Experimental and Structural Adaptation Mechanisms of New Ventures in Nascent Markets

Abstract

A growing body of research devotes attention to new venture evolution in uncertain and ambiguous environments. However, while the entrepreneurship literature typically suggests new ventures show high degrees of adaptability to unfolding market opportunities, the organization theory literature highlights relatively high levels of inertia, even in new ventures. Building on an ethnographic study of a new venture’s development process, we address this tension between both literature streams by aiming to provide a more complete understanding of the venture evolution process. Our approach enables us to identify that this evolution involves fundamentally different processes of adaptation of both business model and resource configuration over time. We introduce the concept of a “legitimate venture archetype” as an important contingency to distinguish between experimental processes of archetype adaptation, typically advanced in the entrepreneurship literature, and structural adaptation processes, in line with orga...