Abstract
The paper focuses on key success factors of startups in the European Union. Startup companies have a massive potential to boost the level of innovation and competitiveness of national economies. They are also uniquely equipped to provide extremely effective and flexible ways of meeting both existing and emerging market needs. However, the development of these microventures differs from country to country. Hence, we put forth a hypothesis that strategic success factors in the development of startups vary in highly developed and catching-up countries. Our main goal was to determine the key success factors of startups in the EU, and to classify the gap between developed and lagging Member States. For this purpose, we applied the method of component analysis on startup data available for selected the EU states. We managed to isolate 5 components explaining 72% of data variability, all of which can be linked to human capital as well as to formal and informal economic institutions. The results confirmed the validity of our hypothesis. We established that more developed countries offer an institutional competitive advantage to startups, while the gap in success factors between highly developed and catching-up countries can be attributed to human capital and to institutions. Based on our findings, we offer suggestions how to reduce this gap by improving formal and informal institutions via innovative public policy and by supporting education.
Highlights
The origin of startups can be traced back to the 1970s
The existing differentiation between individual countries related to the business of startups and their rate of growth, functions, sources of finance, etc. leads to the following question as a research problem: what factors shape and differentiate the qualitative development of startups, contributing to their success, reduced development, or decline in the EU? We looked for key success factors using a criterion or relying on the type of competitive advantage, its sources among many intangible exposed and presented in resource management theory
In order to determine the development of startup competitive potential one needs to identify the characteristic features of startup businesses and, first and foremost, their key success factors
Summary
The origin of startups can be traced back to the 1970s. This is when in developed countries small, agile, and highly innovative companies started to emerge, revolutionizing the traditional market of goods and services and the management of organizations [1]. The term “startup” referred to a few emerging high-tech microcompanies, active mainly in the field of electronics and computer technologies These companies were challenging the hitherto theories on company and society development [2,3]. The key insight on startups in Europe and the world comes from reports issued by consulting companies (e.g., [16,17,18,19]), as well as by the European Commission [20], and individual states, e.g., Germany [21], Israel [22], Australia [23,24], India [25], Poland [26,27], or groups of states such as the Visegrád Four [28] Such reports seek to identify the structural and quantitative development of startups. They are all heterogeneous in terms of determinants, theoretical and geographical scope, and methodology, making direct comparison of data impossible
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