Abstract
The digital-based start-up industry in Indonesia has developed, but with a high failure rate. This research aims at elaborating the relationship between business model, entrepreneurial orientation, innovation, and sustainable performance on the digital start-up companies in Indonesia. The data were collected using offline and online surveys to 206 leaders or founders of digital start-up companies spread throughout Indonesia. Then, the data were then analysed using the structural equation model. The research results revealed that a business model had a significant role in achieving sustainable performance. A business model needs to be supported by customer participation and innovation. Innovation was more influential compared to customer participation in achieving companies’ sustainable performance. The indirect effect of customer participation and innovation on sustainable performance through the business model was greater than the direct effect not through the business model. The novelty of this research is the examination and analysis of the relationship between innovation, customer participation, business model, and sustainable performance in one model, and the use of digital start-up companies in Indonesia as the research analysis unit.
Highlights
The development of digital technology is signified by the growth of various internet-based activities
This research involved digital startup companies with limitations based on the definition of digital start-up issued by the Indian government in 2017, which are companies that have been running for less than seven years, have total revenues of less than Rupee 25 crores or equal to fifty billion Rupiah and working towards innovation (Ministry of Commerce and Industry of the Republic of India, 2017)
Research that employed structural equation model (SEM) should at least involve 200 respondents (Shah & Goldstein, 2006) and it is not recommended to have less than 200 respondents (Barrett, 2007), the samples of this research were 206 leaders or founders of digital startup companies in Indonesia
Summary
The development of digital technology is signified by the growth of various internet-based activities. This growth is followed by the establishment of new businesses in the digital sector known as the digital start-up. Allmand (2013) reported that 90% of start-up companies failed to thrive. This data was supported by the data released by Bandung Techno Park (BTP), as one of the incubators of digital start-up inIndonesia, as reported by Rahayu (2018), as the manager of business incubation in BTP, states that 75% start-up companies failed to develop. CB Insight (2019) affirms that the failure of start-up companies is mostly caused by the use of an inappropriate business model
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