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

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  • Petra Andries
  • Koenraad Debackere

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

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  • Petra Andries & Koenraad Debackere, 2007. "Adaptation and Performance in New Businesses: Understanding the Moderating Effects of Independence and Industry," Small Business Economics, Springer, vol. 29(1), pages 81-99, June.
    • Handle: RePEc:kap:sbusec:v:29:y:2007:i:1:p:81-99
    DOI: 10.1007/s11187-005-5640-2
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    Keywords

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    JEL classification:

    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D

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