Perspective: Economic Conditions, Entrepreneurship, First-Product Development, and New Venture Success*

Abstract

Entrepreneurial ventures have a significant impact on new job creation and economic growth, but existing evidence indicates that most entrepreneurial ventures fail. This paper reports key insights from VENSURV, a new database that tracks the success and failure of ventures founded since 1998. Based on an analysis of 539 new ventures founded during the years 1991-2001, the following conclusions are reached. First, consistent with prior research, less than half of the 539 ventures survived more than two years. Second, economic downturns lead to higher failure rates for new ventures. Third, new venture success is highly correlated with first-product success. Fourth, first-product success is enhanced when those products are introduced into markets with emerging market needs but with established industry standards. Finally, first-product and venture performance are significantly higher for products based on ideas that came from the founders. In addition, the most successful first products are based on ideas that reflect both technology development and an analysis of customer needs. a Performance was measured on an 11-point scale from 0 to 10. Ã Indicates means are significantly different at the 90% confidence level. 132 J PROD INNOV MANAG 2010;27:130-135 L. Z. SONG ET AL.

Technology adaptation: micro new ventures in a COVID-19 lockdown

“…Established small firms, however, are less likely to innovate than new ventures (Gimenez-Fernandez et al. , 2020; Song et al. , 2010), so that findings for established SMEs do not necessarily apply to new ventures.…”

“…The rest of the firms either digitalised the sales function only or outsourced the digital sales to partnering organisations, thus avoiding direct exposure to digital technology. Established small firms, however, are less likely to innovate than new ventures (Gimenez-Fernandez et al, 2020;Song et al, 2010), so that findings for established SMEs do not necessarily apply to new ventures.…”

Firm‐level impact of the global financial crisis: Evidence on innovation from Latin America

“…For example, Archibugi et al (2013b) argues that in recessionary times, firms may decide to expand their product range or to lower production costs and thus, the net effect in terms of the return to innovation is unclear a priori. Similarly, Song et al (2010) points out that entrepreneurs may encounter greater difficulties raising capital which increases the probability of failure and reduces the probability of innovation when economic conditions are unfavourable.…”

The Characteristics of Innovative, Mechanical Products—10 Years Later

“…New ventures that successfully design innovative features into their products and services, especially in the first 2 years after company inception, enjoy a much higher chance of growth and development [22]. Even though the relationship between firm size and innovation may differ by industry [23][24][25], Acs and Audretsch [26] and Stock et al [27] found a negative relationship between firm size and innovation in general.…”