in close collaboration with their customers. The paper addresses three research
issues, which are related to the timing, mutuality and organizing of the collaboration. The analysis of the Oxeon
case results in identification of five crucial aspects on the management of customer collaboration: (i) the need for
involving customers early, (ii) the choice of application areas, (iii) the mutual process of choosing and getting
chosen as collaboration partner, (iv) the external networking role of the start-up, and (v) the internal organizing
of the start-up in relation to its ambitions for external interaction with customers. The results are summarized by
formulating a set of propositions that can be taken as starting point for further research.

1. Introduction resources to be used in the company's commercialization of its inven-

In the current business-to-business (B2B) landscape, inter-organi-
zational collaboration in product development and innovation is an
important topic both for managers and academic business researchers.
Joint research and development (R & D) activities with suppliers, cus-
tomers and universities are common parts of the landscape (see e.g.
Brem & Tidd, 2012; Cantù & Corsaro, 2015; Cantu, Corsaro, & Tunisini,
2015; Freytag & Young, 2014). Especially the role of customers and how
to involve them in product development have been strongly empha-
sized in the recent literature (Chang & Taylor, 2016; La Rocca,
Moscatelli, Perna, & Snehota, 2016; Lagrosen, 2005; Lynch,
O'Toole, & Biemans, 2016; Öberg, 2010). The benefits of interacting
with customers are many-fold, including for instance that customers
can provide detailed information on their problems and needs, give
feedback, present ideas for innovative solutions and function as lead-
users (Von Hippel, 1986). The literature also reports on challenges for
innovating firms regarding, for example, risk sharing and different ex-
pectations (Brockhoff, 2003).
To start-up companies, building collaborative relationships with
customers is especially important since these firms often have scarce
resources (Baum, Calabrese, & Silverman, 2000; Coviello & Joseph,
2012). Collaboration is thus needed in order to access complementary
tions (Chorev & Anderson, 2006; Paradkar, Knight, & Hansen, 2015). As
pointed out by Antolin-Lopez, Martinez-del-Rio, Cespedes-Lorente, and
Perez-Valls (2015), how to carry out product development collabora-
tion with different partners is a strategic decision for the start-up, since
it can reduce both innovation costs and risks. The customer side of the
firm is of significance since the customers may possess valuable in-
formation about what product they need and want to use and hence
what product the start-up should produce (Blank, 2013;
Chorev & Anderson, 2006; La Rocca, Ford, & Snehota, 2013).
How firms develop over time is very much dependent on how they
interact in the network and how they manage to establish relationships
with different types of external actors (Håkansson & Ford, 2002). It also
depends on their expectations and considerations regarding how the
future will unfold (Araujo, Mason, & Spring, 2014; Corsaro, Ramos,
Henneberg, & Naudé, 2012). This holds for established firms as well as
for more newly founded companies, including start-ups which are still
struggling to develop their business model and build positions in net-
works (Aaboen, Dubois, & Lind, 2012; La Rocca & Perna, 2014). How-
ever, despite the large number of studies on customer involvement in
product development in B2B markets, there is still a need for additional
in-depth studies. As pointed out by La Rocca et al. (2016 p.45): “Em-
pirical studies on the customer involvement process in NPD [New Product

⁎
Corresponding author.
E-mail addresses: jens.laage-hellman@chalmers.se (J. Laage-Hellman), maria.landqvist@chalmers.se (M. Landqvist), frida.lind@chalmers.se (F. Lind).

http://dx.doi.org/10.1016/j.indmarman.2017.07.009
Received 13 October 2016; Received in revised form 16 June 2017; Accepted 20 July 2017
Available online 28 July 2017
0019-8501/ © 2017 Elsevier Inc. All rights reserved.
J. Laage-Hellman et al.
Development] are rare and there is a tendency to black-box the process
through which customers are involved”. Biggemann, Kowalkowski, Maley,
and Brege (2013) call for more studies on the process of customer in-
volvement in relation to the development and implementation of cus-
tomer solutions, which are customized combinations embedded in re-
lational processes between customer and supplier. Also Lynch et al.
(2016) pinpoint the further need for approaching the process in terms
of operationalizing customer involvement. For start-ups, collaborating
with customers in product development appears to be vital, and shed-
ding light on this process is thus a way of contributing to the expressed
need for additional studies (Coviello & Joseph, 2012).
Against this background, the aim of this paper is to analyze the
pattern of customer collaboration in product development for a tech-
nology-based start-up. A pattern is a descriptive regularity in the de-
velopment of phases of a process over time (Bizzi & Langley, 2012). This
aim is achieved by using one in-depth single case study. It deals with
Oxeon, which is a Swedish high-growth company with origin in uni-
versity research. Its business builds to a large extent on fruitful R & D
collaboration with various types of counterparts, primarily customers,
suppliers and research organizations. The collaboration takes place in
inter-organizational relationships that Oxeon has established during
different phases of its development, which started some ten years ago.
Oxeon is operating in a B2B market where the customers consist of
other firms, more precisely, composite manufacturers. This paper con-
tributes to the current literature on customer involvement in product
development by using a process-based single case study approach
(Biggemann et al., 2013; La Rocca et al., 2016). Furthermore, by
identifying patterns in this development, and related management is-
sues, the paper adds to the literature on start-ups' customer relationship
development (Aaboen, La Rocca, Lind, Perna, & Shih, 2017;
Coviello & Joseph, 2012) by providing detailed knowledge on how
start-ups develop products and applications through interaction with
customers.
The paper is structured in the following way. First, we present our
theoretical framework followed by a method description. The case of
customer collaboration in product development in Oxeon is then pre-
sented and subsequently analyzed. This is followed by a Discussion
section. Thereafter, in the concluding section, the findings are sum-
marized by formulating a set of propositions. Some managerial im-
plications are also included.
2. Theoretical framework
This paper takes its main theoretical starting point in the Industrial
Network Approach (INA) for studying firms operating in B2B markets.
Here, the business exchange to a large extent takes place in business
relationships, which in different ways are connected to each other and
form network-like structures (Håkansson, Ford, Gadde,
Snehota, & Waluszewski, 2009; Håkansson & Snehota, 1995). Individual
firms are thus parts of networks where they for commercial purposes
interact with other firms and organizations acting primarily as buyers
or sellers. The business relationships are to varying degrees character-
ized by, for example, long duration and long-sightedness, frequent
communication, mutual adaptations, and joint development activities.
This holds for established firms as well as for young start-ups devel-
oping and commercializing products (goods and/or services) for a B2B
market. In order to create business and start growing, such firms need
to establish themselves in networks, and they do this by forming and
developing relationships with customers, suppliers, and other types of
potential business partners (Aaboen et al., 2017).
2.1. Collaborative product development
Business relationships and networks are important not only for the
pure marketing and purchasing in B2B markets. Also, the technological
development to a large extent takes place in networks where firms
14
Industrial Marketing Management 70 (2018) 13–24
interact and collaborate with each other (Håkansson, 1987). This means
that both product and process innovations tend to be the outcome of a
process where several actors contribute and carry out joint develop-
ment activities. Product development collaboration between buying
and selling firms is thus an important part of the innovation process. It
is a means for firms to link development activities, combine resources
(e.g., competence, technology and facilities) and as a result develop
new knowledge, products and processes that create value for both
parties. This kind of interactive effects is difficult to achieve on arm's
length distance.
Firms may collaborate with other types of counterparts (e.g. uni-
versities), but as Håkansson (1990) showed in his cross-sectional study
of 123 Swedish firms, customers and suppliers are the dominant part-
ners, accounting for three out of four collaborative relationships. Later
research carried out in the INA tradition has confirmed this pattern and
contributed to increase our understanding of R & D collaboration and
innovation in industrial networks (Baraldi, Gressetvold, & Harrison,
2012; Cantù & Corsaro, 2015; Freytag & Young, 2014;
Håkansson & Waluszewski, 2002, 2007; Laage-Hellman, 2002; Lind,
2015; Olaru & Purchase, 2015; Wedin, 2001). It can be noted that inter-
organizational R & D collaboration and networking have also been the
subject of research based on other theoretical perspectives (Cooke,
2001; D'Este & Patel, 2007; Greer & Lei, 2012; Lagrosen, 2005;
McKelvey, Zaring, & Ljungberg, 2015; Melander, 2014; Powell, 1998;
Von Hippel, 2005).
How firms in B2B markets involve customers, or other types of
users, in their product development can be described and analyzed by
using five key questions (Coviello & Joseph, 2012; Laage-Hellman,
Lind, & Perna, 2014): Why, When, Who, How and What. These are of
relevance to established firms as well as to new firms, including tech-
nology-based start-ups. The first question, Why, has to do with the
reason for involving customers/users. It can be for the purpose of col-
lecting information, gaining access to technology and competencies,
testing various objects, and getting help with and/or financial support
for the development of solutions. Second, and related to the When
question, firms may choose to involve customers in different phases of
the innovation process. Third, the Who question concerns what types of
customers that are involved. Potential partners may differ for example
with regard to their position in the value chain, which technologies or
application areas they represent and what organizational characteristics
they have. Fourth, there are many different ways in which a customer
can be involved. This is the How question. For example, some com-
monly used methods for involving customers are surveys, interviews,
workshops, user testing, and field tests carried out together with cus-
tomers. Finally, there is a fifth question, namely, What
(Coviello & Joseph, 2012; Laage-Hellman & Rickne, 2014). It pertains to
the object of the collaboration in terms of what technologies or pro-
ducts the collaborative activities are concerned with and which aspects
are in focus (e.g. when testing). The answers to the What question are
very context-specific, and this probably explains why this question has
not been dealt with so much in the literature. In a practical situation,
however, firms need to make decisions on what the collaboration
should focus on.
Coviello and Joseph (2012), grounding their research in these five
questions, have developed a taxonomy of new product development
activities and customer roles in major innovations created by small and
young technology firms. Their study address, for example, customers'
roles and pinpoint that in successful cases customers participate in all
activities and perform multiple roles. In particular, successful firms
differ from failures by using customers to a larger extent as source of
latent needs, financier, advisor, co-developer, approver, promoter, and
feedback giver. On the one hand, their study address similar topics as
those mentioned above. On the other hand, our study is different in that
it does not differentiate successes and failures but instead aims to grasp
the process of customer collaboration.
For innovating firms, to be able to collaborate with customers in an
J. Laage-Hellman et al.
efficient and effective way they need to have appropriate relational (or
network) capabilities. These capabilities help firms to interact with
other firms and to share knowledge with them (Lorenzoni & Lipparini,
1999). One capability dimension of particular relevance to our study is
the ability to tap into technologies and resources in networks in order to
jointly innovate (O'Toole & McGrath, 2008). McGrath and O'Toole
(2013) identify different factors that enable or inhibit the capability
development in entrepreneurial firms. These factors are related to Actor
characteristics and preferences, Inter-firm relationship governance,
Business network model and actors' network context, and Social-eco-
nomic network. The importance of capabilities for managing and
leveraging customers has been emphasized also by Coviello and Joseph
(2012). For example, firms need to have capabilities helping to mobilize
customers and make them committed. This takes place through in-
dividual-level interactions, reflecting the relational character of the
capabilities.
In this paper we define product development collaboration with
customers broadly covering different forms of interaction. Depending
on the context, the characteristics of a collaborative relationship may
vary in terms of, for example, interaction intensity, size of resource
allocation, degree of formalization, duration, and power balance.
Irrespective of interaction form, the relational view on customer col-
laboration implies that mutuality is an important feature of the re-
lationship (Håkansson & Ford, 2002; Håkansson & Snehota, 1995). As
formulated by Biggemann et al. (2013 p. 1089) regarding the devel-
opment of solutions: “solutions need problems that customers find im-
portant enough to undertake in-depth interaction and reciprocal adaptation
with a supplier”. Thus, customers are not involved in a uni-directional
way. Also the customers need to see benefits of the collaboration and be
prepared to invest their own resources in joint development activities. It
corresponds to the logic of business networks, articulated as network
paradoxes (Håkansson & Ford, 2002). Interacting in networks is always
about influencing others and being influenced, aiming to control others
and other actors aiming to control you and existing investments in
networks function both as opportunities and restrictions.
2.2. Start-ups and business interaction in networks
Start-ups are typically small and they suffer from limited resources
and lack of legitimacy. Building the internal organization, finding fi-
nancial resources and the right competences are essential as pointed out
above with regard to the capabilities for entrepreneurial firms
(McGrath & O'Toole, 2013). The scarcity of resources implies that
building collaborative customer relationships in networks is important
to start-ups. As elaborated by Aaboen, Laage-Hellman, Lind, Öberg, and
Shih (2016), a start-up may, depending on the nature of the invention
to be commercialized and its own goals, take different roles in the
network. These authors distinguish between Resource mediator, Re-
source re-combiner, and Resource renewer. This builds upon the notion
that innovation in industrial networks is very much about resource
development in interaction where resources can be, for example, pro-
ducts or production facilities (Håkansson & Waluszewski, 2002). The
choice of role affects how the start-up's own product is related to other
actors' resources, in terms of for example single-sided or mutual tech-
nical adaptations. What is important in all roles but in different ways is
that the start-up needs to establish relationships with potential business
partners as a means to build a position in the network. This is often a
challenging task for the start-up, since by definition it lacks track record
and usually has scarce resources, both regarding capabilities and fi-
nance (Baum et al., 2000).
Due to the uncertain future of the start-up and its invention, po-
tential partners may be reluctant to get involved and invest their own
resources. As noted above with regard to the network paradoxes
(Håkansson & Ford, 2002), collaboration needs to be a mutual process
and it is not a uni-directional choice. Nonetheless, establishing colla-
boration with at least some customers/users is necessary in order for
15
Industrial Marketing Management 70 (2018) 13–24
the start-up to gain access to tangible and intangible resources needed
in the product development. The form and content of the collaboration
can vary, depending on for example the nature of the product and how
the existing network looks like. As observed by Laage-Hellman,
Landqvist, and Lind (2017), for example, the product development
collaboration with customers can be either focused or broad. It means
that some start-ups concentrate their efforts on one customer within
one application area. Others work with parallel tracks, where they
collaborate at the same time with several customers. The way external
interaction is organized is based on the start-ups' perceptions of the
future network (Aaboen et al., 2012) and their network horizons
(Holmen & Pedersen, 2003). The perceptions of the future market and
the shaping of the market (Biggemann et al., 2013) depend on the start-
ups' expectations and considerations regarding how the future will
unfold (Araujo et al., 2014; Corsaro et al., 2012).
2.3. Research issues
This paper aims to analyze the pattern of customer collaboration in
product development for a technology-based start-up. This aim will be
fulfilled by analyzing three research issues grounded in the questions
formulated by Coviello and Joseph (2012) and Laage-Hellman et al.
(2014). More specifically, to be able to capture the pattern of customer
collaboration in product development and the regularities of the pro-
cess (Bizzi & Langley, 2012; Lynch et al., 2016), it is of relevance to
consider when specific events occur, that is, the first research issue
concerns the timing of customer collaboration. Secondly and thirdly, it
is of importance to consider how the collaboration is carried out, in
relation to who, and this is treated in the second and third research
issues regarding the mutuality of the collaboration and internal and
external organizing of start-ups in networks.
3. Method
This paper is based on a qualitative research approach, more pre-
cisely a case study method that enables the study of a focal phenom-
enon in its context (Dyer & Wilkins, 1991; Easton, 2010; Flyvbjerg,
2006). The focal phenomenon is a start-up's collaboration with custo-
mers in product development. The present paper includes a longer
description of one case – Oxeon. The use of the single case study ap-
proach has allowed us to capture the complex patterns of collaboration
in a detailed way. As pointed out by Dubois and Gadde (2002) and
Flyvbjerg (2006), single case research has the advantage of depth,
compared to for instance multiple case studies, and this is something
that we have been able to benefit from and as formulated by Easton
(2000, p. 207): “case research is perhaps the most appropriate methodology
for research into Industrial Networks”. Single case studies are also ad-
vantageous for capturing processes, where Langley (1999 p. 692) refers
to a process study as “concerned with understanding how things evolve over
time and why they evolve in this way”. By making a single process-based
case study, there are possibilities to reveal the mechanisms that di-
rected the start-up's product development process toward its current
characteristics and finding patterns in this development
(Bizzi & Langley, 2012; Langley, 1999; Langley, Smallman,
Tsoukas, & Van de Ven, 2013).
3.1. Case selection
The case of Oxeon was chosen based on a previous study carried out
as a BSc thesis under our supervision (Härkönen et al., 2015). The thesis
includes thirteen cases of research-based start-ups that had spun off
from universities in Gothenburg and had succeeded to bring new pro-
ducts to the market (i.e. they had paying customers). One of the thir-
teen cases was Oxeon, which is a fast-growing university spin-off
commercializing a unique technology for composite manufacturing.
The company has been rather successful in its commercialization of
J. Laage-Hellman et al. Industrial Marketing Management 70 (2018) 13–24

research results, and collaboration with customers has been a key in-
gredient in the product development. Therefore, it was assumed that
the case offered a good opportunity to learn more about how to manage
customer interaction in a start-up company. Hence, we found Oxeon to
be a particularly interesting study object that could help us to fulfil the
aim of analyzing the pattern of customer collaboration in product de-
velopment for a technology-based start-up.
3.2. Data collection
To build the case description of Oxeon and its product development
collaboration with customers, interviews were used as the main source
of data. Both face-to-face and telephone interviews were used to collect
data. In case research, conducting interviews is an appropriate way to
collect data since interviews go further than everyday discussions and
provide profound knowledge about a certain phenomenon (Kvale,
2001). As a first step, an interview-based case study of Oxeon's net-
working with customers was carried out on our behalf in the BSc project
(Härkönen et al., 2015). To collect complementary and more detailed
data about Oxeon's innovation process and in particular its product
development collaboration with customers, we conducted interviews
with one of the founders and executives, one sales manager and one
product manager in a customer firm (see Table 1). The first interviewee,
who was interviewed on several occasions, has been a key person from
the very beginning and has deep knowledge about Oxeon and its pro-
duct development with customers. The customer firm is one of a few
key customers located in Sweden, namely STIGA. Oxeon's collaboration
with this customer is considered to be relatively typical and hence one
sales manager at Oxeon, who is responsible for the relationship with
STIGA, was also interviewed.
The interviews were semi-structured and centered on the five key
questions mentioned in the preceding section. By asking why Oxeon
collaborates, with whom, what is covered, and how and when this col-
laboration takes place, we were able to increase our understanding of
the customer collaboration and what has come out of these activities.
Each interview was run for approximately 1 h and notes were taken
continuously. Additional follow ups were made to confirm and develop
the collected data. Moreover, the case description was sent to the
founder for checking and approval.
To build a rich case description additional data was collected by
using secondary sources. For example we collected some information
available on the Internet, primarily the company's homepage but also
newspaper articles and some other websites. This gave us com-
plementary knowledge about Oxeon's technology, products and market,
and it also broadened our understanding of the context in which Oxeon
operates.
3.3. Procedure of analysis
The analysis and our findings presented in the form of propositions
are the result of an iterative process, defined by a continuous interplay
between the theory, method and the empirical world (Dubois & Gibbert,
2010). Through a continuous matching of the empirical observations
and the emerging theoretical framework (Dubois & Gadde, 2002), the
case led us to develop the theoretical framework with focus on colla-
borative product development for start-ups and with particular focus of
timing and seeing it as a mutual process between actors. The Oxeon
case clearly illustrated the importance of collaboration with customers
and the need for organizing both internal and external resources. The
case also on a general level related to the importance of interaction in
the INA literature (see e.g. Håkansson, 1987).
The theoretical framework and our empirical observations guided
us to identify three research issues that the analysis came to center on.
This in turn formed the basis for identifying five crucial aspects and
formulating three propositions presented at the end of the paper.
During the analysis, we also had other relevant cases at our disposal.
These have been carried out in previous and ongoing research projects
and deal with start-ups and their R & D collaboration in networks. These
cases are described in more detail in other publications and papers that
we refer to. The cases were important to relate to in order to confirm
and contrast the collaboration pattern found in the Oxeon case and this
relating to other cases are found in the Discussion section.
4. The case of customer collaboration in product development at
Oxeon
Oxeon is a spin-off from a University of Technology (UniTech, made
anonymous) founded in 2003. It is commercializing a unique tech-
nology for making reinforcement fabric used in the manufacture of
high-performance composites, mainly carbon fiber reinforced polymers.
The fabric Oxeon produces, and markets under the tradename
TeXtreme®, is currently sold primarily to firms involved in the manu-
facture of sporting goods but also to firms in other industries such as
racing cars, bicycles and aircrafts. The company has grown relatively
fast, and in 2015 it had reached sales amounting to MUSD 7.3 and had
13.4% return on investment. In mid-2016 it had 50 employees. 99% of
the production was exported to Europe, North America and Asia.
Oxeon is privately owned and currently has three major institu-
tional owners: InvestmentAB Latour, InnovationsKapital and UniTech
Ventures (previously UniTechinvest). The four founders also own
shares in the company, like a group of business angels.
4.1. Pre-history and founding of the company
Oxeon's technology is based on research carried out during many
years by Dr. Nandan Kohkar at “UniTech” University of Technology,
Department of Textiles. During his PhD studies, completed in 1997, he
had developed a unique method for making composites, in first place
based on carbon fiber. The key invention consists of a weaving tech-
nology for making a reinforcement fabric based on tape instead of yarn,
the traditionally used raw material. This gives a fabric with improved
properties in terms of, for example, flatness and mechanical strength.
This enables the composite manufacturers to make a final product with
reduced weight and higher strength. The idea to commercialize this
invention was presented to UniTech School of Entrepreneurship (CSE)
in 2002, and this resulted in the start of a business development project
run by a group of four students in collaboration with Nandan Khokar
and Fredrik Winberg, an experienced businessman with whom the

Table 1
Interviews related to Oxeon and its product development with customers.

Interviewee Number of Year of interview Additional follow up Aim of interview

interviews

Founder and executive at
Oxeon
Sales manager at Oxeon
Product manager at STIGA
3 2016
1 2016
1 2016
Telephone call to confirm and develop
interview material
Telephone call to confirm and develop
interview material
Telephone call to confirm and develop
interview material
To get an understanding of how Oxeon works with product
development with customers
To get an understanding of how Oxeon works with product
development with STIGA
To get an understanding of how Oxeon works with product
development with STIGA

16
J. Laage-Hellman et al.
Fiber manu- Impregnating
Weaving
facturing (”prepreg”)
Converters Prepreg
manufacturers
inventor was in contact and who had helped to raise money and seek
patents. In the following year, the student group participated in Venture
Cup Väst, a regional business idea competition, which they won.
The company, Oxeon AB, was incorporated in 2003. It was initially
managed by two of the students (one as Chief Executive Officer and the
other as Vice President Marketing & Sales) and it was located in a
business incubator linked to CSE. The founding group also included the
inventor and the businessman both of which became heavily involved
in the company's further development. Initial funding was provided
also by UniTechinvest, the first institutional investor, and in the form of
grants and loans from national and regional public agencies.
4.2. Technology and products
Oxeon's main product is thus a carbon fiber fabric used as re-
inforcement in polymer-based composites. Fig. 1 illustrates the most
commonly used manufacturing process. It consists of four main steps,
each one carried out by firms specializing in that kind of operation. The
fiber manufacturing is followed by a weaving operation carried out by
so-called converters. There are 10–15 such companies globally. The
woven fabric is in the next step impregnated with resin (e.g. epoxy).
This material, called “prepreg”, is then used to make the composite
product (by curing the prepreg in a mold or tool). The end-user of the
fabric can be either the Original Equipment Manufacturer (OEM), that
is the brand owner (e.g. a car maker, a sports equipment producer or an
aircraft manufacturer), or a component supplier selling to the OEM (e.g.
an automotive part). Often the actual manufacturing operation is out-
sourced by the end-user to a sub-contractor.
As we have seen, woven fabric is normally produced by converters
selling to prepreggers. However Oxeon has chosen to operate at the
prepreg level rather than competing directly with the converters. Thus,
Oxeon's customers are either OEMs/brand owners or component sup-
pliers. However, Oxeon does not impregnate the fabric in its own plant.
This operation is in each case outsourced to a selected prepregger that
the customer already has a relationship with or is a partner to Oxeon.
The first step in Oxeon's own manufacturing process is to make a
thin tape out of fiber tows. After that, the tape is woven into a fabric by
interlacing it to obtain a crimp-less fabric with high strength. This step
is then followed by an impregnating, and sometimes laminating, op-
eration carried out by a prepregger. Overall, Oxeon's unique manu-
facturing technology enables it to make different types of fabric which
are suitable for different types of end-products and can be tailor-made
to meet specific customer needs.
4.3. The development of the company so far: a summarizing overview
The founders saw, based on their investigations, a potential to
commercialize the patented weaving technology, especially in the area
of carbon fiber composites. In the beginning there was some un-
certainty whether the company would sell the fabric or, alternatively, a
machine for producing it. They decided to go for the former option. It
was not clear, however, who was regarded the customer, or as per-
ceived by Oxeon, at what level of the manufacturing process Oxeon
would enter (see Fig. 1). But quite early it was realized that introducing
the own solution in the market would be easier if Oxeon approached the
OEMs/component suppliers and their sub-contractors at the end of the
manufacturing process, since it was these actors who could benefit the
17
Industrial Marketing Management 70 (2018) 13–24
Fig. 1. The dominant manufacturing process for compo-
sites.
Composite
manufacturing
OEMs
Component suppliers
most from the improved material properties. Oxeon's product con-
stituted a threat to the existing suppliers. The VP Marketing & Sales
says: “The prepreggers did not appreciate our strategy to go all the way to the
end-customers which they used to “own”. One of them, in an attempt to
prevent us from contacting its customers and competitors, offered the racing
industry an exclusivity deal. This did not succeed, however.”
Estimations showed that the potential market for Oxeon's tech-
nology was very big, some BUSD 2 only for the carbon fiber fabric in the
form of prepreg. If other applications were included the size of the
potential market was thought to be at least twice as large.
The first three years were characterized by intensive technical de-
velopment. For example, it turned out to be difficult to find a suitable
tape in the market, and therefore Oxeon had to develop its own tech-
nology for tape-making. The technical development work was led by
Nandan Khokar who had been employed as R & D Manager with re-
sponsibility for process development. Later on another person was re-
cruited for managing the product development.
Very early and in parallel to the technical development Oxeon
began to make contacts with potential customers in the composites
industry. This was important in order to get information about cus-
tomer needs and to test the own product idea. The first order, from a
German car manufacturer, came very soon after the founding of the
company, but in reality Oxeon was not able to deliver a commercial
product until in 2006. Nonetheless, in 2004 Oxeon's fabric was offi-
cially launched in the market under the brand name TeXtreme. Two
years later, Oxeon began to sell also its proprietary patent-protected
tape, which is sometimes used in the composites manufacturing, for
example, in combination with fabric.
After a few years, the intensive contacts with numerous potential
customers led to increasing sales especially in the prioritized applica-
tion area of sporting goods but also in other similar fields such as bi-
cycles and boats. Sales grew rapidly and in 2010, Dagens Industri, a daily
business newspaper in Sweden, voted Oxeon the super gazelle of the
year.
Oxeon remained in the incubator until 2007. A disadvantage of this
location was that the incubator could not offer any space for manu-
facturing. This became a problem for Oxeon, which instead had to rent
various premises at UniTech – a not ideal solution. As a result, Oxeon
moved to Borås, a town in Western Sweden with a long industrial tra-
dition in textiles. The main reason for this choice was that one of the
institutional investors wanted Oxeon to co-locate with another textile
company which it had invested in. So, Oxeon moved into the premises
of that company. Five years later, in 2012, it erected its own building in
Borås, and this is now the home of the company's headquarters as well
as its laboratories and production plant.
Regarding the sales organization, Oxeon established in 2011 a
subsidiary in the United States. It also has a sales office in France. To
support sales in other countries Oxeon has appointed a number of au-
thorized distributors covering different geographical regions. It has also
established partnerships with a selection of prepreg suppliers in dif-
ferent countries, and these can if needed be involved in Oxeon's busi-
ness with composites manufacturers.
One way for Oxeon to meet the competition is to strengthen the own
brand. Already in 2006, with Gore-Tex as a role model, Oxeon offered
customers to put the logotype TeXtreme on the end-product. This
should be seen as a quality mark and add value to the customer. Several
manufacturers of sport equipment among others have done this. This
J. Laage-Hellman et al.
practice is seen by Oxeon as an important means to strengthen the
brand name and support marketing.
In line with its ambition to sell a product that adds substantial value
to the customer, Oxeon has since its inception applied a skimming price
strategy, which has had positive effects on the profitability. During the
last eight years, Oxeon has with the exception of one year shown profit,
with return on investment varying from 2% to 31%. Hence, the fi-
nancial performance has been good compared to what is common for
young university spin-offs.
Alongside the expansion of fabric sales, Oxeon has also begun to
license out its process technology, but this is done only to companies
that use it for other materials than carbon fiber and therefore do not
constitute potential competitors.
4.4. First customer collaborations with Formula 1 teams
The management of Oxeon had understood that early contacts with
potential customers were crucial for the company's development. After
having visited a large number of potential customers in various in-
dustries, Oxeon decided to start off by focusing on motor sports and in
particular Formula 1 racing cars. As explained by the VP
Marketing & Sales: “We understood that this was a suitable application area
to begin with, since the main benefits of our fabric, in terms of low weight
combined with high strength, are of great interest to the Formula 1 teams.
These were already using carbon fiber composites in many components, such
as in the chassis, body and engine, but they were constantly searching for
new materials that could help them to further reduce the weight of the car.”
Since these users are very demanding it was thought that if they
wanted to buy TeXtreme this would be a proof of high performance and
enable Oxeon to start building a strong brand. Oxeon set off by calling
and visiting all of the approximately ten teams in the Formula 1 World
Championship series. At this point in time, Oxeon's product was not yet
finished and the company did not know if it would be able to produce it
on a large scale. What Oxeon could offer was a handwoven fabric made
in the laboratory. Most of the teams showed interest in Oxeon's product
and a majority of them chose to test fabric specimens. The immediate
feedback Oxeon got from the teams, normally via their composite en-
gineers, was very positive. Especially, 3–5 of the larger teams showed
strong interest. When meeting with the teams, they provided important
information about what they wanted in terms of specific material
properties for various components. One of the teams placed a purchase
order very soon and another one approached Oxeon for the same pur-
pose. However, it turned out to be difficult for Oxeon to produce and
deliver a commercial product. It had believed it could buy tape on the
market and had established contacts with three potential suppliers. But
it turned out that the quality of the tape was not good enough to pro-
duce a material that fulfilled the requirements of the Formula 1 teams.
As a result, Oxeon decided to develop its own tape, which took some
time. It was not until in 2006 that Oxeon had the entire production
process in place and could start delivering a commercial product.
Oxeon has since then become a regular supplier to a majority of the
Formula 1 teams, including the most successful ones. TeXtreme has
been used primarily in body parts resulting in 20–30% weight savings.
These results have convinced Oxeon's management that its strategy
to target directly the OEMs/component suppliers and their manu-
facturing sub-contractors was correct and have contributed to create a
demand from the end-users. This conclusion confirmed lessons that the
founders had learned at CSE, namely, that introducing a radically new
technology requires that the innovator takes a larger share of the value
chain, instead of establishing itself as an upstream supplier of an in-
termediary good. This is especially so when the largest value is created
at the end-user level.
The relationships with the Formula 1 teams have been important to
Oxeon in several ways. First, it resulted in early income-generating
sales. Second, the feedback has helped Oxeon to develop valuable
knowledge about how to use TeXtreme and obtain a high-performing
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Industrial Marketing Management 70 (2018) 13–24
end-product. Information about specific solutions could not be spread
to other customers, but Oxeon could appropriate more general appli-
cation knowledge that could be used in other contexts. Third, the
Formula 1 teams' adoption of TeXtreme was a valuable reference that
could be used when approaching other potential customers who had
similar needs, for example, in the sporting goods industry (see below).
It was easy to refer to the Formula 1 cases as the material is visible on
the cars and can be viewed on television for example.
Oxeon's interaction with the Formula 1 teams has not been char-
acterized by close technical collaboration – but rather by fruitful ex-
change of information. This is due to the culture of extreme secrecy in
that business, and this makes the customers less open than in other
industries. Oxeon also tried to make marketing agreements with some
of the Formula 1 customers, in order to use them more effectively as
references, but this was not possible. Nevertheless, representatives of
Formula 1 teams have on some occasions participated in networking
events organized by Oxeon and aimed at stimulating experience sharing
among TeXtreme users.
4.5. Introduction into the sporting goods industry
Around 2007/2008, after having received proof of the product's
technical benefits and commercial viability in the Formula 1 market,
Oxeon decided to move on and focus on other application areas with
higher sales potential. Aeronautics and aerospace, bicycles, boats and
sporting goods have all been identified as candidate application areas.
Sporting goods became the most prioritized focus area during the fol-
lowing years. This was a natural choice since the manufacturers used
composites with similar properties as in Formula 1. Another advantage
was that product life cycles in this industry, like in the Formula 1 case,
are short compared to how it is in many other industries. This means
that Oxeon's product could be adopted by the customers relatively
quickly (but not as fast as in Formula 1).
To come into contact with potential customers in this area, with
priority for producers of high-end products, Oxeon exhibited itself by
participating in trade fairs and advertising in trade journals. The
company has also recruited several sales persons who are actively
contacting potential customers by making “cold calls” and visiting
them.
As a first step, Oxeon seeks contact with the OEMs/brand owners.
The manufacturing of the end-product is often outsourced, for example,
to some sub-contractor in Asia. Through the OEMs, Oxeon can get in
touch with these manufacturers. It is usually these firms that know how
to build and produce the end-product, and they therefore constitute the
key counterpart when it comes to the technical development – once the
idea to use TeXtreme has been sold in to the OEM. In order to get the
customer to adopt TeXtreme a tight technical collaboration has to be
established with the manufacturer. The purpose of these joint devel-
opment activities is to optimize the properties of the fabric, given the
specific application, and create a solution that adds value to the OEM,
in terms of for example lower weight and higher strength of the end-
product. This requires, for example, a great deal of calculation and si-
mulation made by Oxeon and testing in the manufacturer's plant. To
support the customers all the way to full-scale production of the com-
posite, Oxeon has created a dedicated TeXtreme Implementation Team.
By contributing to develop a reinforcement solution that improves the
final product, Oxeon strives, inspired by the Gore-Tex-thinking, to give
the OEM a pacemaker in its own marketing.
There is large variation among the different applications in this area
and therefore this type of procedure is necessary in each case. Oxeon,
working in parallel with different customers, has succeeded well and
today the sales of sports products containing Oxeon's fabric amounts to
some one million units annually. This includes, for example, tennis
racquets (e.g. Prince), golf club shafts (e.g. Cobra), ice hockey sticks
(e.g. Bauer), and ski racing helmets (e.g. Giro).
Once the customer has decided to implement TeXtreme in its
J. Laage-Hellman et al.
production, the business relationship tends to be long-term. There are
examples of customer relationships in the field that are almost ten years
old. Oxeon maintains close contacts with its customers in order to get
updated information about their needs and to improve the solution.
STIGA Sports AB, a Swedish world-leading manufacturer of table
tennis blades, can be taken as an example illustrating how Oxeon col-
laborates with customers in the sporting goods area. It all started in
2011. Following a change in table tennis rules, one of STIGA's compe-
titors, a Japanese company, had introduced in the market a blade where
the frame consisted of wood laminated with carbon fiber composite.
STIGA wanted to make a similar product but with a better composite
solution. STIGA had early on some contacts with potential composite
suppliers, but these were in general not interested in collaboration since
the potential volume for this application was relatively small compared
to established markets such as aircraft components (there are some
20,000 table tennis blades sold annually). Then STIGA instead con-
tacted and established collaboration with a large Swedish technical
consultancy firm (Semcon). The latter became interested and helped
STIGA to investigate how carbon composites could be used and what
type of technical solutions that existed. STIGA worked with Semcon for
approximately one year during which some practical tests with various
materials were carried out. This included the TeXtreme fabric. Oxeon
happened to be one of Semcon's other clients. STIGA heard from
Semcon about tests with downhill skis where the properties could be
varied by using different TeXtreme solutions. This was of great interest
to STIGA wanting to make blades adapted to different playing styles.
Furthermore, the fact that Oxeon could refer to customers in Formula 1
and had several leading sports equipment manufacturers among its
customers contributed to make STIGA interested in TeXtreme. A direct
contact with Oxeon was therefore established and after some meetings
and a need analysis carried out by Oxeon, a collaborative project was
started in 2013. For STIGA it was an advantage that Oxeon was a
Swedish company, since STIGA in its marketing emphasized that its
blades were “Made in Sweden”, a world-leading table tennis nation
since many years. For STIGA it was a challenge to convince Oxeon to
start working with them. As explained by Oxeon's sales manager “we
have a policy to choose our partners carefully and we are very keen to
protect our brand by working with customers that have a leading position in
their own field and are actively working with TeXtreme”.
Having made an agreement giving STIGA exclusivity in the field of
table tennis the two companies began the development of a solution.
The aim was to develop a series of tailor-made blades for different types
of players. This should be achieved by developing different fabric so-
lutions leading to varying properties of the end-product in terms of, for
example, how hard the ball can be hit and the shape of the ball tra-
jectory. Oxeon had at this point in time already established itself in the
sporting goods field and had put in place a standardized procedure for
how to develop new applications together with customers. However, in
the case of STIGA the task was unusually challenging from a technical
point of view. The application was unique in that the product would be
a combination of wood and composite (in the sporting goods field most
other products consist of 100% composite). During the approximately
one year that the project lasted, engineers from the two companies met
frequently. Based on input from STIGA, Oxeon made in its laboratory
various specimens that were subsequently tested by STIGA. The test
results were fed back to Oxeon and laid the ground for modification of
fabric properties and a new round of testing. Through this iterative
process a satisfactory solution could finally be achieved. For STIGA, to
solve some technical problems related to the joining of wood and
composite two of its existing suppliers had to be involved in the de-
velopment work.
The outcome of the project was very satisfactory both technically
and commercially and has enabled STIGA to introduce a new series of
table tennis blades starting in spring 2014. It is named Carbonado and
uses the TeXtreme logotype. The blades are built with five layers of
wood and two layers of composite. By varying the type of fabric
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Industrial Marketing Management 70 (2018) 13–24
different blade properties can be achieved leading to variation in ball
speed and trajectory. At present, the series consists of six different blade
variants. These products are unique in the market, and no one else can
offer something similar. The performance of the new products is very
good, illustrated for example by the fact that in the 2016 Olympic
games one gold medal and one silver medal were awarded to players
using Carbonado blades. The sales has also been satisfactory, if one
takes into consideration that Carbonado blades are a high-end product
with high price margin (they cost in the store €170–180, compared to
€50–60 for a standard blade). According to STIGA's product manager,
they are regarded as “the Rolls Royce of table tennis”.
STIGA's competitors are so far only offering composite blades built
on traditional carbon fiber solutions. Several of them have contacted
Oxeon, but they are not allowed to buy TeXtreme due to the exclusivity
agreement. The product manager at STIGA points out that “for us it was
important not only that the performance of the product was good but
also that we got a ‘technical story’ to tell”. TeXtreme is today a strong
brand and there are on the Internet films available showing what it can
be used for. STIGA is spreading information through social media like
Facebook and Instagram. It is also advertising now and then on the
homepage of the International Table Tennis Association. The use of the
TeXtreme logotype on the blades is regarded to be important and
contributes to strengthen the own brand.
For Oxeon, STIGA has become an important customer, although not
one of the largest. The development of an application for table tennis
blades is rather typical for how it works in the sporting goods area and
has resulted in a good relationship between the two companies.
Although Oxeon is used to work globally it was an advantage in the
collaboration that STIGA is a Swedish company, since it is after all
easier to communicate in Swedish and there is geographical proximity.
Oxeon has no other customer for this application. However, like in
many other cases the knowledge gained through this collaboration with
a specific customer has relevance for other applications where the
material demands are similar (e.g. surf boards), and STIGA is one of
many references used in the marketing of TeXtreme.
4.6. Introduction into the aeronautical industry
The aeronautical industry was early identified as a potentially in-
teresting application area due to the OEMs' great interest in lightweight
materials. Aircraft manufacturers have for several decades used carbon
fiber composites and many structural parts are today made of such
material. However, Oxeon has realized that entering this market is
more difficult and takes longer time than in the initially targeted in-
dustries. This industry is characterized, inter alia, by high concentra-
tion, long product life cycles, big order sums, and long contracts. It
takes a long time to become a certified supplier of materials – for in-
terior parts and even more for structural components. One reason is that
composites are parts of a large and complicated system where different
components have to be adapted to each other. Before adopting a certain
component extensive testing has to take place, and this may take
1–2 years.
In this industry, there is a small number of prepreg suppliers which
play a key role in the development of composites and collaborate clo-
sely with the aircraft manufacturers. This means that Oxeon has to team
up with such firms if it wants to enter this potential market. To date,
Oxeon has succeeded to sell its fabric to some manufacturers of small or
unmanned aircrafts. It has also started to work in concrete development
projects together with some of the larger companies in the industry, but
this has not yet resulted in any sales to them. “In this business it takes a
long time to get in, and a long time to execute the projects”, as Oxeon's VP
Marketing & Sales says.
4.7. Some lessons learned by Oxeon
Based on its experiences from collaborating with customer one
J. Laage-Hellman et al.
lesson that Oxeon has learned is that it is of great importance to own the
rights to the fabric solutions developed for customers (even though
Oxeon is very careful to not spread information about individual cus-
tomers' applications). A potential partner may have a different opinion
on the ownership matter, but Oxeon has learned to be bold and assert
itself. The outcome of the negotiation with a potential customer may
thus be that Oxeon decides to not work with that company. But there is
always an act of balancing, as the VP Marketing & Sales points out: “It
depends on who is sitting on the other side of the table”.
When selecting customers/partners, it is also important to Oxeon
that both parties are prepared to open up and build a trustful re-
lationship characterized by tight collaboration and joint development.
The starting point for this work is always the customer's real needs.
One of the difficulties that Oxeon has encountered is to recruit sales
personnel with the right competence and attitude. The salespersons do
not always understand how much time and efforts it takes to build and
maintain a good, collaborative customer relationship. It was easier in
the beginning when it was the founders themselves who handled the
customer contacts. Thanks to experiences gained during the early days,
the founders have learned how to interact with potential customers and
make them interested in starting up collaboration. This capability now
has to be diffused to other employees in the growing organization.
5. Case analysis
There is already plenty of evidence in the literature that R & D
collaboration with external actors, not least customers, is an important
activity when commercializing new technology (see e.g.
Håkansson & Waluszewski, 2007). The more interesting question is how
to organize collaboration with customers. Based on our research issues
formulated in Section 2.3, the case analysis below centers on the timing
of customer collaboration, the mutuality of the collaboration, and the
organizing of start-ups in networks.
5.1. Timing: early product development collaboration with customers
Oxeon started to interact with customers very early – even before it
could produce the product. At this point in time, Oxeon only had la-
boratory specimens to exhibit and deliver. However, this strategy
proved to be fruitful, since it helped Oxeon to deepen its knowledge
about customer needs and to direct the development activities in the
right direction. This interaction, consisting of information exchange
and user-testing (with Formula 1 teams), also prepared the potential
customers for buying, and once the manufacturing process was in place
the first deliveries to a few customers could be made. The early refer-
ences from Formula 1 customers were, despite small volumes, valuable
when approaching potential buyers in the sporting goods industry.
These observations are in line with the Coviello and Joseph (2012)’s
findings that successful innovators more often than others involve
customers early for the purpose of development and testing. As we have
seen in our case, customers can give technical guidance and engage in
hands-on trials. The advantage of involving customers/users at an early
stage of the product development process is overall well known
(Lagrosen, 2005). However, according to our experiences all start-ups
do not fully understand this need or manage to translate it into practice.
This holds especially for university spin-offs, which are not seldom
managed at least initially by the academic inventors themselves (see,
e.g., discussion in Laage-Hellman, 2012). These researchers usually lack
management competence and it is not uncommon that they have their
principal interest in research – rather than in running a business firm.
Hence, it is not unusual that such firms after their founding continue to
focus on research, at the expense of developing commercial applica-
tions together with customers. Therefore, one important task for coa-
ches, board members, financiers, and other advisors is to put pressure
on the start-up's management and make sure that due attention is paid
to the need of customer involvement.
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Industrial Marketing Management 70 (2018) 13–24
In the case of Oxeon, it seems that the companies contacted by
Oxeon were quite keen to test the new fabric, thereby enabling early
input from customers into Oxeon's product development. This could
happen probably because these firms are quite innovative themselves
and in addition, given their own needs, saw a great potential in Oxeon's
product. Other start-ups may encounter difficulties to find suitable
collaboration partners in the early phase – with negative consequences
for the product development. If the invention is radical and still un-
developed, potential customers can be hesitant to get engaged, even if
they are interested and see potential benefits. The potential collabora-
tion partners then choose to play “a wait and see game” asking the start-
up to come back later when it has a finished product to offer.
5.2. Mutuality: choosing application areas and collaboration partners – and
being chosen
It is not uncommon that new technologies developed by start-ups
are quite generic and can be used in many different application areas,
and this is also the situation in the Oxeon case. It also shows how im-
portant it is to choose which application area to focus on, since this
affects the collaborative activities (e.g. type of partner and type of re-
lationship) and the usefulness of the results from a marketing point of
view. In Oxeon's case, it proved to be a good strategy to start with the
Formula 1 teams and then proceed to sporting goods. This made it
possible to have an early version of the product tested by competent
and demanding users and to get feedback from them. This facilitated
Oxeon's development (both of the platform and specific applications),
and the early sales to some Formula 1 teams gave valuable references
that could be used when entering the next, and larger, application area
– sporting goods. The aeronautical industry is another application area
with large sales potential. However, given the characteristics of the
network, the introduction of Oxeon's fabric will be more complicated
and require long time. Therefore, it was probably a wise decision to
wait with this application area and instead focus on the others. Oxeon's
future activities in the aeronautical field will benefit from the knowl-
edge and resources built thanks to the collaboration with Formula 1 and
sporting goods customers.
Associated with the choice of application area, the selection of
collaboration partner is another important aspect, which is related to
the Who question (Coviello & Joseph, 2012; Laage-Hellman et al.,
2014). It is about the number of partners and which individual custo-
mers the company collaborates with. This is also, very importantly,
about interaction and being chosen (Håkansson & Ford, 2002). Oxeon
approached the Formula 1 area by first contacting all ten teams. These
discussions resulted in collaboration being established with some of the
larger teams, which showed more interest than the others. These ac-
tivities were carried out in parallel and were quite similar. Based on
other case studies, this seems to be a common form (see e.g. Laage-
Hellman et al., 2017). That is, after having approached in a broad
manner potential customers in the area, joint development activities are
pursued in parallel with a limited number of partners, who were in-
terested in pursuing collaborative activities with Oxeon.
When Oxeon moved on from Formula 1 to the sporting goods area,
the collaboration with a larger number of potential customers was
pursued in parallel. Here, once the technology platform had been put in
place, Oxeon could have a larger number of partners. As a matter of
fact, as pointed out, each new end-product requires that a customer-
specific application is developed.
5.3. Organizing: external and internal organizing within the start-up
As described, Oxeon's product, the fabric marketed under the tra-
dename TeXtreme®, is adapted to the customer's needs in each appli-
cation where it is used. It is primarily the product, production facility
and application knowledge that are adapted and combined with the
customer's resources and this takes place within specific relationships.
J. Laage-Hellman et al.
This is evident in the sporting goods industry, seen in the joint devel-
opment activities with the OEMs/brand owners such as STIGA, which
are followed by the dedicated TeXtreme Implementation Team inter-
acting with the manufacturing units of the customer. The fabric is
customized and implemented at the customers through combining of
resources and Oxeon thus takes a resource re-combiner role (Aaboen
et al., 2016), where both parties need to make adaptations (Biggemann
et al., 2013).
The external collaboration with customers in the start-up's product
development requires full attention from the management and access to
appropriate capabilities (McGrath & O'Toole, 2013). As seen in the case,
two of Oxeon's founders (the CEO and the VP Marketing & Sales) de-
voted much of their time in the early days to contacting and interacting
with potential customers and partners. They were instrumental in es-
tablishing and running collaborative projects with customers. Later on,
when the company started to grow their time was taken by other
management duties, and the responsibility for creating and handling
the customer relationships was transferred to new employees. However,
according to Oxeon's experience it has been difficult to recruit people
who have the required skills to manage customer collaborations in a
good way. Thus, educating the new sales persons has become an im-
portant matter.
6. Discussion
Altogether, based on the case analysis above centering on our three
research issues, related to timing, mutuality and organizing, we have
identified five crucial aspects concerning collaboration in product de-
velopment for a start-up: (i) the need for involving customers early, (ii)
the choice of application areas, (iii) the mutual process of choosing and
getting chosen as a collaboration partner, (iv) the external networking
role, and (v) the internal organizing in relation to the ambitions for
external interaction with customers. As illustrated by the Oxeon case,
the handling of these aspects is quite challenging to the start-up's
management. In the following discussion our results will compared and
contrasted with observations reported in other case studies.
Let us begin with the need for early customer involvement for start-
ups, which also is seen in other cases. For example, in the life science
sector there are plenty of start-ups, many of which are commercializing
findings from academic research and need to find early collaboration
partners. For medical technology firms, for example, collaboration with
healthcare institutions is crucial in order to test new products in clinical
settings. However, it is not always easy for medtech start-ups to gain
access to such environments. Experiences from Sweden show that the
hospital staff tends to be very busy performing their daily care activities
and has limited time to participate in developing and testing new
products (see, e.g., Laage-Hellman & McKelvey, 2015). Moreover, given
the rules for public procurement and legislation on medical devices,
such buyers tend to prefer doing business with large, established firms.
This creates a problem for new companies that want to come in and test
products under development. Start-ups developing information and
communication technology solutions for the public sector (e.g. social
care) encounter the same type of difficulties when approaching po-
tential customers (Rickne, Laage-Hellman, & Middel, 2013). None-
theless, Laage-Hellman et al. (2017) present an example of such a
company that has indeed succeeded to get a fruitful collaboration with
an activity center for older adults – after having established a re-
lationship and made a key person interested. Testing of a first prototype
at this center proved to be very useful for the development of the
product.
Regarding the crucial management aspect of selecting application
area(s), it appears to be based on the perceptions of the future network
(Aaboen et al., 2012) and the network horizon (Holmen & Pedersen,
2003), and thus be a way of drawing a boundary in the network in order
to zoom in on relevant opportunities. By having this scope in time and
space in the network (Hjelmgren & Dubois, 2013), the complexity of all
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Industrial Marketing Management 70 (2018) 13–24
possible applications and/or customers is managed. The start-up's
choice of application area is thus a crucial aspect of strategic nature and
has major consequences for the development both of the product and
the customer relationships. However, it is not always easy for the start-
up to know in advance which area (or areas) that will be beneficial.
There is often genuine uncertainty regarding the technology's potential
and usefulness. However, it is always necessary to start in some way,
and as noted above in the analysis, the application areas perform the
function to draw boundaries around potential businesses, and in this
way shape the market (Biggemann et al., 2013).
The outcome of the market shaping is dependent on whether the
start-up finds a suitable partner and manages to build a well-func-
tioning collaborative relationship with that potential customer. This
explains why the choice of application area often takes the form of a
search process involving a great deal of trial-and-error activities. In
retrospect, it is possible to know how good the choice actually was. The
collaboration with a particular partner (with certain needs) may drive
the development in a certain direction that makes it difficult to enter
other fields. In other words, the decision-making may be characterized
by limited rationality, but choosing application area still is a way of
being rational within certain boundaries in a market shaping process
(Andersen, Kragh, & Lettl, 2013; Biggemann et al., 2013).
As mentioned in the analysis section, choosing collaboration partner
and get chosen is a mutual and a crucial aspect. Evidently, Oxeon's
resources for doing this are not infinite, and it cannot work at the same
time with too many customers. This can also be seen in the case of
Lamera, a corporate spin-off from AB Volvo which like Oxeon is com-
mercializing a new innovative structural material (Laage-Hellman
et al., 2017). Lamera initiated at an early stage a large number of ap-
plication development projects with potential customers in various in-
dustries. However, the experiences showed that in order to be able to
handle the collaborations in an effective way the number of parallel
partners had to be reduced. Lamera has now decided to concentrate on
five collaborative projects. In contrast, to this form of pursuing several
parallel tracks, another common way is a focused strategy where the
start-up concentrates on just one customer within one application area,
at least during each period of time (ibid.). For example, Swedish Algae
Factory (SAF), developing products based on algae cultivation, first
worked with Preem on bio fuel production. When Preem chose to end
the collaboration, pinpointing the need for being chosen as a colla-
boration partner, SAF managed to find a new partner in the plastics
industry, and the product development is now directed at the needs of
this potential customer. A common and natural reason for choosing this
latter type of strategy (rather than working in parallel with several
partners) is that a small company like a start-up has scarce resources
and therefore must prioritize how these are used. But it can also be that
the product is of a more standardized character and (unlike, e.g., Ox-
eon's fabric) does not require far-reaching customization. Then it is
easier to develop the application in a focused way. The above-men-
tioned SAF is one example. Under all circumstances, the focused
strategy entails of course certain risks. The targeted application may
turn out to be a dead end and/or the relationship with the chosen
partner may not develop as wanted. Promimic, developing a new
coating technology for medical implants, was in a similar situation
(Laage-Hellman, 2012. All development efforts were initially directed
at one partner, the world-leading dental implants manufacturer Nobel
Biocare, which had been granted an exclusive license. When Nobel
Biocare for internal reasons decided to discontinue the collaboration,
Promimic ended up in a difficult situation and hardly survived. It chose
to change application area and instead focus on orthopedic implants.
Given the bad experiences from working exclusively with one customer,
Promimic (unlike SAF) switched to the parallel tracks strategy and
managed to establish collaborative projects with a handful of potential
customers in the orthopedic field. None of them has received an ex-
clusive license for their applications.
Regarding the external networking role, Oxeon like many of the
J. Laage-Hellman et al.
other companies can be classified as Resource re-combiner. But there is
also evidence of start-ups taking the Resource mediator or the Resource
renewer role. For example, drug discovery companies such as “Biotech”
(Aaboen et al., 2016). This type of start-ups often links research (e.g. at
universities) with pharmaceutical firms (customers). It means that they
have to establish, normally, exclusive collaborative and licensing re-
lationships with one or a few pharmaceutical firms. What they sell is
technology and R & D capability. It is the customer that takes the re-
sponsibility for commercializing the drug. Thus, the end-customers in
the healthcare market are reached indirectly via the pharmaceutical
firms. The case of Automotive Sensor in Aaboen et al. (2016)’s study
exemplifies a Resource renewer. In this case, major adaptations had to
be made by potential customers in order to substitute existing solutions
for the start-up's solution. This made it difficult for the start-up to get
the desired product development collaboration with customers in place.
These examples indicate that somewhat different forms of collaboration
with customers may be required for these two types of network roles
and also that there may be different challenges.
The Oxeon case shows that the internal organizing of the start-up is
another crucial aspect. This can be seen also in other case studies. In the
early phase of the company's development it is an important task for the
CEO and other key persons to engage personally in customer colla-
boration. For example, the CEO of Entific Medical Systems, a corporate
spin-off commercializing a unique bone-anchored hearing aid, during
several years spent much of his time travelling around the globe in-
itiating and following up clinical studies at different hospitals (Laage-
Hellman, 2012, Ch. 7). Aerocrine is another medtech start-up, which
like Entific has collaborated extensively with clinical partners (Laage-
Hellman, 2012, Ch. 5; Laage-Hellman & McKelvey, 2015). One of the
founders, a professor at the Karolinska Institutet, was recruited as head
of the medical affairs department. To support the clinical partners, two
clinical research managers were recruited. However, in connection to a
financial crisis and a major re-organization these employees were laid
off. In retrospect, the company has concluded that this was a mistake,
since it got negative effects on the company's ability to manage clinical
collaborations. It is thought that this has contributed to delay the
product development and slow down growth.
Hence, in the Oxeon case as well as the other cases above, it is clear
that the development of relational capabilities affects the start-up's
possibility to benefit from customer collaboration. Several of the en-
abling factors identified by McGrath and O'Toole (2013) can be ob-
served, for example, the importance of past network experiences and
being open to information sharing. This is also in line with the findings
of Coviello and Joseph (2012) who emphasize the importance of
learning agility. It means that the company needs to be staffed with
people who take a flexible stance toward collaboration, understand the
potential to learn from others, and are willing to do so. Our study in-
dicates that relational capabilities are very much developed based on
the experience of key individuals during the early days' networking
activities. When the company grows, it is important that these cap-
abilities are developed and transferred internally to other parts of the
organization.
In conclusion effective managing of customer collaboration puts
demands on how the start-up is organized, in terms of capabilities and
how these are used and developed. In the early phase, the start-up may
lack the desired relational capabilities, and this is something that need
to be considered when building the organization and developing work
processes.
7. Concluding remarks
This paper deals with business creation in networks by setting the
vital process of customer collaboration in product development for
technology-based start-ups in focus. The case analysis shows that cus-
tomer collaboration is important to start-ups in order to get established
in business networks, realize sales, and start growing (Aaboen et al.,
22
Industrial Marketing Management 70 (2018) 13–24
2017; Chorev & Anderson, 2006; La Rocca et al., 2013). Returning to
the aim of the paper, the pattern of customer collaboration that emerges
is one that contains the descriptive regularities of early customer col-
laboration and focusing on application areas as a means to draw
boundaries in the network. The choice of application areas goes hand-
in-hand with choosing and being chosen as a collaboration partner. A
certain collaboration partner may impact on the application areas, and
vice versa, selected application areas may impact on collaboration
partners. The internal organizing in resource-scare start-ups needs to be
aligned with the external interaction ambitions. By fulfilling the aim of
this paper, we contribute to the need for further studies on how the
process of customer involvement is carried out (La Rocca et al., 2016)
and specifically for start-ups (Coviello & Joseph, 2012). Based on the
analysis and discussion above, we conclude this paper by formulating
three propositions, and comment on managerial implications and sug-
gestions for further research.
First, our research has shown that the choice of which application
area (or areas) to focus on has decisive influence on the company's
possibilities to become a viable business. This is a strategic decision that
has to be taken by the start-up itself. At the same time, the choice of
application area, and the more specific application(s) that the product
development activities should focus on, can be influenced by the start-
up's early contacts with potential customers. We know from previous
research about the role of the first customer and the initial customer
relationships (Aaboen, Dubois, & Lind, 2011; La Rocca et al., 2013), An
application area can be understood as a way to create network
boundaries and zooming in on certain customer applications. There are
often many possibilities for how to use a certain technology and all of
them cannot be realized. By drawing boundaries in the network, in
terms of application areas, focus is created and in this way application
areas contribute to market shaping (Biggemann et al., 2013).
It is common that a start-up takes on several application areas, ei-
ther in parallel or in a sequential manner, where the product char-
acteristics resulting from customer collaboration in one area form the
basis for developing another area in collaboration with other custo-
mers. There may thus be certain features of the product as well as the
product development process, such as speed, that develop in a certain
direction as result of the selected application areas. This evolutionary
pattern of starting with one application area and then moving on to the
next, and so forth, can be seen as a trajectory (Castellacci, 2008; Dosi,
1982; Olaru & Purchase, 2015) or path in the start-up's development.
This leads us to our first proposition.
Proposition 1. The application area as a network boundary is crucial
for the start-up and affects the direction of product development.
Given a certain choice of application area, or network boundary
relying on future perceptions of the network, the partner is important.
There appears to be an interesting interplay between the choice of
application area and the mutual choice of collaboration partner(s)
given that a certain collaboration partner may impact on the applica-
tion areas and selected application areas may impact on collaboration
partners. What kind of relationship that emerges with the collaboration
partner, what the collaboration becomes focused upon more specifi-
cally, is dependent on the counterpart and the interaction pattern. This
is obviously something that has to be considered by the start-up when
choosing partner – and being chosen as partner. It should be empha-
sized that business networks are characterized by mutual inter-
dependencies among actors, and therefore no firm is able to single-
handedly choose its partner. This applies to established firms as well as
to entrepreneurial firms (Snehota, 2011). This leads us to our second
proposition.
Proposition 2. The choice of collaboration partner is mutual and
affects the product development.
The establishment of collaborative relationships, execution of joint
activities, and implementation of the results are resource-demanding
J. Laage-Hellman et al.
tasks that require full attention from the start-up's management. This is
challenging and requires the development of appropriate relational
capabilities (McGrath & O'Toole, 2013). How to develop such cap-
abilities has been an under-researched topic (O'Toole & McGrath,
2008). In this paper we have touched upon this issue and there is de-
finitely a need for further research, not least with technology-based
start-ups in focus. To succeed with the customer collaboration, the
company must create an organization and work processes that corre-
spond to what it wants to achieve with the customer collaboration. This
need for aligning and matching ambitions and goals with organizing is
similar to what can be observed in the field of purchasing. Here, buying
firms need to adapt their internal organization to the desired type of
interaction with suppliers (Bocconcelli & Håkansson, 2008). This leads
us to our third proposition.
Proposition 3. The ambitions for product development collaboration
with customers and the internal organizing of the start-up need to be
aligned.
There are many managerial implications that can be drawn from
this study. Many of them have been implicitly given in the preceding
sections. The importance of involving and collaborating with customers
in the product development is already well known. Still it is essential
that the start-up's management understands this and acts accordingly.
Establishing collaborative relationships with customers must be high on
the agenda. Especially in the very early phase, the managers must be
prepared to devote time to customer interaction, and for example
through on-the-job-training acquire the skills necessary to handle the
relationships effectively. A key strategic aspect is to choose what ap-
plications to focus on. This decision goes hand-in-hand with the choice
of partner and also with the possibility to get chosen as a collaboration
partner. Although it is important to the company to take advantage of
potential customers' willingness to collaborate, the management needs
to analyze carefully the pros and cons of candidate application areas,
for example, with regard to size and the potential customers' incentives
to substitute existing solutions for the start-up's product.
The choice of application area should be dynamic, meaning that
there may be a logical order in which different application areas can be
dealt with. Under all circumstances, the managers must be aware of the
fact that the establishment of a collaborative relationship is mutual,
that is involves the customer. To compensate for the start-up's weak-
nesses in terms of resources, the management must be prepared to work
persistently with and in interaction to convince partners to enter into
collaboration, and this without making sacrifices of their business ideas.
Here, referring to and getting support from other existing partners/
contacts in the network can be an effective means to strengthen the
start-up's cause. The internal organizing of the company (staffing,
structure, division of labor, management style, etc.) should be adapted
so that it supports the type of customer relationships the start-up strives
to have and the other way around, the external interactions need to be
in balance with the internal organizing.
Furthermore, we would like to stress that there is a need for further
research. The three propositions can be taken as starting point for new
empirical studies. For example, other case studies of start-ups' customer
collaboration patterns based on theoretical frameworks pinpointing
interactive behaviors can contribute to deepen the understanding of the
aspects identified and discussed in the present paper. It would be in-
teresting to see what kind of network-related problems and difficulties
that other start-ups have encountered and how they have dealt with
them. And related to this, it would be interesting to see how the pat-
terns of customer collaboration is affected by the context of the start-up,
for example, in terms of technological advancements such as digitali-
zation, automation and information and communication technologies
more broadly.
To end this paper, one may raise the question whether the findings
of this paper are specific to start-ups or have a more general applic-
ability. On the one hand, the answer is that the paper builds on
23
Industrial Marketing Management 70 (2018) 13–24
empirical research in which start-ups and their collaborations have
been the principal study objects, and typically start-ups have small
resources and few relationships initially (Baum et al., 2000; La
Rocca & Perna, 2014). On the other hand, the customer collaboration
patterns of the start-up, the observed relatedness between application
areas and product development, and the mutual process of choosing
and getting chosen are issues that are not unique to start-ups. In this
sense, although start-ups function as study objects, our analysis leading
to the formulated propositions comes with the ambition to be of re-
levance to technological development and innovation in industrial
networks more broadly.
Acknowledgements
The authors are thankful to Forskningsstiftelserna Handelsbanken
(Jan Wallanders och Tom Hedelius Stiftelse) for financial support that
enabled the research presented in the paper.
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