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JIC
24,3 Intellectual capital and the
acquisition of human capital by
technology-based new ventures
780 Lee J. Zane
School of Innovation and Entrepreneurship, Rowan University, Glassboro,
Received 29 April 2021
Revised 22 July 2021
New Jersey, USA
14 October 2021
27 January 2022
21 March 2022 Abstract
Accepted 6 April 2022 Purpose – Intellectual Capital (IC) is essential to the success of new technology-based firms. A key component
of IC is human capital. Human capital is shown to affect firm innovation, growth, and survival positively. This
paper investigates the signaling effect of technology-based start-ups’ initial stock of IC on obtaining skilled
human capital.
Design/methodology/approach – The researcher employs signaling theory to analyze primary data
concerning the firm’s initial stock of IC and subsequently hired human capital from founders of 236 technology-
based new ventures in the USA Hypotheses are tested through a set of hierarchical linear regressions.
Findings – This study demonstrates that the firms’ IC, in the form of quantity of founders with doctorates and
intellectual property, correlates with the quality (average education level) of subsequently hired technical and
business human capital. In addition, the quantity of founders with doctorates is correlated with the quantity of
subsequently hired technical human capital.
Originality/value – The paper collects retrospective data from founders of technology-based new ventures.
While human capital is important for technology-based firms’ innovation and growth, little research has
investigated potential connections between firms’ initial IC and subsequent hiring of top-level human capital.
This paper investigates these connections explicitly.
Keywords Intellectual capital, Human capital, Entrepreneurship, Technology
Paper type Research paper

Journal of Intellectual Capital
Vol. 24 No. 3, 2023
pp. 780-798
© Emerald Publishing Limited
1469-1930
DOI 10.1108/JIC-04-2021-0122
1. Introduction
Intellectual Capital (IC) is broadly conceptualized as knowledge-based assets that
organizations utilize to achieve and maintain a competitive advantage (Yang et al., 2015).
It is the set of intangible assets that the firm owns or has access to that contribute to value
creation (Edvinsson and Malone, 1997; Spender et al., 2013). IC has been discussed in a wide
range of studies in entrepreneurship and management and is embedded within the Resource
Based View (RBV) of the firm (Barney, 1991; Wernerfelt, 1984). Accumulating a robust set of
intangible assets provides firms with opportunities for improving business performance
(Mention and Bontis, 2013), developing innovative products and services (Agostini et al.,
2017), and gaining competitive advantage (Bayon et al., 2016). Research typically associates
IC with three main components: 1) human capital, which encompasses employees’ knowledge,
skills, and experience (Subramaniam and Youndt, 2005); 2) structural capital, which includes
firms’ codified knowledge, databases, and culture (Menor et al., 2007); and 3) relational capital,
which incorporates the knowledge embodied in the networks of internal and external
relationships the company manages (Nahapiet and Ghoshal, 1998; Subramaniam and
Youndt, 2005). These three dimensions are perceived to play a pivotal role in leveraging a
firm’s performance (Mehralian et al., 2018).
Knowledge Management (KM) focuses on firms’ knowledge-related processes and
management activities. Whereas the IC literature examines the kind of intangible resources
that exists in firms, the KM literature addresses the mechanisms by which these resources
can be controlled and managed (Kianto et al., 2014). KM strategy refers to the goals, resources,
and plans of KM programs in firms (Bolisani and Bratianu, 2017). One of the aims of KM is to
ensure that the firm’s knowledge-related assets are continuously improved and effectively IC and the
employed (Rajesh et al., 2011), which includes the hiring of knowledgeable human capital. acquisition of
Many studies have demonstrated the importance of human capital’s knowledge and
experience in enabling firms to successfully implement and adapt to changes in technology
human capital
(Wright et al., 2007). In addition, human capital is considered to be a crucial facet in
recognizing and exploiting business opportunities abroad (Kidwell et al., 2020). In technology-
based ventures, the acquisition of knowledgeable employees is critical to the successful
development and commercialization of products and services compared to other types of 781
enterprises (Shrader and Siegel, 2007). In fact, human capital can be a major determinant of
firm financial performance (Sardo and Serrasqueiro, 2017; Soewarno and Tjahjadi, 2020),
overall firm performance (Ployhart et al., 2011), and even survival (Ullah et al., 2019).
Signaling theory provides an established framework for understanding how firms use
substantive signals to reduce information asymmetry and obtain resources (Spence, 1973,
2002; Bergh et al., 2014). The classic example (Spence, 1973) is a job market where an employer
can choose from among candidates whose competencies are largely unknown. A candidate
can signal high levels of competence with a degree from a quality university. Based on this
signal, the employer can infer the candidate’s competence. Signaling via a quality university
degree is effective because such a degree is considered difficult to obtain for an individual
lacking competence. This signaling mechanism reduces information asymmetry to a level
that allows signal recipients to identify and select promising job candidates (Spence, 1973).
Empirical research has provided substantive evidence supporting signaling theory in this
regard (Bergh et al., 2014). If individuals can signal their qualities via degrees and other
certifications, it stands to reason that firms do likewise with their stock of IC.
Technology-based firms need high-quality human capital to develop and market their
products, services, and additional IC. Many do, in fact, hire this talent. However, we do not
fully understand how talented external human capital is obtained by new technology-based
ventures. Thus, an investigation of the possible relationship between a technology-based
start-ups’ initial stock of IC and its acquisition of top-level technical and business human
capital is warranted (see Figure 1).
This research addresses the need for a more fine-grained examination into how new
technology-based firms acquire top-level human capital. This paper argues that a firm’s stock
of IC is a sign of credibility, enhances the firm’s reputation, and is a positive signal to the
human capital market. This study’s findings show that the number of founders with
doctorates and volume of Intellectual Property (IP) is correlated with the quality (average

Technology-based Startup Firm IC Endowment Key Human Capital Hired

Technical
Human
Capital

H1a + H1b +
Firm IC
(Founders with Doctorates,
Firm Intellectual Property) H2a + H2b +

Business Figure 1.
Human Model
Capital
JIC education level) of skilled technical and business human capital. In addition, the number of
24,3 founders with doctorates is correlated with the quantity of technically skilled human capital.
This research contributes to the KM and entrepreneurship literature. Understanding how
new technology-based ventures acquire the human capital necessary to commercialize
products and compete in the marketplace is beneficial for entrepreneurs and investors as well
as technology and entrepreneurship education. In addition, this research adds to the RBV by
examining mechanisms through which critical resources needed by new technology-based
782 firms are acquired, an area that is currently under-explored.
The paper proceeds as follows. We present a review of the literature and develop the
hypotheses. Then, we describe the methodology, including the sample, measures, and
controls, as well as a check for common method variance. Finally, we present the results,
which are followed by the discussion.

2. Literature review and development of hypotheses

2.1 Human capital
Human capital theory has attracted considerable interest in the entrepreneurship literature
(for an overview, see Marvel et al., 2016). Essentially, human capital theory posits that
knowledge provides individuals with increased cognitive abilities, leading to more
productive and efficient activities. Individuals with more or higher quality human capital
will, on average, reap more desirable outcomes (Becker, 1964; Rauch and Rijsdijk, 2013).
Research suggests that when individuals with high levels of human capital decide to exploit
opportunities, they think and act strategically to pursue competitive advantages that enable
their new venture to get a foothold in the market (Bayon et al., 2016). Research has also
measured the positive effect of founder human capital or accumulated human capital on new
venture growth and performance (Simsek and Heavey, 2011). Human capital constitutes one
of the core factors in the entrepreneurial process (Haber and Reichel, 2007), and according to
Shrader and Siegel (2007, p. 894), human capital is particularly vital in technological
entrepreneurship. The rationale is that “a significant percentage of the value of technology-
based new ventures is likely to be determined by the quality of the company’s employees . . .”
Innovation activities help firms establish or maintain long-term competitive advantage
(Ferraris et al., 2017). A critical resource for developing innovative technologies is people with
expert knowledge and talent (Shrader and Siegel, 2007). Research finds a positive association
between the level of human capital, as measured by education level and work experience, and
economic performance at both the entrepreneur and firm levels (Crook et al., 2011; Unger et al.,
2011; Fu et al., 2021). In addition, research confirms linkages between firm IP and
innovativeness (Corral de Zubielqui et al., 2016) as well as innovation and product market
growth (Whitacre et al., 2019).
The RBV proposes that access to resources such as superior human capital creates
competitive advantages for firms because they are valuable and rare (Barney, 1991;
Wernerfelt, 1984). Valuable resources are linked to a firm’s goals and strategy and contribute
to minimizing costs or maximizing profits (Barney and Wright, 1998), while rare assets are
those not generally available to the firm’s current or potential competitors (Barney, 1991).
Hiring top talent helps the focal firm develop and market products and services and keeps
this talent from the competition. The RBV also suggests that in order for firms to achieve
sustained success, they need to enhance their resource base continually. Evidence suggests
that early decisions over what resources and knowledge to acquire can determine the future
success of an organization (Vohora et al., 2004).
In summary, human capital is a key component of IC, which is critical for the successful
development and commercialization of innovative products and services. The quantity and
quality of firm-owned IC send signals of credibility to the market for human capital that the
firm is a desirable place to work, which permits firms to hire talented human capital. The IC and the
following sections develop support for our hypotheses. Specifically, we test the connections acquisition of
between firm IC and the hiring of human capital, both quality and quantity.
human capital
2.2 Signaling theory
Traditional signaling theory examines the communication between two parties (here, a firm
and the market of potential employees) with the intent to reduce information asymmetry. 783
Signaling is one way of responding to the probability of market failure, which occurs when
the market does not have complete information about firms’ attributes. Scholars have used
signaling theory to help explain the influence of information asymmetry in a wide array of
contexts. For example, a study of corporate governance shows how CEOs signal the
unobservable quality of their firms to potential investors via the observable quality of their
financial statements (Zhang and Wiersema, 2009). Signaling theory is used in the
entrepreneurship literature where scholars have examined the signaling value of board
characteristics (Certo, 2003), venture capitalist and angel investor presence (Elitzur and
Gavious, 2003), and founder involvement (Busenitz et al., 2005). Signaling theory is also
important to human resource management, where studies have examined signaling that
occurs during the recruitment process (Suazo et al., 2009).
According to Toms (2002), a firm should meet certain conditions for outsiders to
believe that the signals communicated to them are factual. These conditions include:
1) the firm’s management has an incentive to disclose such attributes, 2) that the
attributes disclosed are difficult to imitate by others, and 3) that there is an
observable relationship between the firm’s disclosure and benefit for the market. In
this case, a technology-based firm (possessing IC) and looking to hire human capital
meets all three conditions. 1) They have incentives to send signals of benefit to the
market for human capital, namely the need to hire human capital. 2) The attributes
disclosed, possession of IC, are difficult to fake or imitate. 3) These signals inform the
market that the firm has significant potential for current and future success and
hence, is a desirable place of employment.

2.3 Acquiring human capital by technology-based new ventures

Scholars have underscored the importance of human capital acquisition and utilization as
essential for firms seeking to develop products and enter new markets (Adomako et al., 2021;
Shrader and Siegel, 2007). Meanwhile, studies of high-tech firms speak to the sizable effort
that top managers must expend to attract and retain talent (Slatter, 1992). Small business
owners consistently rate their ability to successfully recruit employees as one of the most
critical factors influencing organizational success (Williamson, 2000). With new technology-
based ventures needing qualified workers and starting as small unknown firms, this would
appear to be a significant hurdle for them.
2.3.1 Acquiring technical human capital. Williamson (2000, p. 28), discussing the concept of
employer legitimacy and its influence on recruitment in small firms, defines it as “a
generalized perception or assumption held by job applicants that an organization is a
desirable, proper, or appropriate employer given the system of norms, values, beliefs, and
definitions that exist within an industry.” For new technology-based ventures, having
accomplished founders and existing IP could provide the new venture with a reputation as an
up and coming firm (Busenitz et al., 2005) and provide it with legitimacy. This legitimacy
helps the firm to overcome the liability of newness (Stinchcombe, 1965). In this regard,
DiGregorio and Shane (2003) suggest it may be easier for academics from top-tier universities
to assemble resources for start-ups for reasons of credibility.
JIC While research tells us that having top scientists on board leads to improved new product
24,3 development capability (Deeds et al., 2000) and more actual products in the pipeline (Zucker
et al., 1998), it does not tell us how these firms were able to attract these top scientists.
Signaling theory explains how firms’ possession of IC sends signals of credibility to the
market of available human capital. These signals provide the market assurances of the firm’s
capabilities and its attractiveness as a place of employment.
Research suggests that skilled workers may be more inclined to accept an employment
784 offer if the individual’s function is considered important, an argument evident in the R&D
function (Colombo and Piva, 2008). It is believed that scientists prefer employment in more
science-oriented firms. Stern (2004) examined a group of biologists with a doctoral degree
who had just completed their job search and had considered multiple job offers in the private
sector. The results showed a negative relationship between wages and science, suggesting
that scientists value participating in innovative research (through either the publication
process or the ability to choose assignments), even sacrificing wages to do so.
Ram (1999) investigated employee recruitment in small information-intensive service
firms. The results suggest that some employees joined because they regarded the position as
a means of self-expression and self-development. Others cited the potentially exciting nature
of the work. Still, others were motivated by the opportunity to work with “a team of peers”
and to pursue particular interests in their line of work. This line of research demonstrates the
need for knowledge workers to find the proper venue for their talents.
The above theory and rationale point to technically skilled workers being more willing to
work for firms that are developing new knowledge, or have had success in building a
storehouse of IC, or provide workers with the opportunity to publish. Suppose the market of
potential hires does indeed value working at firms possessing these qualities. In that case,
these firms should choose their hires from a somewhat proportionally larger talent pool. A
larger talent pool should also permit these firms to select higher quality human capital. Hence,
the following hypothesis is put forth.
H1a. Stocks of IC will be positively correlated with the quality of the firm’s technically
skilled human capital hired.
The characteristics of founders matter when it comes to determining firm activities, focus,
and performance. Research informs us that founders’ perceptions of the importance of R&D-
related activities are strongly correlated with their firms’ R&D spending. R&D capability and
learning capability are significant drivers of technology commercialization, positively
influencing firm performance (Taekyung and Dongwoo, 2015). Also, owners with higher
levels of education or technology-related experience invest more in R&D activities (Gao and
Hafsi, 2015). In summary, founders with technical knowledge in the form of education and
experience invest additional resources in R&D, perhaps significantly more so than those
without a similar knowledge base. This investment leads to hiring higher quantities of
technical human capital, thus leading to the following hypothesis.
H1b. Stocks of IC will be positively correlated with the quantity of the firm’s technically
skilled human capital hired.
2.3.2 Acquiring business human capital. A significant goal of recruitment strategies is to
entice qualified job applicants to apply for positions, thereby supplying the organization with
skilled labor (Williamson, 2000). The perceived legitimacy of the organization is likely to
influence how successful this recruitment effort will be. Employer legitimacy represents an
umbrella evaluation of an organization’s overall activities or characteristics, and having it
creates an image of an organization as more predictable, meaningful, and trustworthy
(Suchman, 1995). In established firms, potential employees can look at the company’s size or
practices to convey legitimacy. For example, Deephouse (1996) found that a bank’s asset
management practices influenced financial regulatory agencies and public media outlets’ IC and the
evaluations of its’ legitimacy. As mentioned above, firms that have an abundance of IC in the acquisition of
form of knowledgeable and accomplished founders and IP send positive signals to the market
for human capital regarding their reputation and provide the new venture with legitimacy
human capital
concerning potential business workers.
Credibility was identified as a fundamental issue in obtaining seed financing for a group of
technology-based university spin-outs (Vohora et al., 2004). The authors posited that the issue
of credibility seems to be particularly significant for these firms because their primary 785
resources are intangible, being comprised mainly of technological assets and related
knowledge. Hence, the potential may not be fully understood or easily communicated.
In the Ram (1999) study mentioned above, many of the workers were attracted to the
companies by the prospect of doing exciting work or by the opportunity to work with top
people in the field. As one employee commented, “it is a quite privileged situation of having an
association, an involvement, a group of colleagues who are very good at what they do, who do
have a national profile” (p. 19).
New technology firms often do not have the excess financial capital to pay large salaries.
Instead, they often offer stock options or other incentives to attract top business talent. Hsu
and Ziedonis (2008) find that patents increase the valuation of entrepreneurial start-ups and
increase the likelihood of becoming a high-growth firm (Temouri et al., 2021). Concerning a
sample of software IPOs, several papers have investigated the effects of scientific
endorsement on the performance, valuation, and overall success of IPOs (e.g. Chen et al.,
2008). We suggest that signals provided by the firm’s possession of IC increase the firm’s
reputation and expectations for financial success, thus reducing the market’s uncertainty
with regard to employment.
It is proposed that business people, much like those providing financial assistance
(mentioned above), will infer the presence of IC as a signal of credibility and potential future
growth. The expectation of growth makes stock options an attractive incentive for top business
people; hence, skilled business workers will be more willing to work for firms with stocks of IC.
Suppose the market of potential hires does indeed value working at firms possessing high
levels of IC. In that case, these firms should choose their hires from a somewhat proportionally
larger talent pool. A larger talent pool should then also provide the firm the opportunity to
choose higher quality human capital. Hence, the following hypothesis is offered.
H2a. Stocks of IC will be positively correlated with the quality of the firm’s business
skilled human capital hired.
Also, research informs us that firm innovation positively affects turnover and employment
growth (Kemp et al., 2003). With innovation being a result of IC, the following hypothesis is
put forth.
H2b. Stocks of IC will be positively correlated with the quantity of the firm’s business
skilled human capital hired.

3. Methodology
This study examines the relationship between startup technology-based firms’ IC and human
capital acquired. This self-reported, retrospective data were collected via a survey in 2010 as
part of a larger study. While this data could be affected by a retrospective recall bias (Golden,
1992, 1997), Miller et al. (1997) found that retrospective reporting is a viable research
methodology if the measures used are adequately reliable and valid. Following prior examples
(Moran, 2005), this study maximized the validity of the data by 1) choosing the sample from
among firms ten years old or less to ensure that the founders could accurately recall the setting
JIC regarding new venture launch, 2) focused respondents’ memory to the appropriate timeframe
24,3 (startup) by framing questions accordingly (see Survey Instructions below), and 3) prodded
respondents’ memory through the use of a set of name-generating questions which ask
respondents to identify the most important people within their work environment.
The survey was pilot-tested with a group of doctoral students and then with founders in
an incubator. Each group commented on the clarity and readability of the survey. Feedback
led to changes that enhanced the clarity and usability of the survey instrument.
786
3.1 Sample
To gather information from a wide variety of USA based technology-based start-up ventures,
two data sources, StudyResponse and CorpTech, were utilized. Regarding StudyResponse’s
standing panel of participants, a pre-test to qualify potential respondents were conducted.
Then, five hundred qualified respondents were invited (and paid $10.00 each) to participate in
the study using an anonymous online survey. Data (n 5 371) were collected over two weeks
and inspected. Seven duplicate entries and 78 incomplete entries were identified and removed,
leaving 286 (57.2% of those invited to participate in the full study). An examination of
founding dates eliminated 79 entries because the firm was older than ten years and two for an
invalid founding date, reducing the sample size to 205.
An inspection of patent and copyright data revealed ten entries as outliers. Elimination of
these entries produced a near-normal distribution. Adding a natural log to the IP values
brought the data into normalcy. An additional 14 entries were eliminated for irregularities in
financial data, reducing the useable sample to 181.
CorpTech (Corporate Technology Information Services) is a database of USA based high
technology (private and public) company profiles and their business units. It provides access
to a broad range of firms that may not be otherwise accessible and should complement
source one.
A database of 1,058 firms was purchased for use in this research. From this group,
seven duplicate entries and one incomplete entry were removed, leaving 1,050 entries.
The author attempted to contact each firm by telephone or email and checked available
websites. During this process, three entries were removed as they were not business
entities. Four hundred three entities were removed because they were more than ten
years old. Forty-seven were removed because they were divisions of companies (not
separate businesses). One hundred thirty were removed because they were no longer in
business. Sixty-eight entities were removed as the founder(s) were no longer with the firm
and were not reachable. Finally, 169 entries were removed for insufficient information
regarding the founder(s) (i.e. founder names, titles, and contact information). The useable
sample was thus reduced to 230.
Respondents were offered a $20 gift card; 28 founder(s) declined. Therefore, 202 surveys
were emailed or mailed, and 62 completed surveys were received (27% of the useable sample
and 30.7% of surveys mailed or emailed). Seven completed surveys were eliminated as the
firms were more than ten years old, leaving 55 useable surveys.
Before combining the data collected from sample one (n 5 181) and sample two (n 5 55),
the two datasets were compared on multiple dimensions to check for inherent
incompatibilities. T-tests of the number of founders per firm, firm age, and the number of
employees per firm found no significant differences. The two samples contained a similar
percentage of nine of the 12 industries. However, sample one included 14 construction firms
(none in sample two), and sample two had a higher rate of BioTech (10.9%–3.9%) and
Pharmaceutical companies (9.1%–1.1%) firms. Based on the above information, the samples
were combined (n 5 236). However, a control variable, source, was used in all calculations to
identify the sample and control for unidentified differences.
 For the combined sample, 54.7% were co-founders, 39.8% were sole founders, and 5.5% IC and the
did not answer the question. 85.6% are male, 11.9% are female, and 2.5% did not answer the acquisition of
question. 43.6% of the sample’s firms are product-oriented, 42.8% are service-oriented, and
13.6% offer a mix of products and services. The number of employees was skewed, but a
human capital
natural log of the number of employees achieved a normal distribution. When asked if the
firm utilized knowledge/concept/technology to build/develop, or as a basis for, its products/
services, 86.7% replied yes, 13.3% replied no. Of the 169 who said they utilized some
knowledge, concept, or technology, 33.1% developed it internally, 32% licensed or purchased 787
it, 25.4% hired the creator/developer of the knowledge, 8.9% used public domain knowledge,
and 0.6% went for training.

3.2 Survey and measures

Respondents were asked to identify their IC at the start of the venture and the hired
employees. Following the lead of other ego-centered network studies, the survey contained a
set of name-generating questions (asking respondents to identify the founders and key
human capital subsequently hired) and a form to record names. The name-generating
questions and the form used for collecting names used by Moran (2005) and others were
adapted for this study. For confidentiality, respondents were encouraged to use initials or
nicknames to identify founders and hired human capital.
3.2.1 Dependent variable – quality of human capital. Developmental psychologists have
supported the connection between education level and improved knowledge structures and
information processing (Smith et al., 2005). Research also shows connections between years of
university education and positive firm growth of new technology-based firms (Colombo and
Grilli, 2005). This study equates higher levels of education to higher quality human capital.
The survey asked respondents to identify each key human capital individual’s highest
education level with choices of 1 5 Unknown, 2 5 High School, 3 5 Associates,
4 5 Bachelors, 5 5 Masters, 6 5 Jurist Doctorate, and 7 5 M.D./Ph.D. Those marked
unknown were excluded from the sample.
The quality of key technical human capital (AveEducTechHC) is operationalized as the
average level of formal education (highest degree) of the key technical human capital hired by
the firm. In a similar fashion, the quality of key business human capital (AveEducBusHC) is
operationalized as the average level of formal education (highest degree) of the key business
human capital hired by the firm.
3.2.2 Dependent variable – quantity of human capital. The survey asked respondents to
identify up to ten key technical workers (those with specialized technical knowledge related to
actual/proposed products and/or services). Respondents were also asked to identify up to ten
key business workers (those with specialized business knowledge (e.g. sales/marketing,
operation, management)).
The quantity of key technical human capital (QtyKeyTechHC) is operationalized as a
count of the key technical human capital hired by the firm. In a similar fashion, the quantity of
key business human capital (QtyKeyBusHC) is operationalized as a count of the key business
human capital hired by the firm.
3.2.3 Independent variables – firm intellectual capital. The distinctive capabilities of new
technology-based firms are closely tied to the knowledge and skills of founders, their years of
education, and firm IP (Colombo and Grilli, 2005; Power and Reid, 2021). Firm IC was
operationalized with three variables, counts of founders with doctorates, counts of founder
publications, and counts of IP (patents þ copyrights). The count of founder publications is
highly skewed. Using the natural log of the count of founder publications þ1 renders the
distribution normal and accommodates those firms with no publications. Firm IP is also
skewed, so a natural log was applied to it as well. While the intention was to combine these
JIC three measures, a Cronbach Alpha reliability check for the proposed three-item measure
24,3 found them not sufficiently correlated. Therefore, the three separate measures of IC,
QtyFoundersWithDoctorates, Lg(QtyFounderPublications), and Lg(QtyFirmIP), are used as
independent variables (see Table 1).
3.2.4 Controls. An examination of the correlations table (see Table 2) reveals that the
variable source is significantly related to several variables of interest. Source is negatively
related to service-oriented firms and positively related to firms offering a mix of products and
788 services. Source is also positively related to the quantity of founders with doctorates and
quantity of founder publications while being negatively related to firm IP. Firm age is
positively related to service-oriented firms and founders having prior startup experience.
Service-oriented firms are related to having fewer key technical human capitals. Also, the
quantity of founders with doctorates is correlated to the quantity of key persons hired and the
education level of those hired, but strongly correlated with the quantity of founder
publications. Finally, firm IP is correlated with the education level (quality) of hired human
capital but not the quantity of the human capital hired.

Variable Min Max Median Mean s.d. Type Description

1. QtyKeyTechHC 0 8 1 1.07 1.410 DV The number of key technical

human capital individuals
hired
2. QtyKeyBusHC 0 8 1 0.98 0.998 DV The number of key business
human capital individuals
hired
3. AveEducTechHC 2 8 4.5 4.73 1.335 DV The average education level
of the key technical human
capital hired
4. AveEducBusHC 2 8 5 4.66 1.126 DV The average education level
of the key business human
capital hired
5. QtyFoundersWith 0 4 0 0.17 0.548 IV The number of founders
doctorates possessing a doctorate
6. Lg(QtyFounder 0 0.611 0 0.34 1.128 IV Natural log of the
Publications) accumulated number of
publications of the founders
7. Lg(QtyFirmIP) 0 1.556 0.602 0.54 0.485 IV Natural log of the number of
patents plus copyrights
8. Source 0 1 0 0.23 0.424 CV Designates whether the entry
derives from sample 1
(StudyResponse) or sample 2
(CorpTech)
9. FirmAge 0 10 6 5.39 2.942 CV Age of the firm in years
(0–10)
10. ProductDummy 0 1 0 0.44 0.497 NU Firm makes/sells primarily
products
11. ServiceDummy 0 1 0 0.43 0.496 CV Firm makes/sells primarily
services
12. PrdSvcMixDummy 0 1 0 0.14 0.343 CV Firm makes/sells a mix of
products and services
13. PriorStartupExp 0 1 1 0.67 0.473 CV Designates that one or more
of the founders have prior
startup/entrepreneurship
experience
Table 1. Note(s): DV 5 Dependent variable, IV 5 Independent Variable, CV 5 Control Variable, NU 5 Not Used in
Definitions of variables calculations
Variable Mean s.d. 1 2 3 4 5 6 7 8 9 10 11 12

1. QtyKeyTechHC 1.07 1.410

2. QtyKeyBusHC 0.98 0.998 0.262**
3. AveEducTechHC 4.73 1.335 0.137 0.011
4. AveEducBusHC 4.66 1.126 0.093 0.119 0.636**
5. QtyFoundersWith 0.17 0.548 0.389** 0.210** 0.340** 0.328**
doctorates
6. Lg(QtyFounder 0.34 1.128 0.359** 0.213** 0.365** 0.370** 0.855**
publications)
7. Lg(QtyFirmIP) 0.536 0.485 0.095 0.024 0.197* 0.203** 0.021 0.030
8. Source 0.23 0.424 0.471** 0.288** 0.005 0.005 0.347** 0.397** 0.360**
9. FirmAge 5.39 2.942 0.122 0.090 0.053 0.003 0.035 0.000 0.111 0.110
10. ProductDummy 0.44 0.497 0.122 0.028 0.122 0.107 0.078 0.120 0.051 0.020 0.121
11. ServiceDummy 0.43 0.496 0.177** 0.050 0.070 0.008 0.105 0.104 0.165* 0.153* 0.144* 0.761**
12. PrdSvcMixDummy 0.14 0.343 0.078 0.031 0.077 0.153 0.039 0.023 0.165* 0.192** 0.032 0.349** 0.343**
13. PriorStartupExp 0.67 0.473 0.030 0.021 0.150 0.159* 0.001 0.018 0.157* 0.034 0.135* 0.190** 0.203** 0.019
Note(s): * 5 p < 0.05, ** 5 p < 0.01, *** 5 p < 0.001
789
human capital
IC and the
acquisition of

deviations, Pearson
Means, standard
Table 2.

correlations
JIC Firm Age is included as a control variable as there is a strong correlation with the
24,3 Number of Employees. Firms were assigned dummy variables for providing primarily
products (ProductDummy), primarily services (ServiceDummy), or a mix of products
and services (PrdSvcMixDummy). These dummy variables showed correlations with
firm IP. Hence, ServiceDummy and PrdSvcMixDummy were included as controls.
Additional dummy variables for Source (Study Response or CorpTech) and Prior
Startup Experience by founders were also included. The Number of Employees
790 was not used as a control as it was strongly correlated with Firm Age and thus
redundant.
Two independent variables, the quantity of founders with doctorates and the quantity of
founder publications, are highly correlated. Hence, three preliminary sets of regressions were
run. The first set included both variables, the second excluded the quantity of founder
publications, and the third set excluded the quantity of founders with doctorates. The
regression results confirmed that the quantity of founder publications is redundant, as
having it in the regressions added minimal additional explanation. Hence, the decision was
made to drop it from the study.

3.3 Common method variance

This study used a self-reported survey methodology to collect responses from individuals. To
test for common method variance (Podsakoff and Organ, 1986), Harman’s one-factor test of
the main study variables was conducted (Podasakoff et al., 2003). This test’s underlying
assumption is that a substantial amount of common method variance exists in the data when
either a single factor emerges or one general factor accounts for the majority of the covariance
among the variables. Five factors were present, and with the first factor (unrotated)
representing 24.27%, common method variance does not appear to be a significant problem
in the data.

4. Results
SPSS version 24 was used to test the hypotheses via hierarchical linear regression. The
Variable Inflation Factor for each item was under 4, indicating little concern of multi-
collinearity. Each regression was run first with only the controls (Source, FirmAge,
ServiceDummy, PrdSvcMixDummy, and PriorStartupExp). Then, the two IC independent
variables, QtyFoundersWithDoctorates and Lg(QtyFirmIP), were added. Four regressions
were run using AveEducTechHC (H1a), QtyTechHC (H1b), AveEducBusHC (H2a), and
QtyBusHC (H2b) as dependent variables. Results are reported in Table 3.
H1a states that IC will be positively correlated with the quality of the technically skilled
human capital hired. For H1a (see Table 3 - Model 2), the quantity of founders with a doctorate
was highly significantly positively (p 5 0.000) correlated with the quality (average education
level) of technically skilled human capital. At the same time, firm IP approached significant
(p 5 0.68), thus providing support for H1a.
H1b states that IC will be positively correlated with the quantity of technically skilled
human capital hired. For H1b (see Table 3 - Model 4), the quantity of founders with a doctorate
was highly significantly positively (p 5 0.000) correlated with the quantity of technically
skilled human capital, thus providing support for H1b.
H2a states that IC will be positively correlated with the quality of the business’ skilled
human capital hired. For H2a (see Table 3 - Model 6), the quantity of founders with a doctorate
was highly significantly positively (p 5 0.000) correlated with the quality (average education
level) of business skilled human capital. At the same time, firm IP approached significance
(p 5 0.059), thus providing support for H2a.
 Model 1 Model 3 Model 5 Model 7
AveEduc Model 2 QtyKey Model 4 AveEduc Model 6 QtyKey Model 8
DV TechHC AveEduc TechHC QtyKey BusHC AveEduc BusHC QtyKey
Hypothesis Controls TechHC H1a Controls TechHC H1b Controls BusHC H2a Controls BusHC H2b

Control Variables
Source 0.009 (0.260) 0.147 (0.277) 1.483*** (0.199) 1.245*** (0.219) 0.089 (0.213) 0.067 (0.235) 0.733*** (0.156) 0.716*** (0.176)
FirmAge 0.021 (0.040) 0.023 (0.037) 0.048y (0.028) 0.054y (0.028) 0.001 (0.032) 0.015 (0.031) 0.014 (0.022) 0.013 (0.022)
ServiceDummy 0.203 (0.276) 0.259 (0.257) 0.430* (0.183) 0.415* (0.178) 0.048 (0.198) 0.080 (0.186) 0.151 (0.143) 0.135 (0.143)
PrdSvcMixDummy 0.361 (0.346) 0.248 (0.323) 0.229 (0.254) 0.160 (0.245) 0.553y (0.293) 0.409 (0.275) 0.190 (0.196) 0.152 (0.195)
PriorStartupExp 0.348 (0.264) 0.272 (0.248) 0.170 (0.179) 0.210 (0.175) 0.365y (0.199) 0.284 (0.188) 0.010 (0.139) 0.033 (0.140)
Intellectual Capital
QtyFoundersWith doctorates 0.728*** (0.181) 0.642*** (0.154) 0.652*** (0.152) 0.207y (0.123)
Lg(QtyFirmIP) 0.465y (0.252) 0.170 (0.180) 0.380y (0.200) 0.225 (0.143)
Constant 4.509*** (0.327) 4.172*** (0.321) 0.791*** (0.220) 0.629** (0.223) 4.459*** (268) 4.115*** (0.273) 0.696*** (0.170) 0.579** (0.178)
Sig F change 0.505 0.000*** 0.000*** 0.000*** 0.171 0.000*** 0.000*** 0.049*
R-square 0.034 0.181 0.246 0.306 0.048 0.181 0.098 0.122
Adj R-Square 0.005 0.134 0.229 0.285 0.018 0.144 0.079 0.095
Chg in R_Square 0.034 0.147 0.246 0.060 0.048 0.133 0.098 0.024
N 131 131 234 234 162 162 232 232
Note(s): Values are unstandardized regression coefficients with standard errors in parentheses
y 5 p < 0.10, * 5 p < 0.05, ** 5 p < 0.01, *** 5 p < 0.001
791
human capital
IC and the
acquisition of

Education) and
Regression: IC on

capital
and business human
quality (Ave.
Table 3.

quantity of technical
JIC H2b states that IC will be positively correlated with the quantity of the business’ skilled
24,3 human capital hired. For H2b (see Table 3 - Model 8), the quantity of founders with a doctorate
approached significance (p 5 0.093), providing only modest support at best. Thus H2b is not
supported.

5. Discussion and conclusion

792 Value creation in the knowledge-based economy is determined mainly by the effective
utilization of intangible assets. These intangible assets, often referred to as IC, are an
organization’s knowledge-based assets that are a source of innovative products and services
(Agostini et al., 2017) and competitive advantage (Bayon et al., 2016). Hence, the accumulation
of IC is a goal of KM and a key function of the value creation process.
Research suggests a connection between entrepreneurs with the requisite human capital
and firm growth (Rauch and Rijsdijk, 2013) and overall firm performance (Andreeva and
Garanina, 2016). In addition, research shows a clear relationship between the development of
knowledge in the form of patents and a start-up firm’s growth (Helmers and Rogers, 2011).
Finally, investment in intangible assets and generating patents from R&D efforts are
positively related to the likelihood of becoming a high-growth firm (Temouri et al., 2021).
Therefore, understanding how new technology-based ventures acquire the high-quality
human capital necessary to develop and commercialize products and compete in the
marketplace is of obvious importance to entrepreneurs, incubators, investors, potential
employees, and educators.

5.1 Conclusions
This study’s results demonstrate a connection between the firm’s initial stock of IC and the
hiring of high-quality human capital for these technology-based startups. Specifically, both
the quantity of founders with doctorates and firm IP (patents and copyrights) were positively
correlated with hiring high-quality (education level) technical and business human capital.
These stocks of firm knowledge send signals of credibility to the market for human capital,
enabling the firm to hire highly qualified human capital. In addition, the quantity of founders
with doctorates was correlated with the quantity of key technical human capital hired. This
result appears to confirm the work of Gao and Hafsi (2015), who posited that founders with
higher levels of education or technology-related experience invest more in R&D activities.
However, because this research is cross-sectional, causal effects cannot be assumed.
Longitudinal research is needed to answer the causal question of sequence.

5.2 Policy implications

From a policy perspective, research tells us that more significant expenditures on R&D by
governments and universities and public investment in education positively affect
entrepreneurship. Furthermore, societies with a larger quantity of innovative
entrepreneurs generate higher levels of entrepreneurial activity and overall economic
performance (Casta~ no-Martınez et al., 2015). Dakhli and De Clercq (2004) found a strong
positive relationship between country-level human capital and three innovation measures
(Quantity of patents, Expenditures for R&D, and High-technology export). These results lead
to the conclusion that governments and institutions need to continue investments in higher
education less they risk falling back in the global technological competition.
The current study illuminates the need for technology-based new ventures to acquire
talented people with the skills and experience to help the firm develop innovative products
and services and get them to market. The question for incubators, educators, and
governments becomes how best to connect these new technology-based firms with the
requisite human capital they need. This paper suggests that stocks of IC are instrumental in IC and the
sending positive signals that attract the key human capital needed by these firms. However, acquisition of
additional research is needed to tease out the fine points regarding the quantity, quality, and
developmental status of IC and its ability to attract quality human capital as well as other
human capital
necessary resources.

5.3 Theoretical contributions 793

This research contributes to the KM and entrepreneurship literature. Understanding how
new technology-based ventures acquire necessary human capital to develop and
commercialize products and compete in the marketplace is beneficial for scholars,
entrepreneurs, investors, and governments, as well as technology and entrepreneurship
education (Martin et al., 2013; Varano et al., 2018). It informs regarding the signaling effect of
firms’ stock of IC on their ability to attract high-quality human capital. These findings can be
refined and incorporated into KM theory and strategies of firms. Future KM research can
investigate possible linkages between IC and knowledge acquisition via alliances and other
partnerships.
This research extends the RBV and the Signaling theory by examining mechanisms
through which critical resources are acquired by startup technology-based firms, an area that
is currently underexplored. This study proposed and tested the concept that new ventures’
initial stock of IC would play a significant role in acquiring additional resources (i.e. technical
and business human capital) necessary for their growth. Results from this study confirm the
concept that increased stocks of IC led to the firm’s hiring of higher quality human capital.
Further, the results confirm clear linkages between IC and quantity of technical human
capital hired. One could imagine that linkages will exist between stocks of IC and other key
resources such as financing and alliances, an idea that should be confirmed via research.

5.4 Practitioner implications

From a practitioner perspective, for technology-based firms, entrepreneurs, as well as their
alliance partners and other resource providers, need to understand the signaling power of
having founders with doctorates as well as IP. In this study, those firms having founders with
doctorates and IP were able to employ higher quality human capital and higher quantities of
technical human capital. In turn, higher quality and quantities of human capital should
permit the development of superior products and services for these firms. Other research
shows the signaling value of board characteristics (Certo, 2003), venture capitalist and angel
investor presence (Elitzur and Gavious, 2003), and founder involvement (Busenitz et al., 2005).
Future research will inform as to whether the presence of founders with doctorates and IP will
enable these firms to raise additional capital or form additional alliances.
Meanwhile, universities and governments will be interested in exploring how best to
position upcoming technology-based firms to enable them to acquire the requisite human
capital and other resources needed for continued growth.

5.5 Limitations
Several limitations warrant further discussion. First, as mentioned previously, this study
relied on cross-sectional, retrospective data that could be affected by a retrospective recall
bias (Golden, 1992, 1997). However, steps were taken to maximize the validity of the data (see
Methodology). Cross-sectional data cannot be used to determine causation. Hence caution
must be taken with the interpretation of the results. Ideally, future research would capture
longitudinal data to assess the directional influence of initial IC, acquired human capital, and
additional IC accumulation. Second, respondents were drawn primarily from technology-
JIC based firms; thus, results are not generalizable to all sets of firms. Third, the potential non-
24,3 response bias due to the data being collected via an anonymous and voluntary online survey
from source one (StudyResponse), and the number of firms from Source two (CorpTech) that
could not be surveyed due to not being able to identify the founder(s) of some organization.
Finally, the number of disbanded organizations in source two (that could not respond) creates
a survivors’ bias. Hence, the results of this study can only be interpreted as applying to
surviving firms.
794
5.6 Future research
Ideally, future research would capture longitudinal data during multiple observation periods.
This would permit an independent, and hence more transparent, observation of the causal
relationships between acquired human capital and the initial versus accumulated IC such as
patents and other types of firm IC. Also, obtaining periodic firm performance measures will
permit a greater understanding of the impact of starting versus accumulated IC and human
capital on firm growth, profitability, and survival.
An additional question for future studies is whether acquired or licensed IC sends the
same level of quality signals as home-grown IC? Moreover, what is the effect of firm size or
maturity in combination with firm IC? Could the effect of firm size or age be additive,
multiplicative, or does it work in opposition?
Finally, future research could examine the effect of new venture IC, both starting and
accumulated, on acquiring other critical resources such as financing and alliances, and the
eventual effects of these accumulated resources on overall firm performance.

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About the author

Lee J. Zane is an associate professor of entrepreneurship in the Rohrer College of Business, Rowan
University. He earned a Ph.D. in Organization and Strategy from Drexel University. His research
interests focus on entrepreneurship (both individual entrepreneurs and their ventures), innovation,
strategy, and cognition. Before academia, Dr. Zane accumulated over twenty years of industry
experience, including founding a software company, selling the business to a conglomerate, and
managing the transition. Lee J. Zane can be contacted at: zanelj@rowan.edu

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