Assembling resources when forming a new business

Every business builds on a specific set of resources. New businesses in particular have to assemble external resources that are mostly new to them. This resource assembly requires developing business relationships with other actors that control and can provide the needed resources. Adopting a resource interaction perspective, this paper examines a case of a new business venture in the automobile industry. The case study shows that when forming a new business the actors possess only partial knowledge of how to assemble the resources. Consequently, the actors must engage in extensive adaptation and interaction with others to enact workable resource interfaces and combinations. This necessity makes the new business formation process nonlinear and onerous. Further, the case demonstrates that new business formation is a collective process involving not only the emergence of a formal business organization but also reorganizing the applicable resource market. Since third parties involved in developing the necessary resource combinations can be considered part of the new business venture, setting the boundaries of the new venture becomes arbitrary. The arbitrary nature of such boundary setting has implications in entrepreneurship studies with regard to the unit of analysis and the concept of opportunity. (C) 2011 Elsevier Inc. All rights reserved.