Understanding the failure process of ventures: a perspective of the behavioral strategy

Abstract

PurposeThis study aims to endeavor to shed light on the underlying causal mechanisms behind the failure of startups by examining the failure process in such organizations. To achieve this goal, the study conducted a comprehensive review of the literature on the definition of failure and its various dimensions, resulting in the compilation of a comprehensive list of causes of startup failure. Subsequently, the failure process was analyzed using a behavioral strategy approach that encompasses rationality, plasticity and shaping, as well as the growth approach of startups based on dialectic, teleology and evolution theories.Design/methodology/approachThe proposed research methodology was a case study using process tracing, with the sample being a failed platform in the ride-hailing technology sector. The causal mechanism was further explicated through the combined application of the behavioral strategy approach and interpretive structural modeling analysis.FindingsThe findings of the study suggest that the failure of startups is a result of interlinked causes and effects, and growth in these organizations is driven by dialectic, teleology and evolution theories.Originality/valueThe outcomes of the research can assist startups in formulating an effective strategy to deliver the right value proposition to the market, thereby reducing the chances of failure.