Past studies have shown that the flow of knowledge from incumbent firms is associated with the creation of startups and their subsequent performance. While much research has focused on the mechanisms of how incumbent-to-startup knowledge transfer takes place, such as entrepreneurs pursuing opportunities that their previous employers do not want to pursue, we explore with detailed qualitative analysis of six private startups in the Chinese synthetic-dye industry what type of knowledge actually flows and what type is more important for the long-term success of startups. We discover eight types of knowledge that flow from incumbents to new firms during the foundation of startups. Abstracting these eight types of knowledge into two general categories of functional knowledge and strategic knowledge, we find the reception of strategic (not functional) knowledge shapes the long-term competitiveness of surviving startups. Receiving technical knowledge – one type of functional knowledge – during the founding period is necessary for startups’ short-term survival but insufficient for long-term success. Our findings show that the performance implications of initial knowledge flows from incumbents hinge on the type of knowledge, contributing to a more explicit explanation of how incumbent-to-startup knowledge flows affect entrepreneurial performance.

The comparative study of debt and fiscal consolidation has acquired a new focus in the wake of the global financial crisis. This paper re-evaluates the literature on fiscal consolidation that flourished during the 1980s and 1990s. The conventional approach to explanation is based on segmenting episodes of fiscal change into discrete observations. We argue that this misses the dynamic features of government strategy, especially in the choices made between expenditure-based and revenue-based fiscal consolidation strategies. We propose a focus on pathways rather than episodes of adjustment, to capture what Pierson terms ‘politics in time’. A case-study approach facilitates analysis of complex causality that includes the structures of interest intermediation, the role of ideas in shaping the set of feasible policy choices, and the situation of national economies in the international political economy. We support our argument with qualitative data based on two case studies, Ireland and Greece, and with additional paired comparisons of Ireland with Britain, and Greece with Spain. Our conclusions suggest that the conventional literature, by excluding key political variables from consideration, may distort our understanding and result in misleading policy prescription.