Knowledge Sells? How the quality of sales knowledge assets in startups affects their scalability

Abstract: A goal of entrepreneurship is to foster innovation through the creation of sustainable, scalable firms through a successful commercialization of their value proposal. Surprisingly there is little research on the key role sales and hence sales knowledge of the founder plays in the survival of an entrepreneurial venture. The purpose of this study is twofold. First, we aim to contribute to the wider body of knowledge by exploring the effects of knowledge management on startups, using a field of knowledge topic highly appealing to our research interest and relevant for entrepreneurship: sales. Second, we want to scrutinize how the quality of startup founders’ sales knowledge and their way of creating knowledge determines their ability to develop scalable business processes grounded on their implemented sales process. To do so, we undertook a qualitative multiple case-study based on eight interviews with startup founder- managers, with and without previous professional experience in sales who are in either year 1 or year 3+ of their startups life cycle with the intention of isolating the experience factor and to better analyze its effect on the quality of given knowledge. This way we seek to determine if previous professional experience in sales can be equalized to the sales knowledge gained through experience in the startup itself and how this affects scalability of the firm overall, using the framework of Knowledge Management (KM) and the SECI model to support the analysis of the collected data. We identify an interesting difference between sales processes implemented by founder-managers with tacit-leaning and founder-managers with more balanced knowledge assets, as the later have achieved to build efficient sales funnels that are scalable in size and scale. Founder-managers with tacit-leaning sales process knowledge on the other side struggle with the efficiency of their sales process. A major determinant here seems to previous professional experience as the experience gained within the startup itself would not leverage in the same way. Our findings emphasize the need for startups to more systematically approach knowledge management practices in order to create more balanced knowledge assets; something investors as well as scholars might benefit from when investing and educating the next generation of entrepreneurs.