Sowing the Seeds of Failure

Research Paper Title:

“Sowing the seeds of failure: Organizational identity dynamics in new venture pivoting”

Authors:

Yuliya Snihur (Toulouse Business School)
Bart Clarysse (Imperial College Business School)

Background:

Despite the prevailing view of entrepreneurs as continually pivoting their ventures, trying on different business models is not without risks, particularly in nascent markets. Scaling new ventures becomes dependent on employees and investors, who might make pivoting difficult. One of the researchers’ interviewees described the situation like this: “It's like working for Formula 1 and then they ask you to fix a deux-chevaux. You might do it for fun once, but not as a day-to-day job.” The authors’ find that pivoting can become challenging when organizational identity becomes misaligned with the new attempted business model. To pivot, the individual roles of organizational members (“what we do”) have to be aligned with organizational identity (“who we are”), if not, pivoting might fail.

Methodology:

Sample: Belgium-based software technology company
Sample Size: 1
Analytical Approach: In-depth longitudinal case study

Hypothesis:

• New venture pivoting relies on the ability to crystallize the individual roles of organizational members (“what we do”) in line with organizational identity (“who we are”)

• Stakeholder constraints can give rise to diminishing returns from pivoting in new ventures

Results:

• The authors’ findings reveal the inter-temporal effects of a lingering organizational identity that give rise to diminishing returns from pivoting. Their paper contributes to the literature on pivoting and organizational identity in new ventures by providing evidence of pivoting constraints.

Conclusion:

The researchers contribute to an emerging literature on new venture pivoting by showing how stakeholder constraints can give rise to diminishing returns from pivoting. Prior entrepreneurship research has focused on founding teams and the need for structure in scaling new ventures, without connection to organizational identity. The findings suggest that new venture employees and investors can slow down pivoting considerably due to their continuing identification with a lingering organizational identity that is misaligned with the venture's updated business model. Often hardly visible at the surface, these cognitive drivers of behavior can become powerful impediments to new venture plasticity, potentially contributing an explanation as to why pivoting might not always be associated with new venture success.