Start-up Firms Research Articles

Student entrepreneurs with triple bottom line objectives: capabilities in creating viable business models

PurposeThe objective of this instrumental case study is to investigate issues impacting capability development/transformation with respect to student entrepreneurs’ aspirations to create a viable, evolving business model for their start-ups, namely, that are underpinned by goals featuring the “triple bottom line”. That is, instead of simply profits as an economic performance metric, there is also a consideration of wider social issues within the notion of “responsible leadership”, involving people and the planet.Design/methodology/approachUnderpinned by a “capabilities lens”, the research setting focuses on the perceptions of student entrepreneurs together with other stakeholders in a Canadian university. The country context is pertinent, since to gain scalability, owners of start-up firms may need to internationalise to overcome limited domestic demand (despite the large geographic area); also, stakeholders’ support is sometimes needed to facilitate growth.FindingsNew insights demonstrate the need for appropriate stakeholders to facilitate effective transformative capability development amongst student entrepreneurs with triple bottom line objectives. Student entrepreneurs’ capability of validating facets of a viable evolving business model that address “all” and not “some” aspects of the triple bottom line is especially important. This is alongside the capability of being able to pivot product-market strategies where necessary, and this may feature the need to internationalise in the event there is limited domestic demand. A capability to develop soft skills is also likely to help student entrepreneurs communicate with stakeholders. In turn, such capabilities are likely to help move ideation, passed validation and through to commercialisation.Originality/valueThe utility of institutions and associated stakeholders offering education and training support to develop capabilities amongst students as aspiring entrepreneurs has featured in earlier studies. Likewise, issues associated with the notion of sustainability have also been previously considered. The originality of this instrumental case study is to offer a more nuanced investigation into salient issues associated with capability development amongst student entrepreneurs exhibiting triple bottom line objectives in their start-ups. That is, focusing on considerations related to validating their evolving business models and especially when facing limited domestic market demand.

Outside or inside the firm? The impact of debt financing on the exit routes of start-up firms

Outside or inside the firm? The impact of debt financing on the exit routes of start-up firms

Sustainable business model innovation of an emerging country startup: An imprinting theory perspective

Sustainable Business Model Innovation integrates environmental and social value with economic value. Using Organizational Imprinting Theory and drawing on a qualitative, in-depth single case study of an Indian startup, we observe the impact of founders' sustainability values (FSVs) on sustainable business model innovation. The study shows how the founders' sustainability values (FSVs) imprint the startup's business model through structural and cognitive imprinting routes. Further, we trace three key sources of these imprints that infused sustainability values in the startup founder. The study offers a set of propositions regarding how startup firms achieve sustainable business model innovation and which sources imprint sustainability values on founders. The study contributes to the literature on sustainable business model innovation in an emerging country context and the empirical application of Imprinting Theory to Sustainable Business model innovation.

Effect of Access to Capital, Entrepreneurship Education, and HR Competencies on Start-up Success in the Technology Sector

This study examines the impact of access to capital, entrepreneurship education, and human resource (HR) competencies on the success of start-ups in the technology sector. Utilizing a quantitative approach, data were collected from 150 start-up firms through structured questionnaires using a Likert scale ranging from 1 to 5. The data were analyzed using Structural Equation Modeling-Partial Least Squares (SEM-PLS 3). The results indicate that all three factors—access to capital, entrepreneurship education, and HR competencies—positively and significantly influence start-up success. Access to capital allows start-ups to invest in research and development, scale operations, and attract top talent, while entrepreneurship education equips entrepreneurs with essential skills for strategic decision-making. HR competencies, as the strongest predictor, underscore the critical role of a skilled workforce in driving innovation and sustaining growth in the technology sector. The findings provide valuable insights for entrepreneurs, educators, and policymakers seeking to support the development and success of technology start-ups.

Unlocking data’s potential: navigating the challenges of data-driven innovation for start-ups

Purpose Data-driven innovation is a key pillar for economic development in the 21st century, accordingly the role and value of data in developing new products, services and business models has gained attention. The study aims to identify three important factors explaining the challenges faced by young entrepreneurial firms when seeking to use public data in their business development. Design/methodology/approach This study presents the user journeys of five data-driven start-ups in the capital region of Norway aiming to use public data in their business development process. Multiple methods for data collection were used, such as interviews, observations and secondary data. Findings The study reveals how differences in culture, communication and work methods across stakeholders and sectors affect and delay the process of gaining access to data. Moreover, how various forms of knowledge are expressed differently throughout the user journeys of the start-up firms, with stronger dependency on explicit and codified in early phase, and tacit and experience-based knowledge in later stages, each stage relating to the maturity of the entrepreneurial ecosystem for data-driven innovation. Therefore, the ecosystem for data-driven innovation may be further developed through arenas for collaboration that simplify the process for access to – and use of public data. Originality/value The study reveals how young entrepreneurial firms identify opportunities whilst simultaneously facing substantial barriers when they seek to take advantage of publicly available data and transforming them into value creating activities. The study contributes to the theoretical understanding of data-driven innovation by exploring the user journeys of start-up firms and identifying the challenges they face when utilizing public data, highlighting the importance of a mature ecosystem, collaboration for market development and the evolving role of tacit and experience-based knowledge throughout the business development process.

Factors Influencing HealthTech Startup Firm Outcomes: Does Founder / CEO Industry Knowledge Matter?

Factors Influencing HealthTech Startup Firm Outcomes: Does Founder / CEO Industry Knowledge Matter?

Navigating start-ups: a qualitative exploration of causal and effectual decision-making in entrepreneurial marketing

Purpose This study aims to enrich the field of entrepreneurial marketing (EM) by examining decision-making processes in the unique context of start-up ventures. To do so, it extends research on the distinct EM dimensions to the behavioral context by revealing how causation and effectuation principles shape entrepreneurs’ actions. Design/methodology/approach The study investigates EM behavior through 12 semi-structured interviews with 10 start-up founders and two founder associates in Germany. Use of established frameworks of the EM dimensions and causation/effectuation principles paves the way for an in-depth analysis. This methodology uncovers a distinct pattern of decision-making behaviors characterizing various activities within start-ups. Findings The findings show that causal logic prevails in start-ups’ EM, and effectual reasoning serves a complementary role. On the dimensional level, the findings reveal a predominant goal-driven focus on customer intensity and value-creation processes. Predictive logic guides opportunity focus, proactiveness and risk management, with nonpredictive behaviors providing adaptability. The principle of affordable loss is also evident in risk management. Finally, start-ups exhibit a blend of causal and effectual logic in innovativeness and resource-leveraging. Originality/value To the best of the authors’ knowledge, this study is the first to illuminate the interplay of behavioral logics in start-up firms’ EM by exploring the nuanced principles underpinning the decision-making processes of entrepreneurs. In doing so, it advances understanding of the marketing–entrepreneurship interface and enriches decision-making literature.

In the flexible working era: the micro-location choices of co-working spaces

ABSTRACT Would physical location become less essential when work and communication are not limited to a fixed space? We explore the question with the micro-location choices of co-working spaces (CWSs) in London. The empirical results show that the CWS tends to choose districts with more ‘teleworkable’ jobs and a high reliance on tacit knowledge in local industries. CWS also tends to be located where start-up firms co-locate, echoing the different influences of knowledge spillover in firms’ life cycles. The study highlights how CWS facilitates businesses in a digitised and more collaborative economy, carrying implications for business empowerment and local urban patterns.

Frenemies: Exploring interfirm credit between an incumbent and a capital‐constrained startup

AbstractInterfirm credit, a financial relationship between two firms, has garnered recent attention due to its potential to aid innovative startups' funding challenges and shape competitive dynamics. We examine a supply chain consisting of an incumbent and a capital‐constrained startup firm. The startup's entry may cannibalize the incumbent's market share. Therefore, we model their interaction as a Stackelberg game, with the incumbent leading. The startup faces funding challenges and can opt for bank financing, interfirm credit, or mixed financing. Under interfirm credit, the incumbent and startup firms engage in financial collaboration, which requires the incumbent to decide on the trade‐off between profit sharing and market erosion. We consider two cases of financial sufficiency: (i) sufficient funds for production that satisfy the loan amount required for the startup firm's production and (ii) limited funds for production that are insufficient for the startup firm's needs and limit the startup firm's production. We find that bank financing is not always beneficial to firms. Specifically, under limited funds for production, when a startup has moderate initial available funds, he will opt for profit sharing with the incumbent and prefer interfirm credit, allowing both firms to achieve a win‐win outcome. However, suppose the incumbent strategically determines the interest rate. In that case, mixed financing becomes advantageous for both firms when the startup firm's initial available funds are high and the loan amount is ample. Finally, when the startup predetermines the loan amount, he will pursue economic funding if his product is competitive.

Exploiting cognitive distance for enhanced innovative capabilities: The role of collaboration controls in incumbent-startup partnerships

Collaborations between incumbent and startup firms are hailed for enhancing incumbent innovation capability. Yet, these collaborations often face challenges, notably cognitive distance, highlighting the need to balance potential novelty and mutual understanding between partner firms. Drawing on prior research that indicates a non-linear relationship between cognitive distance and innovation outcomes, we focus on collaboration controls—tools and practices that guide and motivate managers responsible for startup collaborations— serving as critical mechanisms for incumbents to exploit cognitive distance. We hypothesize that the use of collaboration controls mediates the non-linear relationship between cognitive distance and realizing enhanced innovation capabilities. Empirical findings from a survey of 239 French incumbents confirm an inverted U-shaped relation between cognitive distance and enhanced innovative capabilities. Notably, we find that use of collaboration controls mediates this relationship, highlighting the importance of controls in exploiting cognitive distance. This research contributes to unveiling the intricacies of successful collaborations between incumbents and startups by uncovering a critical role for collaboration controls in realizing novelty potential.

Australia’s FinTech leaders: Education, work experience, and eagerness of self-employment

In recent years, many FinTech start-up firms have poured into the FinTech landscape. Since FinTech leaders (including founders and chief executive officers (CEOs)) have a major impact on the performance of their respective firms, research studies on FinTech leaders are indispensable. This paper discusses our study to investigate three major dimensions (education, work experience, and eagerness of self-employment) of FinTech leaders in an Australian context. We also compare these dimensions between FinTech founders and CEOs. Overall, we found that: (a) The majority of FinTech leaders are degree holders and one-third of them have a master’s degree. (b) Only about one-third of leaders with a master’s degree hold an MBA. (c) Only 19.4% and 11.1% of degree-holding leaders were graduated from the IT and finance discipline, respectively. (d) Only 19.0% of leaders have previous IT work experience and the mean years of such experience is only 2.0. (e) 54.8% of leaders have previous finance work experience and the mean years of such experience is 6.7. (f) When compared with CEOs, founders are more likely to hold a master’s degree and are more eager to be self-employed.

Inventor CEOs and financing of innovation: Evidence from IPOs

We examine the role of inventor CEOs—those with personal hands-on experience of innovation—in the financing of innovation. Using a sample of technology initial public offerings (IPOs) in the US, we document that inventor CEOs are associated with lower underpricing at the time of the IPOs. Inventor CEOs also appear more capable of taking their firms public during “cold” IPO market periods when financing conditions are more difficult. Analyses based on regulatory changes and a founder-only sample suggest that these relationships are causal. Further, inventor-led firms appear to invest the IPO proceeds more productively, as reflected in the firms’ superior innovation outcomes in the post-IPO period. The stock market fails to fully understand these relationships, and IPOs led by inventor CEOs produce large positive abnormal returns in the three years following the offering. Our findings are consistent with inventor CEOs facilitating innovation financing for startup firms by effectively reducing information asymmetry and valuation uncertainty of firm's innovation capital for outside investors.

Social networks and start-up funding

This paper examines whether aggregate social networks influence start-up firms’ access to external funding. We find that start-ups in U.S. counties with higher social proximity to start-up funding (SPF) attract a larger investor base and secure more capital. The results are robust to several alternate specifications. We also show that start-ups in counties with higher SPF have high survival rates and successful exits. Our findings highlight the importance of aggregate social connections in facilitating access to early-stage funding.

Agency Costs of Outside Equity: Evidence From Start-Up Firms in Their First Two Years

This paper investigates the agency costs associated with outside equity infusions into 4928 randomly selected firms surveyed annually during their first two years of business. Sources of outside equity include angel investors, venture capital or private equity, other companies, or government sources. Changes in outside equity levels are significantly and positively associated with changes in the number of perquisite programs available to employees. These results are robust to controls for observable firm characteristics such as firm size and profitability.

Who is willing to be rich and king? Founder-CEOs’ IPO and M&A intentions

ABSTRACT Founder-chief executive officers (founder-CEOs) have several reasons for starting businesses but often struggle to pursue shareholder wealth and firm control. By conducting a survey of start-up firms in the manufacturing and information service sectors in Japan, we examine founder-CEOs’ initial public offering (IPO) and mergers and acquisitions (M&A) intentions. We propose an analytical approach from the perspective of shareholder wealth and firm control, and estimate the determinants of founder-CEOs’ IPO and M&A intentions. Our findings indicate that start-up firms with innovation resources, including new products and service and intellectual property, are more likely to seek IPOs. In addition, growth-oriented firms and founder-CEOs with prior entrepreneurial experience are more likely to seek IPOs and M&A. Moreover, younger founder-CEOs are more likely to have IPOs and M&A intentions. Furthermore, this study identifies founder-CEOs’ rich and king positions by providing the similarities and differences in the determinants of IPO and M&A intentions.

Implementation of Blue Ocean Strategy in Facing Business Competition: A Startup Case Study of Lapangbola.Com

Research aims: This study discusses the specific blue ocean strategy employed by lapangbola.com to emerge successful in the business competition.Design/Methodology/Approach: This study employed a descriptive qualitative methodology, utilizing interviews with relevant individuals (Operations and Marketing managers) from lapangbola.com. The analysis was conducted using the Blue Ocean Strategy, employing a strategy canvas, a four-step framework, and a six-step framework for data gathering.Research findings: A business competition strategy employs a blue ocean strategy approach that originates from business innovation, encompassing product development, operational enhancements, and the utilization of efficient digital marketing channels.Theoretical Contribution/Originality: This research serves as valuable information for decision-makers, particularly in startup firms, seeking to enhance their business growth by adopting a blue ocean strategy approach. The successful implementation of this technique by lapangbola.com, a startup business in the sports industry, further exemplifies its effectiveness.Practitioners/Policy Implications: Startup companies or businesses in the digital industry might employ a blue ocean strategy, characterized by a rigorous, flexible, and inventive approach, to analyze the market and formulate an effective formula for company development.Research Limitations/Implications: The limitations of this research are found in the secondary data (literature studies) used, this is because not many businesses have consciously implemented blue ocean strategy simultaneously using canvas strategies, 4-step frameworks and 6-step frameworks. More in-depth analysis is needed on the implementation of the blue ocean business strategy that will be carried out at each startup.

Optimizing defect rework for a software start-up's schedule variation: a Six-Sigma-based approach

PurposeManaging project completion within the stipulated time is significant to all firms' sustainability. Especially for software start-up firms, it is of utmost importance. For any schedule variation, these firms must spend 25 to 40 percent of the development cost reworking quality defects. Significantly, the existing literature does not support defect rework opportunities under quality aspects among Indian IT start-ups. The present study aims to fill this niche by proposing a unique mathematical model of the defect rework aligned with the Six Sigma quality approach.Design/methodology/approachAn optimization model was formulated, comprising the two objectives: rework “time” and rework “cost.” A case study was developed in relevance, and for the model solution, we used MATLAB and an elitist, Nondominated Sorting Genetic Algorithm (NSGA-II).FindingsThe output of the proposed approach reduced the “time” by 31 percent at a minimum “cost”. The derived “Pareto Optimal” front can be used to estimate the “cost” for a pre-determined rework “time” and vice versa, thus adding value to the existing literature.Research limitations/implicationsThis work has deployed a decision tree for defect prediction, but it is often criticized for overfitting. This is one of the limitations of this paper. Apart from this, comparing the predicted defect count with other prediction models hasn’t been attempted. NSGA-II has been applied to solve the optimization problem; however, the optimal results obtained have yet to be compared with other algorithms. Further study is envisaged.Practical implicationsThe Pareto front provides an effective visual aid for managers to compare multiple strategies to decide the best possible rework “cost” and “time” for their projects. It is beneficial for cost-sensitive start-ups to estimate the rework “cost” and “time” to negotiate with their customers effectively.Originality/valueThis paper proposes a novel quality management framework under the Six Sigma approach, which integrates optimization of critical metrics. As part of this study, a unique mathematical model of the software defect rework process was developed (combined with the proposed framework) to obtain the optimal solution for the perennial problem of schedule slippage in the rework process of software development.

Should B2B start-ups invest in marketing?

Start-up firms play a major role in the economy, with B2B start-ups often developing new technologies and offerings to business customers that incumbent firms do not provide. However, little is known about the cost-effectiveness of start-up firms' investments in marketing. We integrate insights from managerial interviews with signaling theory to posit how conducting systematic marketing affects start-up firm valuation, and how the combination of the firm's primary customer-type (B2B versus B2C) and development stage (early versus late) moderates that effect. Our empirical analysis reveals that marketing investments affect firm valuation positively for some start-ups and negatively for others depending on the noted moderators. In particular, we find that investments in systematic marketing by early-stage B2B start-ups increase firm valuation, yet more than half of early-stage B2B start-up firms choose not to invest in systematic marketing, apparently believing such investments will not pay off.

Venture capital, the fetish of artificial intelligence, and the contradictions of making intangible assets

This paper examines the venture capital-driven process of making intangible assets in platform start-up firms. By examining the case study of the rise and fall of a venture capital-backed ‘unicorn’ firm developing a digital health platform, this paper argues that the process of real valorization of capital invested in platform start-up firms involves the making of algorithmic systems and data as intangible assets as well as the experimentation with strategies of exploitation and appropriation, which are inherently linked to the future-oriented financial valorization process of equity shares since unprofitable start-up firms continuously require outside capital to expand operations. While the fetish of ‘artificial intelligence’ posing the firm’s chatbot for self-diagnosis as an intelligent ‘doctor in your pocket’ plays an important role in financial valorization, it is the failed real valorization process in making profits that ultimately leads to the platform start-up’s financial collapse. The conceptual contribution of the paper centres on the contradictory nature of assetization processes which sheds light on how class domination operates in and through venture capital-driven accumulation.

Adoption of Digital Technologies, Business Model Innovation, and Financial and Sustainability Performance in Start-Up Firms

Adoption of Digital Technologies, Business Model Innovation, and Financial and Sustainability Performance in Start-Up Firms