For nascent ventures, becoming cash flow positive may require changes in the business model. A business model is an interconnected set of activities and exchange relationships that create value, and includes customer value proposition, source of revenue/profit, resources, capabilities and key processes (Zott, Amit, & Massa, 2011). During venture development, the entrepreneurial team makes decisions about resource and activity configurations designed to deliver value to customers (Demil & Lecocq, 2010). Nascent ventures may be under conflicting pressures—to stay the course and give the business model time to succeed and attain legitimacy, or to cut losses and make a change rapidly (Gersick, 1994; Zimmerman & Zeitz, 2002). A change, or pivot, in key value creating activities, such as distribution, product technology, or market choice can hasten an early closure. In this study, we address the following question: “What causes nascent entrepreneurs to change their business models?” Drawing from the literature on strategic change and entrepreneurship, we hypothesize that earlier stage of development, more entrepreneur experience, previous angel funding, and environmental factors will be positively associated with business model changes.
Brush, Candida G.; Edelman, Linda F.; and Manolova, Tatiana S.
"TO PIVOT OR NOT TO PIVOT: WHY DO NASCENT VENTURES CHANGE THEIR BUSINESS MODELS? (SUMMARY),"
Frontiers of Entrepreneurship Research: Vol. 35
, Article 3.
Available at: http://digitalknowledge.babson.edu/fer/vol35/iss1/3