Endogenous capability building and start-up advantage In creating new markets

Startups play a major role in establishing many new markets. This is theoretically puzzling because existing firms have more resources and relevant core and peripheral capabilities that should advantage them in diversifying into new markets. Here, we explore one mechanism that differentiates startups from existing firms: the stronger link between past performance and resources available for future capability building for startups than for existing firms. Using a simulation model, we show that this reinforcing loop leads entrepreneurial financial markets to quickly focus on more promising startups and, despite initial disadvantage, enable the most promising startups to overtake projects in well-endowed diversifying entrants. We analyze how different markets and technological opportunities can affect these dynamics.

Department dc:contributor.department

Sloan School of Management.

Grantor dc:publisher

Massachusetts Institute of Technology

Year dc:date.issued

2016

Author dc:creator

• Hashemian, MohammadMahdi

Advisor dc:contributor.advisor

• Hazhir Rahmandad.

• Sloan School of Management.

Statement dc:rights

• MIT theses are protected by copyright. They may be viewed, downloaded, or printed from this source but further reproduction or distribution in any format is prohibited without written permission.

Licence dc:rights.uri

• http://dspace.mit.edu/handle/1721.1/7582

Language dc:language.iso

eng

Handle dc:identifier.uri

http://hdl.handle.net/1721.1/107529

OAI identifier oai:identifier

oai:dspace.mit.edu:1721.1/107529