EXPRESS: The Different Effects of Mass-Media Marketing and Personal Sales Budgets across the Life Cycle of B2B High-Tech Start-ups

In their early life-cycle stages, business-to-business (B2B) high-tech start-ups face severe challenges in establishing their first customer relationships. To generate business growth, they must convey the value of unfamiliar, innovative, complex offerings to customers, using the limited resources at their disposal. Prior research has not examined the different roles of mass-media marketing and personal sales communications in this challenging endeavor, despite principal differences between these activities in start-up contexts. To help B2B high-tech start-ups allocate financial resources to mass-media marketing and personal sales communications across early and later stages of their organizational life cycle, this article presents a longitudinal survey study involving founders of B2B high-tech start-ups. The findings indicate that start-ups spending a larger share of their budget on personal sales (i.e., higher personal sales expense ratio) exhibit stronger performance in earlier stages of their life cycle but weaker performance in later stages; however, still in later stages, these expenditures enhance certain performance metrics. Conversely, start-ups spending a larger share of their budget on mass-media marketing (i.e., higher mass-media marketing expense ratio) show stronger performance in later stages but weaker performance in earlier stages. High-tech start-ups can leverage these findings to improve their budget allocation and ensure persistent growth.