Abstract

Prior research has established that entrepreneurs’ networks with incumbents improve new firms’ outcomes by enhancing their knowledge base. Surprisingly little is known about what knowledge flows in these networks and what knowledge obtained through this mechanism actually underlies start-up success. Drawing on six cases of private new venture start-ups in the Chinese synthetic dye industry after 1978, we investigate these gaps in the literature. In this context, eight types of knowledge falling into two general categories, functional knowledge and strategic knowledge, flowed from full-time incumbent employees to new venture start-ups via entrepreneur-incumbent relationships (start-up founders’ personal relationships with incumbent firm employees) during the foundation (within four years after the establishment) of new firms. The reception of strategic knowledge, rather than functional knowledge – which includes the conventionally emphasized technical knowledge – shaped these start-ups’ competitiveness and was most decisive for their long-term growth.