Disentangling the performance implications of new venture status: competitive vulnerability, resource scarcity or strategic flexibility?

Lucas Liang Wang, Qing Dai, Yan Gao

Research output: Journal PublicationArticlepeer-review


Purpose: New venture status is the most prominent feature of entrepreneurial startups, but its performance implications have remained under-studied. This study aims to bridge this knowledge void and offer precise guidelines for startup managers in boosting performance. Design/methodology/approach: The study develops and tests a multi-perspective model on the linkage between new venture status and firm performance by integrating I/O economics, resource-based view and dynamic capability perspective. The arguments from the first two perspectives point to an adverse effect of new venture status, which is contingent, respectively, on business differentiation and resource endowments. The third perspective grounds a positive relationship between new venture status and performance, which is more pronounced for firms with weaker dynamic capabilities. Findings: Quantitative evidence from a sample of new and established firms in China shows that the direct effect of new venture status is negative but insignificant. Neither business differentiation nor dynamic capabilities moderate the relationship. Low resource endowments, however, reinforce the negative influence of new venture status. New venture status, thus, shapes firm performance through resource scarcity from resource-based view rather than competitive vulnerability from I/O economics or strategic flexibility from dynamic capability perspective. Originality/value: Newness and new venture performance have both been extensively examined in literature. But the relationship between them has remained largely omitted. The multi-perspective model and the findings in this study help clarify the confusion as to whether newness is good or bad in the context of an emerging market and reveals the subtle mechanism the effect of newness unfolds.

Original languageEnglish
Pages (from-to)738-762
Number of pages25
JournalInternational Journal of Entrepreneurial Behaviour and Research
Issue number3
Publication statusPublished - 31 Mar 2023
Externally publishedYes


  • Differentiation
  • Dynamic capabilities
  • New venture status
  • Resource scarcity

ASJC Scopus subject areas

  • Business and International Management
  • Business, Management and Accounting (miscellaneous)


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