The influence of dynamic capabilities on startup growth

Abstract

Purpose The purpose of this study is to analyze the relationship between dynamic service innovation capabilities (DSICs) and startup growth in an emerging country. Design/methodology/approach This paper used a theoretical DSIC model to process data on 137 Brazilian startups, using a stepwise regression. Findings Service startup growth is related to the capability of enterprises to understand market signals, learn from customers and design a scalable, repetitive and profitable business model. Research limitations/implications Despite the innovative nature of startups, this paper found that technological and networking capacities are not a determinant of growth. Practical implications Managers should commit themselves to improve their competence in terms of understanding market signals, even when they already have a consolidated business model, products and service offerings. The findings also function as a warning about the dangers of an excessive focus on technological capabilities. Social implications Innovative startups, which achieve high growth create a disproportionate number of new jobs. Hence, by indicating the dynamic capabilities that are more conducive to firm growth, this paper contributes to society and the economy at large. Originality/value The findings challenge the myth of technological capacity and networking skills as the main sources of startup growth. This paper shows that founders and managers of service startups who want to achieve rapid growth should concentrate more effort on other skills. Marketing competence and building scalable business models – abilities that are common to successful traditional firms – are more relevant for short-term growth than technological innovation.

New perspectives for dynamic capabilities in meeting needs of startups’ survival

“…This building of dynamic capabilities creates and organizes an organizational structure to allow searching and testing newness as of initial vision of founders (Oliva et al , 2019). In addition, exploiting new opportunities under a highly uncertain market environment (Giardino et al , 2014), the presence of dynamic capabilities for startups are crucial in enabling a rapid development and/or reconfiguration of resources for value creation as a sustainable basis to survive (Wu, 2007; Feng et al , 2019; Oliva et al , 2019; Ma et al , 2020; Teixeira et al , 2021).…”

“…From a research standpoint about dynamic capabilities of startups (Thiele and Fellnhofer, 2015; Chin et al , 2016; Datta et al , 2018; Caseiro and Coelho, 2019; Dong, 2019; Feng et al , 2019; Ma et al , 2020; Polo García-Ochoa et al , 2020; Steiber and Alänge, 2020; Guo et al , 2021; Teixeira et al , 2021), internal and external forces affect business in general (Cavalcante et al , 2011; Chesbrough, 2010; de Reuver et al , 2009; Johnson et al , 2008; Pucihar et al , 2019; Rub et al , 2017; Saebi, 2015; Seo and Lee, 2019; Teece, 2007; Thiele and Fellnhofer, 2015; Van Den Heuvel et al , 2020), and considering the differences in capabilities from startups to handle environmental changes, our framework combines dynamic capabilities of startups within their effects on tangible and intangible resources exchange to overcome challenges imposed from internal and external forces.…”

Dynamic Capabilities of Start-Ups

“…Not only the use of dynamic capabilities, but the characteristics of the given capabilities can also cause a difference: dynamic capabilities have an indirect effect on performance [Shi -Yuan -Lee, 2022], but this effect on performance can be influenced by participation in an acceleration program [García-Ochoa -De-Pablos-Heredero -Jimenez, 2022]. Among start-ups, it is not (only) technological (dynamic) capabilities that determine the growth of the firm, but rather, the ability to learn from customers and create scalable, repeatable and profitable business models [Teixeira -de Moura -Lopes -Marconatto -Fischmann, 2021]. Young and smaller organizations generally behave in the same way in terms of dynamic capabilities.…”

Fostering business model innovation for sustainability: a dynamic capabilities perspective

“…Furthermore, the logistics industry is characterized by high uncertainty and, therefore, for startups to compete in this highly dynamic environment, they must develop dynamic capabilities. In this sense, previous studies have shown that the ability to identify customer needs is essential for the startups' growth (Teixeira et al, 2021). Previous research has also revealed that companies must align customer needs with the requirements of sustainable development, taking a proactive role in creating sustainable behavior (Inigo et al, 2017).…”

“…Furthermore, the logistics industry is characterized by high uncertainty and, therefore, for startups to compete in this highly dynamic environment, they must develop dynamic capabilities. In this sense, previous studies have shown that the ability to identify customer needs is essential for the startups' growth (Teixeira et al. , 2021).…”