Adaptation and Performance in New Businesses: Understanding the Moderating Effects of Independence and Industry

Petra Andries () and Koenraad Debackere

Small Business Economics, 2007, vol. 29, issue 1, 99 pages

Abstract: New ventures as well as new business units experience significant difficulties in finding a viable business model. They often need to adapt their initial business model due to the presence of uncertainty and ambiguity. Technology-based companies are confronted with particularly high degrees of uncertainty and ambiguity. We hypothesize that adaptation is crucial for the performance (measured as survival) of these businesses, but that this effect is moderated by the (in)dependence of the new technology-based business and by the industry in which it is active. We test the adaptation-performance hypothesis through a survival analysis of a sample of 117 independent new ventures and business units. Our findings suggest that adaptation is beneficial in less mature, capital-intensive and high-velocity industries but not so in more mature, stable industries. Also, adaptation reduces failure rates in dependent business units as compared to independent ventures. Copyright Springer 2007

Keywords: business model adaptation; performance; new technology-based businesses; D83; M13; O32 (search for similar items in EconPapers)
Date: 2007
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DOI: 10.1007/s11187-005-5640-2

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