When Survival Trumps Growth: Attention to Survival and Growth in New Ventures

Thursday, September 19, 2013 ( 1:00 pm to 2:00 pm )

Location: BC 430

Howe School Talk

Abstract:  New ventures learn from performance feedback. Prior studies focus primarily on learning from performance feedback on a single organizational goal, leaving learning from feedback on multiple goals less explored. Feedback on multiple goals may complicate action, as new ventures generally face attentional limitations. Using data from a national probability sample of new ventures, we study how new ventures learn from and respond to performance feedback on survival goal and size goal. Consistent with the behavioral theory of the firm, the result shows that unsatisfactory size performance drives new ventures to search for ways to expand organizational size and achieve organizational growth. However, the pursuit of survival goal competes with the pursuit of size goal. When survival chance is unsatisfactory, new ventures divert attention from the pursuit of size to the pursuit of survival, resulting in decline in organizational growth. The pursuit of multiple organizational goals is generally difficult, and the difficulty may result from attentional limitations. Although attentional capacity is generally limited, this limit is not homogeneous but varied across new ventures. As the size of the new venture team increases, attentional capacity expands, enabling new ventures to attend to multiple goals simultaneously. We draw implications for the behavioral theory of the firm and for the entrepreneurship literature.

Bio:  Yan Chen is a Ph.D. Candidate in Entrepreneurship and Innovation at the University of Missouri-Kansas City. He has taught a course on the lean startup and has been studying the intersection of the lean startup and the behavioral theory of the firm. He is currently drawing on the behavioral theory of the firm to study the learning and searching processes in new ventures. His research has been published or accepted for publication in the Journal of Product Innovation Management, Strategic Organization, and Information Systems Frontiers.