This paper describes how entrepreneurial firms can use superior architectural knowledge to open up a technical system to gain strategic advantage. The strategy involves, first, identifying “bottlenecks” in the existing system, and then creating a new open architecture that isolates the bottlenecks in modules and allows others to connect to the system at key interfaces. An entrepreneurial firm with limited financial resources can then focus on supplying superior bottleneck modules, and while outsourcing and allowing complementors to supply non-bottleneck components. I show that a firm pursuing this strategy will have a higher return on invested capital (ROIC) than competitors with a less modular, closed architecture. Over time, the more open firm can drive the ROIC of competitors below their cost of capital, causing them to shrink and possibly exit the market. The strategy was used by Sun Microsystems in the 1980s and Dell Computer in the 1990s.

Why are some places more entrepreneurial than others? We use Census Bureau data to study local determinants of manufacturing startups across cities and industries. Demographics have limited explanatory power. Overall levels of local customers and suppliers are only modestly important, but new entrants seem particularly drawn to areas with many smaller suppliers, as suggested by Chinitz (1961). Abundant workers in relevant occupations also strongly predict entry. These forces plus city and industry Öxed e§ects explain between sixty and eighty percent of manufacturing entry. We use spatial distributions of natural cost advantages to address partially endogeneity concerns.

The purpose of this paper is to explain why the likelihood of survival and post-entry growth rates vary systematically from industry to industry. In particular, the post-entry performance of new firms is linked to the underlying technological conditions in an industry. In industries where innovative activity, and especially the innovative activity of small firms, plays an important role, the likelihood of new entrants' surviving over a decade is lower than in industries where innovative activity is less important. At the same time, those entrants that are able to survive exhibit higher growth rates. In addition, the conditional likelihood of surviving an additional two years for entrants that have already survived the first few years is actually greater, and not lower, in highly innovative industries.

The evidence therefore suggests that a highly innovative environment exerts a disparate effect on the post-entry performance of new entrants. Those new firms that are able to adjust and offer a viable product apparently experience higher rates of growth and a greater likelihood of survival. But overall, entrants and certainly new firms that are not able to adjust and produce a viable product are confronted by a lower likelihood of survival in highly innovative environments.

Identification of positive international experiences in the promotion and enhancement of the entrepreneurial spirit.

Identification within the EBN network of successful new companies and SMEs, in which innovation has played an important role, and in which BICs have played a critical role, by sharing and communicating best practices to the external environment and policy-makers.

1 The Business Model Canvas, a tool for describing, analyzing, and designing business models, 2 Business Model Patterns, based on concepts from leading business thinkers, 3 techniques to help you design business models, 4 re-interpreting strategy through the business model lens, and 5 a generic process to help you design innovative business models, tying together all the concepts, techniques, and tools in Business Model Generation. }The last section offers an outlook on five business model topics for future exploration. Finally, the afterword provides a peek into “the making of” Business Model Generation.