“Pivot Like Your Life Depends On It!” Mastering Early-Stage Business Experimentation
Research Paper Title:
“Early-stage business model experimentation and pivoting”
Authors:
Background:
Entrepreneurship research suggests new ventures benefit from early-stage business model experimentation and pivoting in response to negative feedback. However, research also suggests entrepreneurs may resist pivoting in response to negative feedback. This paper asks when and why entrepreneurs pivot their business models in response to negative feedback during early-stage experimentation.
Highlights:
The authors explore when and why some entrepreneurs overcome resistance to change in response to negative feedback during early-stage business model experimentation.
Founders tend to resist pivoting their value propositions more often than other parts of a business model in response to similar levels of negative feedback.
Venture teams with more entrepreneurial experience, more startup mentoring, and greater team size are more likely to be able to broaden their perspectives and overcome resistance to pivoting.
The research adopts a convergent, mixed methods research design, using qualitative and quantitative data with entrepreneurs in the field to investigate the factors that cause entrepreneurs to resist pivoting when they receive negative feedback
Methodology:
Number of studies: 2
Sample description: Early-stage entrepreneurs experimenting with their business models
Sample size: Qualitative study = 57; Quantitative study = 80
Hypothesis:
Hypothesis 1. The likelihood of pivoting in response to negative feedback will be lower when the feedback relates to the value proposition relative to other business model components (supported)
Hypothesis 2. Entrepreneurial experience moderates the relationship between negative feedback and pivoting the value proposition, such that the likelihood of pivoting the value proposition will be higher when teams have an entrepreneurial experience rather than when they do not have entrepreneurial experience (supported)
Hypothesis 3. Startup mentoring moderates the relationship between negative feedback and pivoting the value proposition, such that the likelihood of pivoting the value proposition will be higher when startup mentoring is high rather than when startup mentoring is low (supported)
Hypothesis 4. Team size moderates the relationship between negative feedback and pivoting the value proposition, such that the likelihood of pivoting the value proposition will be higher when the team size is large rather than when the team size is small (supported)
Results:
Entrepreneurs may feel an attachment toward the value proposition of their business model and, therefore, may resist pivoting in response to negative feedback during early-stage business model experimentation.
Entrepreneurial experience, startup mentoring, and team size may enable entrepreneurs to pivot the value proposition in response to negative feedback.
The breadth of perspective seems to be a plausible mechanism that could explain why entrepreneurial experience, startup mentoring, and team size enable pivoting.
Conclusion:
Overall, the authors contribute to understanding the nuances of pivoting different business model components, identifying social psychological enablers, and proposing an integrative explanation for when and why new ventures pivot.