Strategic repertoire variety and new venture growth: The moderating effects of origin and industry dynamism

Abstract

New ventures (companies eight years or younger) face an important choice in attempting to achieve growth: Should they follow "strategic simplicity" by relying on a few similar competitive actions, or emphasize "strategic variety" by implementing multiple different competitive actions? Data from 140 new ventures in Spain suggest that new ventures benefit from pursuing strategic variety, especially when their industries are highly dynamic. Further, although new ventures in general gain from strategic variety in highly dynamic industries, independently owned ventures achieve higher growth rates than their corporate counterparts.

Effectuation, Exploratory Learning and New Venture Performance: Evidence from China

“…Specifically, experimentation refers to a series of trial and error changes pursued along various dimensions of strategy, over a relatively short period of time, in an effort to identify and establish a viable basis for competing (Chandler et al 2011;Nicholls-Nixon, Cooper, and Woo 2000). The effectuation process as a series of experiments with business models allows new ventures to formulate and crystallize strategic goals in an unpredictable future (Chandler et al 2011;Larrañeta, Zahra, and Gonz alez 2012). Given the turbulent business environment in transitional economies (Tan 2005), predetermined strategic goals do not always work well.…”

“…Finally, through establishing pre-commitments and strategic alliances, effectuation helps new ventures to engage in exploratory learning by creating a variety of external knowledge sources (Chandler et al 2011;Fisher 2012). Pre-commitments and strategic alliances allow new ventures to search, recognize, and understand tacit and unique knowledge from strategic partners through interacting with external stakeholders (Hitt, Li, and Worthington IV 2005;Larrañeta, Zahra, and Gonz alez 2012;. To gain new knowledge externally is more critical for new ventures in transitional economies given that they cannot solely learn from their own experiences because much of that is outdated and outmoded in the increasingly open market (Zhao, Li, and Lee 2011).…”

Adaptation and inertia in dynamic environments

“…Management research has long espoused the idea that increased strategic flexibility and exploration hold the key to survival and profitability in highly dynamic environments (Eisenhardt and Tabrizi, 1995;Jansen, Van Den Bosch, and Volberda, 2006;Larrañeta, Zahra, and González, 2014;Nadkarni and Narayanan, 2007). Yet, scholars in management (Hannan and Freeman, 1984;Posen and Levinthal, 2012), in economics (Keller and Rady, 1999), and Keywords: organizational adaptation;inertia;selection;exploration;dynamism 2006).…”

HR flexibility: Precursors and the contingent impact on firm financial performance

“…Dynamic industries are typified by rapid changes and high variability in competitive pressures (Chadwick et al, ). Scholars have asserted that for firms that compete in highly dynamic industries, firm competitiveness and performance depend on the capacity to address threats and exploit opportunities that rapidly and often unexpectedly arise in the outputs of competitors and consumer demands (Chadwick et al, ; Larrañeta, Zahra, & Galán González, ). That is, firms competing in high‐dynamism industries face continuous pressures to adjust to changes in the outputs of competitors and the demands of customers, and thus, investing in resources that enhance flexibility may enable firms to adapt to unanticipated contingencies (Lecuona & Reitzig, ) and provide a buffer under conditions of uncertainty (Nohria & Gulati, ).…”

“…Dynamic industries are typified by rapid changes and high variability in competitive pressures (Chadwick et al, 2013). Scholars have asserted that for firms that compete in highly dynamic industries, firm competitiveness and performance depend on the capacity to address threats and exploit opportunities that rapidly and often unexpectedly arise in the outputs of competitors and consumer demands (Chadwick et al, 2013;Larrañeta, Zahra, & Galán González, 2014).…”