Adaptation and survival in new businesses: Understanding the moderating effects of (in)dependence and industry.

Abstract

New ventures as well as new business units experience significant difficulties in finding a viable market application or business model. They often need to adapt their initial business model and this need for adaptation is mainly due to high degrees of uncertainty and ambiguity they are confronted with. This paper hypothesizes that adaptation is crucial for new ventures' and new business units' survival, but that differences exist between the need for adaptation in business units of established companies versus in independent start-ups. According to insights obtained from institutional isomorphism as well as from the resource-based theory of the firm, the effects of adaptation on survival are complex and multifaceted. We test the adaptation-survival hypothesis through a survival analysis of a sample of 117 new ventures and new business units. We find that the main effect of adaptation on survival is negative, but that this effect is moderated and even reversed by the (in) dependence of the new business and by the industry in which it is active.Innovation; Research; Model; Companies; Performance; Startups; Processes; Factors; Effects; Industry; Market; Uncertainty; Theory; Dependence;