Business model evolution and the growth of innovative new ventures: Evidence from the Italian system

It is well acknowledged that a non-negligible number of new business ventures, of any industry and country, are short-lived and do not generate satisfactory economic performances or significant growth (Walker, 2005; Brusoni et al., 2006). Such poor outcomes, which apply to both traditional and innovative start-ups, are caused by several intrinsic limitations and weaknesses, pertaining to the entrepreneurial, strategic, and organizational levels. While these factors have been amply discussed \u2013 even if mostly in isolation \u2013 in the managerial literature (Goffin and Mitchell, 2005; Dodgson et al., 2008; Von Stamm, 2008; Tidd and Bessant, 2013), our claim is that, by considering them in an integrated perspective, we can shed new light on the deep causes of the above-mentioned \u2018innovation failures\u2019. In particular, the central idea of this study is that the performance gap of innovative new ventures mostly refers to a lack of adaptation and evolution of their initial business models (Zott and Amit, 2007, 2008). To support our claim, we analyze the business model evolution of four innovative new ventures over their first years of life. Our analysis reveals that, for all of the cases, the initial business models have significantly changed to cope with unexpected issues and negative feedback from the market. However, our findings also highlight that this adaptation to new contingent factors and to assure a better match with the market demand and the entrepreneurial objectives has not yet completely paid off (even after several years since the start of activities) and that most of the new ventures examined are still looking for a sustainable and scalable business model. In sum, contrary to the well-rooted idea that the market potential of innovative start-ups is reflected in its initial business model, our findings emphasize the importance of business model reconfiguration and of its continuous adaptation and fine-tuning to the uncertain competitive landscapes faced by such new ventures. Our conclusions are consistent with the basic assumption of this book, whereby the innovation process is a complex and long-lasting phenomenon. It takes a lot of adaptation and fine-tuning to bring to the market new and creative ideas. Along this path, idea generation and implementation do not necessarily proceed in a linear fashion, but take place interchangeably (Anderson et al., 2004; Van de Ven and Sun, 2011). It is the nature of this recursive process that sets the directions of business model reconfiguration and eventually determines the success of innovation