IDEAS home Printed from https://ideas.repec.org/a/eee/tefoso/v196y2023ics0040162523005243.html
   My bibliography  Save this article

What happens after market validation? Experimentation for scaling in technology-based startups

Author

Listed:
  • Sanasi, Silvia
  • Ghezzi, Antonio
  • Cavallo, Angelo

Abstract

Scaling is one of the most critical phases in the lifecycle of technology-based startups: failure to scale often translates into failure to survive. Entrepreneurial experimentation has emerged as a method to reduce the likelihood of startup failure by anticipating market information. However, previous studies only described experimentation as the means to achieve market validation during the early stages of a startup's lifecycle. In our study, we have inductively investigated experimentation in technology-based startups after they had achieved market validation, conducting a comparative multiple-case study on four technology-based startups operating as digital platforms for financial and marketing services. Our findings conclude that technology-based startups continue to experiment extensively as they scale up. We present a process model of how experimentation for scaling focuses on probing for new customer segments, experimenting on customer relationships and channels, whilst carefully pacing and prioritizing experiments, and selecting the relevant growth metrics to monitor. Our study thus extends the current understanding of entrepreneurial experimentation beyond the accomplishment of market validation to the phase of scaling. This article also provides practical guidelines for technology entrepreneurs to direct their efforts towards experimentation during the challenging scaling phase.

Suggested Citation

  • Sanasi, Silvia & Ghezzi, Antonio & Cavallo, Angelo, 2023. "What happens after market validation? Experimentation for scaling in technology-based startups," Technological Forecasting and Social Change, Elsevier, vol. 196(C).
  • Handle: RePEc:eee:tefoso:v:196:y:2023:i:c:s0040162523005243
    DOI: 10.1016/j.techfore.2023.122839
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0040162523005243
    Download Restriction: Full text for ScienceDirect subscribers only

    File URL: https://libkey.io/10.1016/j.techfore.2023.122839?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Andries, Petra & Clarysse, Bart & Costa, Sergio, 2021. "Technology ventures' engagement of external actors in the search for viable market applications: On the relevance of Technology Broadcasting and Systematic Validation," Journal of Business Venturing, Elsevier, vol. 36(6).
    2. Timothy E. Ott & Kathleen M. Eisenhardt, 2020. "Decision weaving: Forming novel, complex strategy in entrepreneurial settings," Strategic Management Journal, Wiley Blackwell, vol. 41(12), pages 2275-2314, December.
    3. Ratinho, Tiago & Harms, Rainer & Walsh, Steven, 2015. "Structuring the Technology Entrepreneurship publication landscape: Making sense out of chaos," Technological Forecasting and Social Change, Elsevier, vol. 100(C), pages 168-175.
    4. Ghezzi, Antonio, 2020. "How Entrepreneurs make sense of Lean Startup Approaches: Business Models as cognitive lenses to generate fast and frugal Heuristics," Technological Forecasting and Social Change, Elsevier, vol. 161(C).
    5. Satish Nambisan, 2017. "Digital Entrepreneurship: Toward a Digital Technology Perspective of Entrepreneurship," Entrepreneurship Theory and Practice, , vol. 41(6), pages 1029-1055, November.
    6. Ajay Agrawal & Joshua S. Gans & Scott Stern, 2021. "Enabling Entrepreneurial Choice," Management Science, INFORMS, vol. 67(9), pages 5510-5524, September.
    7. Bertoni, Fabio & Colombo, Massimo G. & Grilli, Luca, 2011. "Venture capital financing and the growth of high-tech start-ups: Disentangling treatment from selection effects," Research Policy, Elsevier, vol. 40(7), pages 1028-1043, September.
    8. Arnaldo Camuffo & Alessandro Cordova & Alfonso Gambardella & Chiara Spina, 2020. "A Scientific Approach to Entrepreneurial Decision Making: Evidence from a Randomized Control Trial," Management Science, INFORMS, vol. 66(2), pages 564-586, February.
    9. Bianchi, Mattia & Marzi, Giacomo & Guerini, Massimiliano, 2020. "Agile, Stage-Gate and their combination: Exploring how they relate to performance in software development," Journal of Business Research, Elsevier, vol. 110(C), pages 538-553.
    10. Nambisan, Satish & Wright, Mike & Feldman, Maryann, 2019. "The digital transformation of innovation and entrepreneurship: Progress, challenges and key themes," Research Policy, Elsevier, vol. 48(8), pages 1-1.
    11. Magnus Henrekson & Dan Johansson, 2010. "Gazelles as job creators: a survey and interpretation of the evidence," Small Business Economics, Springer, vol. 35(2), pages 227-244, September.
    12. Ghezzi, Antonio, 2019. "Digital startups and the adoption and implementation of Lean Startup Approaches: Effectuation, Bricolage and Opportunity Creation in practice," Technological Forecasting and Social Change, Elsevier, vol. 146(C), pages 945-960.
    13. Varga, Suzana & Cholakova, Magdalena & Jansen, Justin J.P. & Mom, Tom J.M. & Kok, Guus J.M., 2023. "From platform growth to platform scaling: The role of decision rules and network effects over time," Journal of Business Venturing, Elsevier, vol. 38(6).
    14. Stevenson, Regan & Allen, Jared & Wang, Tang, 2022. "Failed but validated? The effect of market validation on persistence and performance after a crowdfunding failure," Journal of Business Venturing, Elsevier, vol. 37(2).
    15. Timo Ehrig & Jens Schmidt, 2022. "Theory‐based learning and experimentation: How strategists can systematically generate knowledge at the edge between the known and the unknown," Strategic Management Journal, Wiley Blackwell, vol. 43(7), pages 1287-1318, July.
    16. Harms, Rainer, 2015. "Self-regulated learning, team learning and project performance in entrepreneurship education: Learning in a lean startup environment," Technological Forecasting and Social Change, Elsevier, vol. 100(C), pages 21-28.
    17. William R. Kerr & Ramana Nanda & Matthew Rhodes-Kropf, 2014. "Entrepreneurship as Experimentation," Journal of Economic Perspectives, American Economic Association, vol. 28(3), pages 25-48, Summer.
    18. Christian Busch & Harry Barkema, 2021. "From necessity to opportunity: Scaling bricolage across resource‐constrained environments," Strategic Management Journal, Wiley Blackwell, vol. 42(4), pages 741-773, April.
    19. Cavallo, Angelo & Ghezzi, Antonio & Dell'Era, Claudio & Pellizzoni, Elena, 2019. "Fostering digital entrepreneurship from startup to scaleup: The role of venture capital funds and angel groups," Technological Forecasting and Social Change, Elsevier, vol. 145(C), pages 24-35.
    20. J. Robert Baum & Barbara J. Bird, 2010. "The Successful Intelligence of High-Growth Entrepreneurs: Links to New Venture Growth," Organization Science, INFORMS, vol. 21(2), pages 397-412, April.
    21. Busch, Christian & Barkema, Harry, 2022. "Align or perish: Social enterprise network orchestration in Sub-Saharan Africa," Journal of Business Venturing, Elsevier, vol. 37(2).
    22. Henry R. Feeser & Gary E. Willard, 1990. "Founding strategy and performance: A comparison of high and low growth high tech firms," Strategic Management Journal, Wiley Blackwell, vol. 11(2), pages 87-98, February.
    23. Hölzl, Werner & Janger, Jürgen, 2013. "Does the analysis of innovation barriers perceived by high growth firms provide information on innovation policy priorities?," Technological Forecasting and Social Change, Elsevier, vol. 80(8), pages 1450-1468.
    24. Magistretti, Stefano & Dell'Era, Claudio & Verganti, Roberto, 2020. "Searching for the right application: A technology development review and research agenda," Technological Forecasting and Social Change, Elsevier, vol. 151(C).
    25. Busch, Christian & Barkema, Harry, 2022. "Align or perish: social enterprise network orchestration in Sub-Saharan Africa," LSE Research Online Documents on Economics 115350, London School of Economics and Political Science, LSE Library.
    26. Herman Aguinis & Angelo M. Solarino, 2019. "Transparency and replicability in qualitative research: The case of interviews with elite informants," Strategic Management Journal, Wiley Blackwell, vol. 40(8), pages 1291-1315, August.
    27. Joshua S. Gans & Scott Stern & Jane Wu, 2019. "Foundations of entrepreneurial strategy," Strategic Management Journal, Wiley Blackwell, vol. 40(5), pages 736-756, May.
    28. Lee, Hyunmin, 2023. "Strategic similarity in the co-evolution of technological and business diversification for firm growth: Evidence from smart-manufacturing related firms," Technological Forecasting and Social Change, Elsevier, vol. 189(C).
    29. Robin De Cock & Johan Bruneel & Annelies Bobelyn, 2020. "Making the lean start-up method work: The role of prior market knowledge," Journal of Small Business Management, Taylor & Francis Journals, vol. 58(5), pages 975-1002, September.
    30. Kang, Taewon & Baek, Chulwoo & Lee, Jeong-Dong, 2019. "Effects of knowledge accumulation strategies through experience and experimentation on firm growth," Technological Forecasting and Social Change, Elsevier, vol. 144(C), pages 169-181.
    31. Snihur, Yuliya & Clarysse, Bart, 2022. "Sowing the seeds of failure: Organizational identity dynamics in new venture pivoting," Journal of Business Venturing, Elsevier, vol. 37(1).
    32. Sandeep D. Pillai & Brent Goldfarb & David A. Kirsch, 2020. "The origins of firm strategy: Learning by economic experimentation and strategic pivots in the early automobile industry," Strategic Management Journal, Wiley Blackwell, vol. 41(3), pages 369-399, March.
    33. Ghezzi, Antonio & Cavallo, Angelo, 2020. "Agile Business Model Innovation in Digital Entrepreneurship: Lean Startup Approaches," Journal of Business Research, Elsevier, vol. 110(C), pages 519-537.
    34. De Massis, Alfredo & Kotlar, Josip, 2014. "The case study method in family business research: Guidelines for qualitative scholarship," Journal of Family Business Strategy, Elsevier, vol. 5(1), pages 15-29.
    35. Bohnsack, René & Liesner, Meike Malena, 2019. "What the hack? A growth hacking taxonomy and practical applications for firms," Business Horizons, Elsevier, vol. 62(6), pages 799-818.
    36. Andrea Contigiani & Daniel A Levinthal, 2019. "Situating the construct of lean start-up: adjacent conversations and possible future directions," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 28(3), pages 551-564.
    37. Dean A. Shepherd & Holger Patzelt, 2022. "A Call for Research on the Scaling of Organizations and the Scaling of Social Impact," Entrepreneurship Theory and Practice, , vol. 46(2), pages 255-268, March.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Silvia Sanasi, 2023. "Entrepreneurial experimentation in business model dynamics: Current understanding and future opportunities," International Entrepreneurship and Management Journal, Springer, vol. 19(2), pages 805-836, June.
    2. Chengbin, Wang & Hongbin, Wang & Min, Dai & Yongyan, Fang, 2022. "Lean Startup Approaches(LSAs): Convergence, Integration and Improvement," Technological Forecasting and Social Change, Elsevier, vol. 179(C).
    3. Ari Hyytinen & Petri Rouvinen & Mika Pajarinen & Joosua Virtanen, 2023. "Ex Ante Predictability of Rapid Growth: A Design Science Approach," Entrepreneurship Theory and Practice, , vol. 47(6), pages 2465-2493, November.
    4. Yáñez-Valdés, Claudia & Guerrero, Maribel & Barros-Celume, Sebastián & Ibáñez, María J., 2023. "Winds of change due to global lockdowns: Refreshing digital social entrepreneurship research paradigm," Technological Forecasting and Social Change, Elsevier, vol. 190(C).
    5. Ghezzi, Antonio, 2020. "How Entrepreneurs make sense of Lean Startup Approaches: Business Models as cognitive lenses to generate fast and frugal Heuristics," Technological Forecasting and Social Change, Elsevier, vol. 161(C).
    6. Rembrand Koning & Sharique Hasan & Aaron Chatterji, 2022. "Experimentation and Start-up Performance: Evidence from A/B Testing," Management Science, INFORMS, vol. 68(9), pages 6434-6453, September.
    7. Fernandes, Cristina & Ferreira, João J. & Veiga, Pedro Mota & Kraus, Sascha & Dabić, Marina, 2022. "Digital entrepreneurship platforms: Mapping the field and looking towards a holistic approach," Technology in Society, Elsevier, vol. 70(C).
    8. Lee, Hyeonsuh, 2023. "Unraveling the effect of pre-entry knowledge of founders on experimentation in nascent industries: A configurational approach," Journal of Business Research, Elsevier, vol. 167(C).
    9. Fini, Riccardo & Perkmann, Markus & Kenney, Martin & Maki, Kanetaka M., 2023. "Are public subsidies effective for university spinoffs? Evidence from SBIR awards in the University of California system," Research Policy, Elsevier, vol. 52(1).
    10. Ajay Agrawal & Joshua S. Gans & Scott Stern, 2021. "Enabling Entrepreneurial Choice," Management Science, INFORMS, vol. 67(9), pages 5510-5524, September.
    11. Zaheer, Hasnain & Breyer, Yvonne & Dumay, John & Enjeti, Mahesh, 2022. "The entrepreneurial journeys of digital start-up founders," Technological Forecasting and Social Change, Elsevier, vol. 179(C).
    12. Majdouline, Ilias & Baz, Jamal El & Jebli, Fedwa, 2022. "Revisiting technological entrepreneurship research: An updated bibliometric analysis of the state of art," Technological Forecasting and Social Change, Elsevier, vol. 179(C).
    13. Andries, Petra & Clarysse, Bart & Costa, Sergio, 2021. "Technology ventures' engagement of external actors in the search for viable market applications: On the relevance of Technology Broadcasting and Systematic Validation," Journal of Business Venturing, Elsevier, vol. 36(6).
    14. Timo Ehrig & Jens Schmidt, 2022. "Theory‐based learning and experimentation: How strategists can systematically generate knowledge at the edge between the known and the unknown," Strategic Management Journal, Wiley Blackwell, vol. 43(7), pages 1287-1318, July.
    15. Zellweger, Thomas & Zenger, Todd, 2022. "Entrepreneurs as scientists, Bayesian inference, and belief revision," Journal of Business Venturing Insights, Elsevier, vol. 18(C).
    16. Mike G. Tsionas & Pankaj C. Patel, 2022. "An entrepreneur's dilemma: An optimal stopping rule in pivoting," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(8), pages 3498-3515, December.
    17. Burnell, Devin & Stevenson, Regan & Fisher, Greg, 2023. "Early-stage business model experimentation and pivoting," Journal of Business Venturing, Elsevier, vol. 38(4).
    18. Peng Chen & Zhenjun Yan & Pengfei Wang, 2023. "How can the Digital Economy Boost the Performance of Entrepreneurs? A Large Sample of Evidence from China’s Business Incubators," Sustainability, MDPI, vol. 15(7), pages 1-24, March.
    19. Weking, Jörg & Desouza, Kevin C. & Fielt, Erwin & Kowalkiewicz, Marek, 2023. "Metaverse-enabled entrepreneurship," Journal of Business Venturing Insights, Elsevier, vol. 19(C).
    20. Gambardella, Alfonso & Camuffo, Arnaldo & Spina, Chiara, 2020. "Small Changes with Big Impact: Experimental Evidence of a Scientific Approach to the Decision-Making of Entrepreneurial Firms," CEPR Discussion Papers 14909, C.E.P.R. Discussion Papers.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:tefoso:v:196:y:2023:i:c:s0040162523005243. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.sciencedirect.com/science/journal/00401625 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.