An integrated model of startup failure factors and entrepreneurial strategies to avoid failure

Document Type : Research Paper

Authors

1 Department of Entrepreneurship Management, Science and Research Branch, Islamic Azad University, Tehran, Iran.

2 Department of Management & Economics, Faculty of Management, Tarbiat Modares University, Iran.

3 Department of Management, Faculty of Management, Science and Research Branch, Islamic Azad University, Iran.

Abstract

Aim: This study aimed to integrate existing knowledge in the field of startup failure factors and entrepreneurial strategies to avoid them and to form coherent interpretative solutions for reducing the high failure rate of startups.
Method: This research was developmental and applied in terms of its aim and adopted a multiple qualitative approach. In this research, firstly, consecutive meta-synthesis of the findings of previous studies in two fields of startup failure factors and entrepreneurial strategies to avoid them were performed, and then interviews were conducted with 12 elite experts and entrepreneurs, and finally, upon theme analysis, the model and framework of interpretive findings were presented. Internal validity and internal reliability of the models were confirmed based on experts' evaluation by Cohen's kappa indices.
Findings: The comprehensive categorization model of startup failure factors in 7 overarching theme categories including team/human problem, product problem, wrong strategy, unfavorable market, financial problem, bad organization, and unfavorable environment were obtained from 23 organizing theme categories and 249 basic theme categories. Also, the solutions and strategies presented in the literature and interviews were extracted and the theme analysis of 122 basic categories yielded 20 sub-strategies and 5 main strategies to avoid the failure of startups, including synergistic team, credible product, agile management, effective cash flow, and Institutional facilitation, were identified for each comprehensive category of failure factors.
Conclusions: The most emphasized categories based on the frequency of unique themes in literature and interviews were: bad organization (bad management and wrong decisions, poor operations and processes, wrong time or place, bad commercialization), team/human problem (decreased motivation and perseverance, and deficiencies in team and human capital), product problem (product or technology problem, demand and customer not being valid, imitativeness and lack of advantage, intellectual property problem). The consolidation of the two research products, namely, the integrated model of failure factors and the framework of entrepreneurial strategies, showed that: a) the focus of strategies were on the same 3 category of team/human problem, bad organization, and product problem, however in a different order from the literature. b) the most emphasis of the studies was on flexibility and pivoting strategy, lean credible value, and synergistic team building, respectively. c) Contrastive matrix of strategies and failure factors showed the most emphasized correlations to be: 1- flexibility and pivoting strategy to avoid failure by bad organization, 2- complementary team strategy for overcoming the team/human problem, and 3- lean credible value strategy for avoiding the product problem. 

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References

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Journal of Entrepreneurship Development
Volume 16, Issue 2 - Serial Number 60
September 2023
Pages 115-128

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