Impact of initial business model on the growth trajectory of new technology-based firms: a path dependency perspective

Hans Löfsten (), Anders Isaksson (), Heikki Rannikko (), Erno Tornikoski () and Mickaël Buffart ()
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Hans Löfsten: Chalmers University of Technology
Anders Isaksson: Chalmers University of Technology
Heikki Rannikko: Ramboll Finland Oy, Circular Business Models
Erno Tornikoski: Exeter University
Mickaël Buffart: Stockholm School of Economics

The Journal of Technology Transfer, 2025, vol. 50, issue 1, No 2, 29-61

Abstract: Abstract Our study explores links between the initial business model design and the post-founding development of new technology-based firms (NTBFs) through a selection of recently established NTBFs across Sweden, Finland, and France (481 firms). The trajectory of these firms’ performance has been observed and analyzed over the span of five years. The study examines the long-term effects of NTBFs’ initial business model design on their development and the path dependency of these designs on future firm performance. Our results indicate that high-growth and stable NTBFs have distinct initial designs, implying that new firms’ founders and their business design decisions have important consequences for subsequent NTBF development. Specifically, our study examines how business model characteristics impact the growth trajectory of NTBFs by empirically differentiating between the foundational characteristics of high-growth and stable NTBFs. We find that maintaining stable activity is linked to a low level of uniqueness, less demanding business objectives, and a lack of risk while high-growth is related to a larger early access to resources. We propose an explanation using path dependency literature, arguing how early business model choices predetermine long-term growth paths. Our research also provides valuable insights for stakeholders in designing targeted strategies for sustainable development.

Keywords: High-growth firms; Stable firms; Founding business model; Path dependency; Imprinting mechanism; Post-founding success (search for similar items in EconPapers)
JEL-codes: L26 M13 M21 O25 O32 O44 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s10961-024-10086-6

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