Sowing the seeds of failure: Organizational identity dynamics in new venture pivoting

Abstract

New ventures in nascent markets often pivot while still developing their organizational identity. A strong identity helps attract investors and employees and pivoting helps pursue new opportunities. How do they interact? To illuminate this process, we conduct an in-depth longitudinal field study of a new venture developing a technology to transform Internet websites for mobile devices. The venture completes a first pivot but fails during a second attempted pivot of its business model in the nascent market. Comparing the completed and the attempted pivot, our analysis suggests that new venture pivoting relies on the ability to crystallize the individual roles of organizational members (“what we do”) in line with organizational identity (“who we are”). Our findings shed light on stakeholder constraints on pivoting by scaling new ventures through the micro-mechanism of role crystallization. Our analysis also delineates the inter-temporal effects of lingering organizational identity, thereby advancing research on the organizational identity dynamics of new ventures.