Small, young firm flexibility and performance in the context of disruptive innovations

Abstract

Flexibility is a quality that is frequently associated with small, young firms. However, there has been limited attention given to understanding how flexibility is linked to small firm performance, and limited recognition that flexibility is costly and only advantageous in certain environmental contexts. This paper explores small, young firm flexibility advantages in the context of commercialising radical, architectural, modular, and incremental innovations. Multiple dimensions of flexibility are examined to identify the innovation regimes in which small, young firms may survive and succeed against larger, more established incumbents. The propositions developed extend understanding of the liabilities of newness, start-up performance and flexibility, and the displacement of incumbents by new firms.