The role of operational stickiness in impacting new venture survival

Abstract

PurposeThe purpose of this paper is to examine the existence of operational stickiness, and explores the relationship between operational stickiness and the likelihood of survival. Furthermore, the authors investigate this relationship in different manufacturing industries.Design/methodology/approachUsing a large sample of more than 200,000 new manufacturing small and medium enterprises between 2000 and 2013 in China, the authors use the survival analysis method to investigate the non-linear relationship between operational stickiness and the likelihood of survival.FindingsThe authors demonstrate the existence of operational stickiness, such as inventory stickiness, property, plant, and equipment (PPE) stickiness, and labor stickiness. Next, the authors find the inverted U-shaped relationship between operational stickiness and the likelihood of survival. Furthermore, the authors document the differential effect of operational stickiness on the likelihood of survival in different industries.Practical implicationsManagers can improve the firm’s likelihood of survival by maintaining a moderate inventory stickiness and PPE stickiness. However, managers should not adopt sticky labor management in manufacturing industries.Originality/valueThis paper may be the first study to demonstrate the existence of operational stickiness, and confirm the inverted U-shaped relationship between operational stickiness and the likelihood of survival.