Tweaks and Pivots: The Impact of New Ventures’ Market Creation Ties on Business Model Experimentation in an Emerging Industry
Despite its importance for new ventures and for ventures in an emerging industry, we do not know a lot about what drives business model experimentation or how it may vary depending on the stage of the industry. In this longitudinal study, we track 187 new ventures from the earliest stages of the mobile health industry to examine how a venture’s market creation ties will act as sources of interorganizational learning that will influence a venture’s business model change behavior and how these dynamics change as the emerging industry matures. We find that a venture’s market creation ties make business model change both more likely and more radical, but only for ventures active in an introductory or growth stage industry segment. For ventures in a mature industry segment, the effect is the opposite. Our study makes contributions to the literatures on organizational learning, business models and entrepreneurship by showing how market creation ties can be sources of interorganizational learning that result in business model changes for new ventures in an emerging industry where other learning options are relatively scarce.