DOI QR코드

DOI QR Code

Successful vs. Failed Tech Start-ups in India: What Are the Distinctive Features?

  • Received : 2020.11.28
  • Accepted : 2020.12.25
  • Published : 2020.12.31

Abstract

The entrepreneurial journey is not short of challenges, and about 90% + tech start-ups experience failure (Startup Genome, 2019). The magnitude of the challenges varies across the tech start-up lifecycle stages, namely emergence, stability, and growth. This opens the research question, do the profiles of a start-up and its co-founder impact start-up success or failure across its lifecycle stages? This study aims to understand and identify the profiles of tech start-ups and their co-founders. We gathered primary data from 151 start-ups (Status: 101 failed and 50 successful ones), and they are across different lifecycle stages and represent six major start-up hubs in India. The chi-square test on status and start-up's lifecycle stage indicates a noticeable correlation, and they are not independent. The Kruskal Wallis test was used to distinguish statistically significant profile attributes. The parameters distinguishing success and failure are identified, and the need to deliver customer experience is emphasized by the start-up profile attributes: Product/service, high-tech nature of a start-up, investor fund availed, co-founder experience, and employee count. The importance of entrepreneurial experience is ascertained with entrepreneur profile attributes: Entrepreneurial expertise, the number of prior and current start-ups, their willingness to start again in the event of failure, and age of co-founder, which is a proxy to learning and experience. This study has implications for entrepreneurs, investors, and policymakers.

Keywords

References

  1. Amankwah-amoah, J. (2016). An integrative process model of organisational failure. Journal of Business Research, 02(005). https://doi.org/10.1016/j.jbusres.2016.02.005
  2. Bajwa, S. S., Wang, X., Nguyen Duc, A., & Abrahamsson, P. (2017). "Failures" to be celebrated: an analysis of major pivots of software start-ups. Empirical Software Engineering, 22(5), 2373-2408. https://doi.org/10.1007/s10664-016-9458-0
  3. Bala Subrahmanya, M. H. (2017). HOW DID BANGALORE EMERGE AS A GLOBAL HUB OF TECH START-UPs IN INDIA? ENTREPRENEURIAL ECOSYSTEM - EVOLUTION, STRUCTURE AND ROLE. Journal of Developmental Entrepreneurship, 22(1), 1-22. https://doi.org/10.1142/S1084946717500066
  4. Cardon, M. S., Stevens, C. E., & Potter, D. R. (2011). Misfortunes or mistakes ? Cultural sensemaking of entrepreneurial failure ☆. Journal of Business Venturing, 26(1), 79-92. https://doi.org/10.1016/j.jbusvent.2009.06.004
  5. Carter, N. M., Gartner, W. B., & Reynolds, P. D. (1996). Exploring start-up event sequences. Journal of Business Venturing, 11(3), 151-166. https://doi.org/10.1016/ 0883-9026(95)00129-8
  6. Carter, R., & Van Auken, H. (2006). Small firm bankruptcy. Journal of Small Business Management, 44(4), 493-512. https://doi.org/10.1111/j.1540-627X.2006.00187.x
  7. Corner, P. D., Singh, S., & Pavlovich, K. (2017). Entrepreneurial resilience and venture failure. International Small Business Journal: Researching Entrepreneurship, 35(6), 687-708. https://doi.org/10.1177/0266242616685604
  8. Cotterill, K. (2012). How do attitudes of habitual high-technology entrepreneurs to early-stage failure differ in Silicon Valley, Cambridge and Munich? December, 1-216.
  9. DeTienne, D. R. (2010). Entrepreneurial exit as a critical component of the entrepreneurial process: Theoretical development. Journal of Business Venturing, 25(2), 203-215. https://doi.org/10.1016/j.jbusvent.2008.05.004
  10. DeTienne, D. R., & Wennberg, K. (2015). Research handbook of entrepreneurial exit. Research Handbook of Entrepreneurial Exit. https://doi.org/10.4337/9781782546979
  11. Dias, A., & Teixeira, A. A. C. (2017). The anatomy of business failure: A qualitative account of its implications for future business success. European Journal of Management and Business Economics, 26(1), 2-20. https://doi.org/10.1108/EJMBE-07-2017-001
  12. Ding, Z., Sun, S. L., & Au, K. (2014). Angel investors' selection criteria: A comparative institutional perspective. Asia Pacific Journal of Management, 31(3), 705-731. https://doi.org/10.1007/s10490-014-9374-z
  13. Goldschlag, N., & Miranda, J. (2020). Business dynamics statistics of High Tech industries. Journal of Economics and Management Strategy, 29(1), 3-30. https:// doi.org/10.1111/jems.12334
  14. Headd, B. (2003). Redefining Business Success: Distinguishing between Closure and Failure. Small Business Economics, 21(1), 51-61. https://doi.org/10.1023/A: 1024433630958
  15. Jenkins, A., & McKelvie, A. (2016). What is entrepreneurial failure? Implications for future research. International Small Business Journal: Researching Entrepreneurship, 34(2), 176-188. https://doi.org/10.1177/0266242615574011
  16. Jenkins, A., Wiklund, J., & Brundin, E. (2014). Individual responses to firm failure: Appraisals, grief, and the influence of prior failure experience. Journal of Business Venturing, 29(1), 17-33. https://doi.org/10.1016/j.jbusvent.2012.10.006
  17. KESSLER, A., KORUNKA, C., FRANK, H., & LUEGER, M. (2012). Predicting Founding Success and New Venture Survival: a Longitudinal Nascent Entrepreneurship Approach. Journal of Enterprising Culture, 20(01), 25-55. https://doi.org/10.1142/s0218495812500021
  18. Khelil, N. (2016). The many faces of entrepreneurial failure: Insights from an empirical taxonomy. Journal of Business Venturing, 31(1), 72-94. https://doi.org/10.1016/ j.jbusvent.2015.08.001
  19. Korber, S., & McNaughton, R. B. (2018). Resilience and entrepreneurship: a systematic literature review. International Journal of Entrepreneurial Behaviour and Research, 24(7), 1129-1154. https://doi.org/10.1108/IJEBR-10-2016-0356
  20. Mantere, S., Aula, P., Schildt, H., & Vaara, E. (2013). Narrative attributions of entrepreneurial failure. Journal of Business Venturing, 28(4), 459-473. https://doi.org/10.1016/j.jbusvent.2012.12.001
  21. NASSCOM. (2019). Indian Tech Start-up Ecosystem.
  22. Politis, D., & Gabrielsson, J. (2007). ENTREPRENEURS' ATTITUDES TOWARDS FAILURE - AN EXPERIENTIAL LEARNING. Frontiers of Entrepreneurship Research, 27(6).
  23. Roininen, S., & Ylinenpaa, H. (2009). Schumpeterian versus Kirznerian entrepreneurship A comparison of academic and non-academic. Journal of Small Business and Enterprise Development, 16(3), 504-520. https://doi.org/10.1108/146260009109 77198
  24. Ronstadt, R. (1988). The Corridor Principle. Journal of Business Venturing, 3, 31-40. https://doi.org/10.1016/0883-9026(88)90028-6
  25. Saxena, S. (2015). 8 Things Investors Look for in A Business While Investing/Funding Linkedin. https://www.linkedin.com/pulse/8-things-investors-look-business-while-shweta-saxena
  26. Scott, M., & Bruce, R. (1987). Five stages of growth in small business. Long Range Planning, 20(3), 45-52. https://doi.org/10.1016/0024-6301(87)90071-9
  27. Shepherd, D. A., Wiklund, J., & Haynie, J. M. (2009). Moving forward : Balancing the financial and emotional costs of business failure ☆. In Journal of Business Venturing (Vol. 24, Issue 2, pp. 134-148). Elsevier B.V. https://doi.org/10.1016/j.jbusvent. 2007.10.002
  28. Start-up Genome. (2019). Global Start-up Ecosystem Report. The Startup Genome, 199. https://doi.org/10.1096/fj.00
  29. Stephanie. (2016). Kruskal Wallis H Test: Definition, Examples & Assumptions - Statistics How To. https://www.statisticshowto.com/kruskal-wallis/
  30. Ucbasaran, D., Westhead, P., Wright, M., & Flores, M. (2010). The nature of entrepreneurial experience , business failure and comparative optimism. Journal of Business Venturing, 25(6), 541-555. https://doi.org/10.1016/j.jbusvent.2009.04.001
  31. UNDP, 2001. (2001). Making new technologies work for human development.
  32. Unger, J. M., Rauch, A., Frese, M., & Rosenbusch, N. (2011). Human capital and entrepreneurial success: A meta-analytical review. Journal of Business Venturing, 26(3), 341-358. https://doi.org/10.1016/j.jbusvent.2009.09.004