ABSTRACT
There is a dearth of research before a business becomes established in the market (i.e. nascent firm). This is surprising because nascent firms are at the core of economic growth through the process of “creative destruction”. This study proposes a model that explains how some activities in nascent firms, and the time in which those activities are undertaken, affect survival.
Similar to human evolution, firms go from conception (nascent firm) until birth (new firm). This conceptual paper, proposes that survival will be a function of the type of activity (i.e. business plan and prototype building) and the timing from the start of a nascent firm. According to the proposed model, both business plans and prototype building increase chances of survival of both nascent firms and new firms. It is hypothesized that nascent firms and new firms which rely on prototype building have more survival chances than otherwise. Similarly, it is hypothesized that new firms which develop business plans have more survival chances than startups do, while nascent firms and new firms which rely on prototype building and business plans simultaneously have more chances of survival than otherwise. Implications for theory building and practitioners are derived.
Keywords
Nascent firm, new firm, business plan, prototype, survival.