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Academy of Entrepreneurship Journal Volume 23, Issue 2, 2017
1 1528-2686-23-2-101
SYSTEMATIC LITERATURE REVIEW OF CRITICAL
SUCCESS FACTORS OF INFORMATION
TECHNOLOGY STARTUPS
José Santisteban, National University of San Marcos
David Mauricio, National University of San Marcos
ABSTRACT
In the industry of Information Technology (IT) Startup, high birth rates go hand in hand
with a high risk of failure; only one in three survive the first three years. There is a set of factors
that influence the success of the Startup. So in this paper we present a Systematic Literature
Review of critical success factors of IT Startups. Our keyword search found 1,013 papers and a
total of 74 primary studies were selected and analyzed as a result of the systematic review. We
identified 21 critical success factors grouped into three categories (organizational, individual
and external) and 4 stages of development through which a Startup passes (seed, early, growth
and expansion). In addition, we found that the experience previous start-up of the founding team
and government support factors affect the seed stage; the venture capital factor affects the early
stage; the clustering, technological/business capabilities of the founding team and venture
capital factors affect the growth stage; and the clustering factor affects the expansion stage.
There are few studies on the stages of development that a Startup undergoes, much less on the
factors that affect the stages of development.
Keywords: Critical Success Factors, IT Startup, New Technology-Based Venture, Stage
INTRODUCTION
At the moment of undertaking, fundamentally in the technology sector, it is necessary to
carry out a deep analysis not only of the national market, but of the global market, to see if our
idea has already been proposed or is already being exploited, since once Is launched the product
or service to the market of a country, its international expansion is practically implicit (Joshi &
Satyanarayana, 2014). In many countries in the region and in the world, there is a growing trend
towards new innovative businesses, so new technology-based companies (Startups) are born
each year (Hormiga et al., 2010). The study by Krejci et al. (2015) indicated that a Startup is a
new and temporary company that has a business model based on innovation and technology. In
addition, these types of companies have a potential for rapid growth and scalability. Startups are
known to governments around the world for their contribution to economic stability, growth, and
job creation (Sulayman et al., 2014). The figure of Startup has acquired an important relevance
in the most dynamic markets of the world as a new model of social and economic growth
(Olawale & Garwe, 2010). According to Kelley & Nakosteen (2005), Startups are important for
the development of the economies of the countries and especially important in the developing
countries. The concept of Startup is identified with those organizations that begin or are in their
Academy of Entrepreneurship Journal Volume 23, Issue 2, 2017
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earliest stages of development (Spiegel et al., 2015). According to Cho & McLean (2009),
Information Technology (IT) Startups, also referred to as new technology-based enterprises, are
those temporary organizations that create innovative products and/or services using high
technology, but this Type of companies are also known to be inserted in uncertain and risky
scenarios, proof of this is their high mortality rate (Preisendorfer et al., 2012). Unfortunately, the
failure rate of such firms is high worldwide (Cowling et al., 2006; Colombo & Grilli, 2005;
McAdam & McAdam, 2008). According to Ejermo & Xiao (2014), between 1990 and 2000,
only 21 percent of IT Startup in Sweden survived after 5 years. On the other hand, Hyder &
Lussier (2016) affirms that more than 80 percent of Startups fail in their first year of existence.
In the last decades, an extensive literature on the factors influencing the success of the Startup
has been developed (Yoon-Jun, 2010), although there is a lack of consensus in determining what
these factors are, along with a lack of knowledge about the Startups (Sulayman et al., 2014), so it
is preponderant to identify the critical success factors of the IT Startup, in order to mitigate the
risks of failure and, consequently, increase their success. Since 1984, with the work of Van de
ven et al. (1984), studies have been carried out to identify, analyze and discuss the main factors
that influence the success of the Startup (e.g. Almakenzi et al. 2015, Anh et al., 2012 Balboni et
al., 2014, Banda & Lussier, 2015). However, these studies have paid scant attention to
categorizing the identified factors, which according to Bocken (2015) all factors must be within a
certain category. In addition, factors must be classified to distinguish between different types of
factors influencing success. Although there are few studies that have tried to identify the stages
of development of the Startup, they have paid little attention to a stage called the exit stage,
which determines the sale of the business. Recently, Pugliese et al. (2016) recognized the need
for a more complete understanding of the stages of development of the Startup and the
importance of knowing how to manage each stage to achieve success. However, it is important to
identify which factors of success are relevant or influence the stages of development. However,
there isn’t a work on literature review that organizes all these works in a systematic way that
classifies the success factors into categories, that identifies the stages of development of the IT
startup and that determines the factors that influence each stage of the life cycle. In addition,
several papers state that there is a large discrepancy in the literature on the factors influencing
success or failure. Therefore, our research is in addition to these previous works, making a
Systematic Literature Review on factors influencing success, factor categories and factors that
are most important at different stages of development, which is summarized in the following
research question: What aspects have been developed about the success of the IT startup?
This article is organized in five sections. Section two describes the research methodology
used. Section three presents the analysis of the results of the selected literature. Section four
presents the discussion of the study and future research is suggested. Finally, in section five, the
conclusions are shown, which describes how each of the objectives of the research has been
fulfilled.
RESEARCH METHODOLOGY
A Systematic Literature Review is a clear and reproducible procedure consisting of a series
of phases that help researchers in defining the goal of research and planning the way in which
articles are retrieved and reported (Ardito et al., 2015). This study has followed a series of steps
to provide a systemic, transparent and reproducible methodology:
Academy of Entrepreneurship Journal Volume 23, Issue 2, 2017
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Planning the review: In this phase, the research questions are elaborated and the search
protocol is defined.
Development the revision: In this phase, the defined protocol is applied and the primary
articles are obtained according to the established criteria.
Results the review: In this phase, we present the results of the search and analysis of the
studies that have been selected. This analysis will be described in the Analysis section.
Planning the Review
In order to answer the research question, the following questions are asked about the
factors that influence the success of the Information Technology Startup.
Q1: What is success for startup?
Q2: What factors influence
success?
Q3: What are the categories and how is success factors categorized?
Q4: What are the development stages and what factors influence each stage?
The search sources are given by Journal banks: Science Direct, Springer Link, IEEE
Xplore Digital Library, ACM Digital Library, Emerald, Taylor & Francis. The search period
begins in the year 2003, because from that year they increase the studies about the factors that
influence the success.
We used the following search string in the titles, abstract and keywords: (factors OR
variable OR determinants OR driver OR reason OR category OR agent) AND (technology
startup OR software startup OR tech startups OR IT startup OR high tech startup OR new
technology-based venture OR technology-based startup OR small business tech OR firms
startup).
Development the Review
Inclusion and exclusion criteria have been considered, as shown in Tables 1 and 2,
respectively.
Table 1
INCLUSION CRITERIA
Inclusion Criteria
Reason for inclusion
Research focus
Studies that identify the critical success factors and desirable those that
categorize the factors and show the development stages.
Quantitative empirical studies
These articles are included because they provide extant empirical evidence,
which represents the main interest of this review.
Impact factor
Only articles of Journals with SJR impact factor are considered.
English language
Only English studies are considered.
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Table 2
EXCLUSION CRITERIA
Inclusion Criteria
Reason for exclusion
Publication type
Unit of Analysis
Research focus
Exclude books, book chapters, conference proceedings and dissertations.
Exclude studies that do not consider technology-based startups.
Studies that do not show research methodology, numerical tests (descriptive
statistics) and analysis or discussion.
In the first step, the keywords and their respective descriptors were used to search the
primary articles in defined banks. The review was limited to articles in peer-reviewed journals,
leaving out books, book chapters, and conference proceedings, since journal articles are
considered to be valid knowledge and represent authoritative statements on the subject (Ardito
et al., 2015). Specifically, the search was limited to high quality journals in the field of
"Entrepreneurship" and "Startup" with an impact factor higher than 1.5. The search procedure
considered the available editions of journals from the 2003 period. A total of 1,013 potential
studies were identified, these were subjected to a selection process according to the criteria of
inclusion and exclusion established. Thus, first, we divide the articles into "excluded articles"
(870 articles) and "articles of check the complete text" (143 articles), it was necessary to carry
out a previous review of the titles and abstracts. However, many abstracts do not provide a
clear understanding of the purpose of the articles, with 112 references being selected. Then, a
more detailed analysis of the articles of "full text check", we proceeded to read the
introduction and conclusions, obtaining 90 references. Finally, we proceeded to read the
complete content of the article in order to determine its relevance for the present study and,
mainly, to determine if these studies identify the critical success factors. Thus, the final sample
consists of 74 primary studies. It is worth mentioning that the enormous fall in the number of
articles that we are facing is not alien to the bibliographical revisions. In fact, most of them
often have a large number of articles in a first round of article search (Bakker, 2010), which
declines as academics continue with an in-depth analysis of their content against a set of
inclusion and exclusion criteria. The high number of articles excluded in the search process is
due to the general nature of our search terms. In fact, they are commonly used in different
types of studies about entrepreneurship and startups. We believe that this choice is justified by
the fact that the selected journals have been published manuscripts of the highest quality for a
long time. Therefore, it allows us to review the most representative and highly relevant
literature (Ardito et al., 2015).
The applied processes, as well as the results obtained in each step of the process, are
represented in Figure 1.
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Figure 1
FLOW OF THE PROCESS FOR THE SELECTION OF ARTICLES
Others O
Total of references using search strings:
Science Direct: 83
Springer Link: 295
IEEE Xplore Digital Library: 75
ACM Digital Library: 206
Emerald: 23
Taylor & Francis: 53
Others: 278 Total: 1,013
Using inclusion and exclusion criteria:
Science Direct: 24
Springer Link: 30
IEEE Xplore Digital Library: 13
ACM Digital Library: 16
Emerald: 14
Taylor & Francis: 11
Others: 35 Total: 143
Eliminated references after
reading the abstracts: 31
Selected references: 112
Eliminated references after
reading the introduction and
conclusions: 22
Selected references: 90
Eliminated references after
reading the whole text: 16
Selected studies: 74
Academy of Entrepreneurship Journal Volume 23, Issue 2, 2017
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Results the Review
The result of the selection process of the articles gave 1,013 studies, of which 74 were
selected. Only one study was a Systematic Literature Review (Pugliese et al., 2016), the other
73 were contributions, which were analyzed to answer the research sub questions. In Table 3,
the number of studies selected after applying the process flow of Figure 1 is shown.
Table 3
POTENTIALLY ELIGIBLE STUDIES AND SELECTED STUDIES
Sources
Potentially eligible studies
Selected studies
Science Direct
83
17
Springer
295
12
IEEE Xplore
75
1
ACM Library
206
0
Emerald
23
6
Taylor & Francis
53
6
Others
278
32
Total
1,013
74
Once the articles were selected, the trends of publications by each database were
identified. The sample of articles resulting from this methodology was published between
2003 and 2016, as shown in Figure 2, but more than half of the studies were published after
2010. The present study, therefore, seems timely, as there was recently an increase in the
number of academic papers on the factors influencing the success of the Startup.
Figure 2
TRENDS IN PUBLICATIONS RELATING TO CRITICAL SUCCESS FACTORS
12
10
5
5
8
2
6
1
2
2
4
2
1
1
1
1
1
2
6
3
1
2
1
1
1
1
1
2
1
1
1
1
5
4
4
2
1
1
1
1
2
2
2
1
1
0
2003 2014 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Science Direct Emerald IEEE Springer Taylor & Francis Others
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Figure 3
NUMBER OF ARTICLES PER JOURNAL
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Furthermore, Figure 3 offers a detailed view of the journals where the selected articles were. It is
worthy of note how this topic is widespread in the business and management literature, covering
60 different journals. Specifically, Small Business Economics published the most articles (7),
followed by Technovation (5), Research Policy (5) and Journal of Small Business and
Entrepreneurship (4).
73 of the selected studies have been oriented to carry out case studies on critical
success factors, with the United States being the country where the most case studies have
been developed, with a total of 11 studies, which represents 15% of all cases of study, as
detailed in Table 4.
Table 4
REGION FOR CASES OF STUDY OF SUCCESS FACTOR
Region for
cases of study
References
Total
Africa
(Preisendorfer et al., 2012; Olawale & Garwe, 2010)
2
North America
(Diochon et al., 2007; Song et al., 2008; Gartner & Liao, 2012; Ouimet & Zarutskie,
2014; Spiegel et al., 2015; Leary & DeVaughn, 2009; Maine et al., 2010; Kelley &
Nakosteen, 2005; Davis & Zweig, 2005; Friar & Meyer, 2003;
March-Chorda, 2004; Banda & Lussier, 2015)
12
South America
(Arruda et al., 2013)
1
Asia
(Almakenzi et al., 2015; Dornberger & Zeng, 2009; Cho & McLean, 2009; Yoon-
Jun, 2010; Kim & Heshmati, 2010; Yoo et al., 2012; Wing-Ki et al., 2005; Ng et al.,
2014; Joshi & Satyanarayana, 2014; Kakati, 2003; Morteza et al., 2013; Chorev &
Anderson, 2006; Gimmon & Levie, 2010; Abou-Moghli & Al-Kasasbeh, 2012;
Hyder & Lussier, 2016; Bou-Wen et al., 2006; Thiranagama & Edirisinghe, 2015;
Anh et al., 2012; Thanh, 2015; Lei-Yu et al., 2008; Wei-Wen, 2009)
21
Europe
(Schneider et al., 2007; Gottschalk & Niefert, 2013; Dautzenberg & Reger, 2010;
Strehle et al., 2010; Mueller et al., 2012; Festel et al., 2013; Biga & Gailly, 2011;
Hormiga et al., 2011; Hormiga et al., 2010; Garcia-Muiña & Navas-López, 2007;
Rojas & Huergo, 2016; Miettinen & Littunen, 2013; Marie-Estelle & Francois,
2014; Lasch et al., 2007; Spyros & Nickolaos, 2012; Groenewegen & De Langen,
2012; Van Gelderen et al., 2005; Colombo & Grilli, 2010; Balboni et al., 2014,
Colombo & Grilli, 2005; Bertoni et al., 2011; Pirolo & Presutti, 2010; Colombo et
al., 2004; Baptista et al., 2007; Ganotakis, 2012; O’Regan & Sims, 2008; Cowling
et al., 2006; Krejci et al., 2015; Ejermo & Xiao, 2014; Stucki, 2016; Bocken, 2015;
Grilli & Murtinu, 2014; McAdam & McAdam, 2008; Colombo et al., 2010; Sulayman
et al., 2014; Cannone & Ughetto, 2014; Chirjevskis & Dvortsova, 2012)
37
Total
73
Several European countries are aware that support for the creation of new innovative
technological ventures with a high potential for growth in the market is important for the
development of their economies. Meanwhile, the outlook for this type of business in Latin
America today is more encouraging, with a range of traditional support programs in seed
capital, investment angels and venture capital.
ANALYSIS
This section responds to the research sub-questions raised in the review planning.
Academy of Entrepreneurship Journal Volume 23, Issue 2, 2017
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Q1: What is Success for Startup?
In the literature there are several studies that try to define the success of the Startup.
Success is a term that means different things to different people; it is likely that entrepreneurs
define success differently from an investor or a client. For example, an entrepreneur could
define success in terms of whether the business can generate higher revenues, another could
define it according to whether it achieves personal fulfillment. While an investor can define it
as if the company where it invests allows you to earn more money. Table 5 shows the different
success definitions found in the selected studies.
Table 5
DEFINITIONS OF SUCCESS
Definition
Reference
Success is defined by the number of jobs the company has generated.
(March-Chorda, 2004)
It is given by its share in the market and the size of the customers.
(Van Gelderen et al., 2005)
It is the growth of sales and profitability, which has to be similar or higher
than the industry average.
(Wing-Ki et al., 2005; Hormiga et
al., 2010)
Success in the entrepreneurial ecosystem is that they buy or get you to go
public.
(Colombo & Grilli, 2010; Krejci et
al., 2015; Hyder & Lussier, 2016)
It is having a business that allows you to live the way you want. Some
employers want to avoid working for someone else.
(Chirjevskis & Dvortsova, 2012)
It is the achievement of the goals and objectives of the company and also
as a measure of good management.
(Anh et al., 2012; Thanh, 2015)
Success is in creating something that truly contributes to improving the
lives of others.
(Sulayman et al., 2014)
It is the good financial performance of the company.
(Spiegel et al., 2015)
From Table 5, it is observed that there is no standard definition of success in the
literature. However, all the definitions have something in common: the growth of the company
and the number of jobs generated. With respect to growth, it is a validation that the product
and/or service offered by startup has the ability to attract users/customers. On the other hand,
the creation of jobs is directly influenced by the growth of the company and the growth of the
entrepreneurial ecosystem.
In this study, a successful startup is considered a new company that offers products
and/or services capable of being well received in the market, looking for a repeatable,
profitable and scalable business model, generating jobs or Manage to transform the way
people do things.
Q2: What Factors Influence Success?
For the present investigation, it is understood by factors to those elements that can
condition the success or failure of a startup. Of the publications selected, 21 statistically
proven success factors have been identified, which are shown in Table 6, where the factors that
positively or negatively influence the (+) or (-) signs are identified respectively.
Academy of Entrepreneurship Journal Volume 23, Issue 2, 2017
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Table 6
FACTORS THAT INFLUENCE THE SUCCESS OF THE STARTUP
Id
Factor
Definiti
on
References
F1
Experience in the
industry of the
founding team (+)
Founders with previous experience in
the industry have a solid network of
contacts that facilitate the development
and growth of the company.
(Spyros & Nickolaos, 2012;
Preisendorfer et al., 2012; Anh et al.,
2012; Baptista et al., 2007; Bou-Wen et
al., 2006; Colombo et al., 2004;
Dautzenberg & Reger, 2010; Friar &
Meyer, 2003; Gartner & Liao, 2012;
Hyder & Lussier, 2016; O’Regan &
Sims, 2008; Pugliese et al., 2016; Rojas
& Huergo, 2016; Thiranagama &
Edirisinghe, 2015; Wei-Wen, 2009; Yoo
et al., 2012)
F2
Previous
experience startup
of the founding
team (+)
The entrepreneurial experience of the
founding team facilitates the launch of
the company and prevents the
appearance of errors in its management.
(Van Gelderen et al., 2005; Song et al.,
2008; Baptista et al., 2007; Bou- Wen et
al., 2006; Colombo et al., 2004;
Dautzenberg & Reger, 2010; Davis &
Zweig, 2005; Friar & Meyer, 2003;
Gartner & Liao, 2012; Kim &
Heshmati, 2010; Pugliese et al., 2016;
Mueller et al., 2012; Bocken, 2015)
F3
Academic
formation of the
founding team (+)
It is the academic preparation in
courses of management of the founding
team, which has a positive impact on
organizational growth.
(Van Gelderen et al., 2005; Baptista et
al., 2007; Bou-Wen et al., 2006;
Colombo et al., 2004; Dautzenberg &
Reger, 2010; Davis & Zweig, 2005;
Gartner & Liao, 2012; Hyder & Lussier,
2016; Pugliese et al., 2016; Rojas &
Huergo, 2016; Thiranagama &
Edirisinghe, 2015)
F4
Technological/
business
capabilities of the
founding team (+)
Technological and managerial skills,
aptitudes and knowledge required to
gain competitive advantage.
(Garcia-Muiña & Navas-López, 2007;
Groenewegen & De Langen, 2012;
Yoon-Jun, 2010; Li et al., 2010)
F5
Experience in
R&D of the
founding team (+)
In order to develop innovative products
and/or services, the entrepreneurial
team needs to have previous research
experience.
(Baum & Silverman, 2004)
F6
Experience in
management of the
entrepreneur (+)
It is the experience of the entrepreneur
in organization and general
management of the resources necessary
to bring success to the company. It also
describes the degree of competencies
(attitudes, skills or abilities) of the
entrepreneur to meet the objectives and
goals.
(Groenewegen & De Langen, 2012; Van
Gelderen et al., 2005; Anh et al., 2012;
Arruda et al., 2013; Baptista et al.,
2007; Bou-Wen et al., 2006; Cannone &
Ughetto, 2014; Hyder & Lussier, 2016;
Strehle et al., 2010; Thiranagama &
Edirisinghe, 2015; Yoo et al., 2012; Fini
et al., 2009)
F7
Leadership of the
entrepreneur (+)
They are the characteristics and
abilities of the entrepreneurial leader to
lead the organization to fulfill its
objectives.
(Schneider et al., 2007; Wei-Wen,
2009)
F8
Gender of the
entrepreneur (+)
It is the participation of men or women
as founders of the company.
(Becchetti & Trovato, 2002)
F9
Age of the
entrepreneur (+)
It is a relevant factor for the
development of a business. The
probability of undertaking decreases as
the individual's age increases.
(Oakey, 2003)
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Table 6
FACTORS THAT INFLUENCE THE SUCCESS OF THE STARTUP
Id
Facto
r
Definitio
n
References
F10
Initial motivation
of the
entrepreneur (+)
The motivation of the founder represents
his commitment to the project or idea of
company.
(Greve & Salaff, 2003; Reynolds &
Miller, 1992)
F11
Government
support (+)
It is the financial sponsorship of the
government, through seed capital, in the
initial stage of startup, are also support
programs made, especially for startup.
(Lasch et al., 2007; Chorev &
Anderson, 2006; Anh et al., 2012;
Arruda et al., 2013; Davis & Zweig,
2005; Pugliese et al., 2016)
F12
Venture capital (+)
It is the entrepreneurial capital that
consists of financing startup in the phase
of growth with high potential and risk.
(Bocken, 2015; Grilli & Murtinu, 2014;
Almakenzi et al., 2015; Bertoni et al.,
2011; Colombo et al., 2010; Kim &
Heshmati, 2010; Strehle et al., 2010;
Yoon-Jun, 2010)
F13
Level of
competence
(+)
It is the intensity of competition between
Startups within the same industry.
(Song et al., 2008; Arruda et al., 2013)
F14
Organizational size
(+)
It is the number of founding employees
of the startup, it is considered that the
bigger the size of the entrepreneurial
team, the greater the talent.
(Song et al., 2008; Ganotakis, 2012;
Baptista et al., 2007; Bou-Wen et al.,
2006; Colombo et al., 2004;
Dautzenberg & Reger, 2010; Gartner &
Liao, 2012; Rojas & Huergo, 2016;
Thiranagama & Edirisinghe, 2015;
Gottschalk & Niefert, 2013; Joshi &
Satyanarayana, 2014; Cannone &
Ughetto, 2014; Strehle et al., 2010)
F15
Organizational
age (+)
They are the years of operation of the
company from its creation.
(Haltiwanger et al., 2012)
F16
Product Innovation
(+)
Degree in which new innovative products
and/or services are introduced.
(Almus & Nerlinher, 1999)
F17
Location (+)
It is the geographic location of the
startup in a given location, being closer
to its suppliers and customers facilitates
growth.
(Hormiga et al., 2011)
F18
Dynamism of
the environment
(-)
It is the high pace of changes in the
external environment of the company.
(Timmons & Spinelli, 2004)
F19
Science and
technology
policy (+)
Political authorities give laws for the
development of science and technology.
(Scarborough & Zimmerer, 2003)
F20
Clustering (+)
Group of interrelated companies that
work in the same industrial sector and
that collaborate strategically to obtain
common benefits.
(Maine et al., 2010; Yoon-Jun, 2010;
Mueller et al., 2012)
F21
Partner (+)
It is a person or company with which an
agreement, agreement or alliance is
maintained.
(Sefiani & Bown, 2013)
All the factors explained in Table 6 are closely related and must be taken into account
when defining the Startup’s competitive strategy.
Some critical success factors have different names, for example: government support
(F11) has synonymous with government funding (Silva & Costa, 2013); The clustering factor
(F20) is also called support for business networks (Maine et al., 2010); The academic
formation of the founding team (F3) is also called the education level (Thiranagama &
Edirisinghe, 2015); The venture capital (F12) is known as external investment (Bocken, 2015),
Academy of Entrepreneurship Journal Volume 23, Issue 2, 2017
12 1528-2686-23-2-101
and finally organizational size (F14) is also called the size of the founding team (Rojas &
Huergo, 2016).According to Groenewegen & De Langen (2012), entrepreneurship
management experience (F6) is often analyzed in the literature, and is that many successful
StartUps were run by a CEO who had previous experience in company management. In
addition, the management experience allows the entrepreneur to efficiently manage the
company's resources to achieve success (Van Gelderen et al., 2005, Anh et al., 2012, Arruda et
al., 2013, Baptista et al. 2007; Bou-Wen et al., 2006). With regard to the academic formation
of the founding team (F3), IT startup entrepreneurs, on average, have a university education,
unlike other sectors (Van Gelderen et al., 2005; Baptista et al., 2007; Bou-Wen et al., 2006).
Another important factor analyzed in the literature is the experience in the entrepreneurial
team industry (F1), several studies indicate that it directly influences success (Spyros &
Nickolaos, 2012; Preisendorfer et al., 2012; Anh et al., 2012; In this paper, we present the
results of the initial study of the StartUp, which is based on the results obtained by the authors
of the study. The clustering (F20) also contributes to the success of the new company, since
they present networking opportunities and can interact with other companies of the same
sector (Banda & Lussier, 2015; Hormiga et al., 2011; Abou-Moghli et al., 2012).
From the Systematic Literature Review making the studies selected, 13 critical success
factors have been identified and are shown in Table 7.
Table 7
OTHER FACTORS THAT INFLUENCE THE SUCCESS OF THE STARTUP
Factor
Definition
References
Marketing Experience
In order to be able to sell the products and/or
services, the entrepreneurial team needs to have
previous marketing experience.
(Dimov et al., 2007)
Potential untapped
market
They are emerging markets or market segments
that have not seen product offerings.
(Berry, 1996)
Market growth rate
Degree in which the average sales of the company
increase, with respect to the industry.
(Pandey, 1996)
Distribution channels
Means through which entrepreneurs make products
and/or services available to consumers to purchase.
(Stuart & Abetti, 1987)
Initial capital
It is generally used to put the idea on paper and
cover the initial expenses of the business.
(Deakins & Whittam, 2000)
Level of independence
of the entrepreneur
It is possible to survive with our company or
venture, without having to resort to third parties.
(Phan & Foo, 2004)
Social skills of the
entrepreneur
It is the ability of the entrepreneur to communicate
and negotiate with other people or companies.
(Klepper, 2001)
Business attitude of the
entrepreneur
It is the ability to create or start a project, a
company.
(Castrogiovanni, 1996)
Personality of the
founders
Personality allows the founding team to know how
to face the difficult moments in the company.
(Van de ven et al., 1984)
Unemployment of the
entrepreneur
It is a factor that conditions the entrepreneur to set
up his own company, in order to be able to survive.
(Verheul & Thurik, 2001)
Familiar surroundings
Factor that favors the entrepreneurial initiative,
especially when it is in a familiar business
environment.
(Malecki, 1990; Davidsson et al.,
1994)
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Table 7
OTHER FACTORS THAT INFLUENCE THE SUCCESS OF THE STARTUP
Factor
Definition
References
Business plans
Document that includes the objectives, strategies,
organizational structure, amount of investment to
finance the enterprise.
(Miner & Raju, 2004)
Technological resources
They are an essential part of the company and help
to develop everyday operations.
(Alvarez & Barney, 2001)
Table 7 shows the factors that have been proposed in several studies. However, the
numerical tests performed in the studies do not confirm their influence on the success of the
Startup.
Q3: What are the Categories and how is the Success Factors Categorized?
The categories allow for there to be a classification of the success factors that share
common characteristics. Out of the selected studies, 3 success factor categories have been
identified: organizational, individual and external.
In the organizational category, also called organizational factors, the studies have been
focused on factors such as the organizational age (Song et al., 2008) and the organizational
size (Ganotakis, 2012; Baptista et al., 2007). In the study of Hormiga et al., (2011), they’ve
taken the role of the location of the company as a facilitating factor for success because it
allows the startup to be closer to the providers but especially close to the final clients. On the
other hand, Banda & Lussier (2015) claim partners are important for the survival and growth
of the Startups.
The individual’s category represent the challenges related to the human capital of the
startup (the entrepreneur leader and the work team). The connection between the human
capital of a company and the business success has been studied in many works. In the studies
done by Morteza et al., (2013) and Preisendorfer et al., (2012), they study the interaction
between human capital and success; the results obtained establish a strong positive connection,
especially when the human capital that is involved in the company is well trained and has the
necessary experience.
Lastly, the externals category is also called characteristics of the environment where
the Startups operate. Some researches point out that the external factors can work/act/serve as
the driving force behind the performance and growth of the organization. According to Chorev
& Andersin (2006), many times the success of a company can be influenced by factors foreign
to the company such as the competitive rivalry, innovation, changes in the processes and
technologies. In recent years, the study of the ways of financing the startup has caught quite
the attention. A better financial capacity gives the startup a better agility in the change of
product and technology and these then results in a better adjustment/adaptation to the demand
of the client. The lack of financing is often one of the reasons entrepreneurs give up on their
business initiatives (Van Gelderen et al., 2005; Song et al., 2008; Morteza et al., 2013; Kakati,
2003). Table 8 shows these categories and the classification of the 21 success factors.
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14 1528-2686-23-2-101
Table 8
CLASSIFICATION OF THE FACTORS THAT INFLUENCE SUCESS
Category
Definition
References
Factor
Organizational
Group of factors that define
the firm characteristics of
the startup.
(Groenewegen & De Langen, 2012;
Preisendorfer et al., 2012; Lasch et al., 2007;
Gottschalk & Niefert, 2013; Yoon-Jun, 2010;
Festel et al., 2013; March-Chorda, 2004)
F14, F15,
F16, F17,
F20, F21
Individuals
Consists of the groups of
characteristics of the
entrepreneur leader and the
founding team.
(Groenewegen & De Langen, 2012;
Preisendorfer et al., 2012; Lasch et al., 2007;
Van Gelderen et al., 2005; Colombo & Grilli,
2010; Gottschalk & Niefert, 2013; Song et al.,
2008; Miettinen & Littunen, 2013; Morteza et
al., 2013; Hormiga et al., 2010; Gimmon &
Levie, 2010; Spiegel et al., 2015; Leary &
DeVaughn, 2009; Kakati, 2003; Yoon-Jun,
2010; Wing-Ki et al., 2005; Chorev &
Anderson, 2006; Chirjevskis & Dvortsova,
2012; Festel et al., 2013)
F1, F2, F3,
F4, F5, F6,
F7, F8, F9,
F10
Externals
Factors that are in the
environmental context and
that describe the scene
where the startup develops
its activity.
(Van Gelderen et al., 2005; Chorev &
Anderson, 2006; Song et al., 2008; Yoon-Jun,
2010; Miettinen & Littunen, 2013; ;Festel et al.,
2013; Thanh, 2015; Kakati, 2003; Balboni et
al., 2014; Wing-Ki et al., 2005; Stucki, 2016;
Dornberger & Zeng, 2009; Olawale & Garwe,
2010; Morteza et al., 2013)
F11, F12,
F13, F18,
F19
Q4: What is the Development Stages and What Factors Influence Each Stage?
The development stages are phases that constitute the life cycle of a startup. In the
research done by Wing-Ki et al. (2005), they suggest 6 stages: preparation for Start-up, an
entrance evaluation is performed in order to assess the incubation program applicants;
incubación process, where the services and resources are channeled for the creation,
consolidation and escalation of the business in the market; incubatee performance measures,
these measures help to have a better understanding of where their Startups are incubated and
how to enhance their performance; the exit policies, an experienced business incubator must
be capable of providing professional knowledge and experience so as to help their Startups
towards graduation; parental care, not all incubated Startups may have gained enough
maturity to be able to operate independently, an extended period of care can make them
stronger in competing with others; and, lastly, disconnect incubator, the incubated Startups
are ready to become an independent business to enter the competitive world. On the other
hand, the study done by Yoon-Jun (2010) identified 3 stages: incubation, companies identify
the practical business ideas, review and evaluate the possibility of commercialization and
produce early products; growing, companies start producing, launching and selling their
products and/or services as a result of the technology development, and maturing, the focus is
on maintaining the growth rate and developing additional products. However, Pirolo &
Presutti (2010) identified two stages: Emergence, the first stage, normally there’s very small
equipment, it gets put into action and gives way to the first outline and early growth, the
entrepreneurs typically search the financing of the biggest venture capital from investing
angels. Likewise, Mueller at al. (2012) identified 2 stages: Startup, entrepreneurs focus on the
business opportunity that they plan to take advantage of, the exact starting activities such as
Academy of Entrepreneurship Journal Volume 23, Issue 2, 2017
15 1528-2686-23-2-101
)
the development of a prototype, the organization of a founding team and equipment
purchasing and growth, resources are collected to finance a rapid growth; the entrepreneur
focuses on the strategic alliances. Meanwhile, Ng et al. (2014) identified 3 stages: early, the
company builds its initial business team; growth and development, this stage is affected by the
management of resources and expansion, in this stage the human capital appears as the driving
force for the companies to expand rapidly, furthermore, the technologic infrastructure helps
the enhancement of the critical actives and the innovation of the products and/or services.
However, Bocken (2015) identified 4 stages: seed, this stage is influenced by family, friends,
entrepreneur’s own capital and government support; young, in this stage the products and/or
services are in production and the first clients turn up; growing, the sales and the clients are
increasing and the competition intensifies; and lastly, mature, the sales and benefits tend to be
stable. Nevertheless, competition remains ferocious and a decision needs to be made as to
whether to expand the company or not. In the work done by Almakenzi et al., (2015), 2 stages
were identified: Incubation, in this stage the entrepreneur leader evaluates the team’s
commitment and validates de business model; on the other hand, in the Post incubation stage,
the market evolution and the emergence of substitute and competing products are evaluated.
Table 9 shows the identified stages of the selected studies.
Table 9
STAGES OF DEVELOPMENT FOUND IN LITERATURE
Reference
Stages of development
(Wing-Ki et al.,
2005)
Preparation
for Start-up
Incubation
process
Incubatee
performance
measures
Exit policies
Parental
care
Disconnect
incubator
(Yoon-Jun, 2010)
Incubation
Growing
Maturing
(Pirolo & Presutti,
2010)
Emergence
Early growth
(Mueller et al.,
2012)
Start-up
Growth
(Ng et al., 2014)
Early
Growth and
Development
Expansion
(Bocken, 2015)
Seed
Young
Growing
Mature
(Almakenzi et al.,
2015)
Incubation
Post incubation
In order to identify the factors that influence the development stages in the startup, this
work has considered the stages showed in Figure 4.
Figure 4
SUCCESS STAGES AND FACTORS
Seed
Early
Growth
Expansion
F2 (Mueller et al., 2012),
F11 (Bocken, 2015)
F12 (Bocken, 2015 F4, F12 (Yoon-Jun,
2010), F20 (Mueller et
al., 2012)
F20 (Yoon-Jun,
2010)
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The seed stage is also called preparation for Start-up (Wing-Ki et al., 2005); emergence
(Pirolo & Presutti, 2010) and start-up (Mueller et al., 2012), in this stage there’s no business
plan 100% defined, this is why the work team is normally small and they are the ones in
charge of shaping said plan. Furthermore, it’s usual to use the seed capital or in other words,
the contributions given the founders, relatives or some small investor that believes in the
project (Mueller et al., 2012; Bocken, 2015). The early stage, also known as Young (Bocken,
2015), here the product is already on the market and everyday there are more clients willing to
buy the product and so it is necessary to keep innovating the product (Ng et al., 2014). The
growth stage is also called growing (Yoon-Jun, 2010; Bocken, 2015); early growth (Pirolo &
Presutii, 2010) and growth and development (Ng et al., 2014), in this stage the business model
suggested in the initial phase has been perfecting, thus causing the emergence of investment
funds specialized in the financing of the startup, in this stage it is important to be competitive
through the increase of the market share (Mueller et al., 2012). Lastly, the expansion stage is
also called mature (Yoon-Jun, 2010; Bocken, 2015), the external financing will turn out to be
crucial; in this stage alliances are established with other companies in order to facilitate the
settlement I other markets and segments. According to Ng et al. (2014), expansion is
motivated by the need to increase profitability, enhance business management and search
complementary services. DISCUSSION
About Success
The success of a startup is similar to the success of a person, out of all people born, few
manage to walk the path of abundance, prosperity, well-being and quality of life, the same
happens with the Startups, that’s why for many researchers it can be baffling that so few
Startups reach success.
After reviewing the few studies that deal with the stages of development of the
Startups, we have observed that in order to successfully overcome the early stages of its life,
where profitability doesn’t exist and there’s no own capital, the Startups require those
platforms because, otherwise, they could barely manage to arrange company projects.
Meanwhile, business success has been associated for year to the economic benefits that derive
from the commercial activity of the company; however, we can’t forget that what will really
determine the survival and success of a startup not always depends on obtaining economic
benefits, but also on the reception of its product and/or service by the market. Furthermore,
success lies in creating something that will truly contribute to the enhancement of people’s life
and help us change things so that the world becomes a better place.
About Categories and Factors
Researches have revealed a series of firm characteristics as potential success
determinants of the startup, for example, the organizational size. Colombo et al., (2010)
revealed that even inside the category of small companies, the size of the company is a factor
to consider for success. This conclusion is reinforced by the work of Ganotakis (2012) about
the success of the startup that indicated bigger companies in the small companies group will
tend more towards growth than the smaller ones. Other organizational factors that affect
success of the startup are the sector where it belongs to. Cowling et al. (2006), in his research,
they found out that Startups of a same industry sector have similar behaviors towards
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technological changes and especially towards growth, therefore, we believe that the launching
of a business or venture in the same sector where the founder was last employed is connected
with success. A factor that is not mentioned often is the participation of the family
environment in the decisions of the startup. We believe that the participation and intervention
of the family in the management of the business could have significant impact on the success
of the startup.
The educational background of the founder or the team doesn’t necessarily have a
positive effect in the performance, unless said education is complemented by abilities obtained
through experience. In fact, the enhancement of the abilities of the founder or the team, such as
business, managerial and commercial abilities is a key factor for an Information Technology
startup to increase its performance. However, literature mentions a connection between the
level of education and the success of the entrepreneurs. Further, it would seem that one of the
most frequent problems that affect the founders is their short term vision; most of the founders
don’t usually develop strategic plans that serve them as a guide for the management of the
startup, as mentioned in his work by Spiegel et al. (2015). The lack of experience in
management is often the main reason for the failure of new ventures. The entrepreneurs of
Startups rely on their previous experience and, that’s why, they don’t want nor try to expand
their knowledge in order to achieve a bigger business range. Additionally, more important than
a great business idea to be taken to the market is the work team that will develop the initial
idea, since a great idea in the hands of a team that is not committed to the business idea will be
doomed to failure. In this sense, it’s not only about having the best professionals available in
the industry, but also about showing an attitude just as flexible and adaptive as what is
required from the startup itself. Studies suggest that the members of the management team that
have previous experience in the industry increase the probability of success of the startup,
besides, most of the entrepreneurship literature supports the opinion that previous business
experience is an important factor in business success. Literature indicates business teams have
had a growing relevance in the last years.
For many startups, the pressure to stay up to date with the competition gives a mean to
enhance the capacities for innovation, survival and/or growth. Literature suggests that while
startups are susceptible to client pressure, these companies will adopt the Information
Technology as results of the clients’ demands and that involves a growth in their businesses.
Moreover, a study done by Pugliese et al. (2016) about startups suggests that external pressure
and competitive pressure are fundamental for the success of the startup. Further, the advantage
of forming alliances has been stressed for a long time and it was assumed that these benefits
extended to new companies. The alliances must benefit the startup because these companies
lack sufficient financial and human resources to invest in the technologies needed in order to
compete in their dynamic environments. Literature show there is a positive connection
between alliances (partner, clustering) and the success of the startup. Nevertheless, the
influence of the alliances is not so strong in comparison to other factors of the characteristics
of the entrepreneur and the composition of the management team. Additionally, informality is
one the barriers that prevent the development of these kind of companies. It would also seem
that the role of the government is not enough, although nowadays governments of different
countries have developed mechanisms and support programs that promote formalization and
training of new entrepreneurs.
It would seem the development of new technologies or products doesn’t guarantee the
commercial success of the companies that operate in the high technology industry. However,
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compatibility and security are crucial for the success of the startup because this can determine
the client’s acceptance.
It is true that having part of the initial financing covered is a good start but there are
other factors that need to be mentioned that are just as or even more important than financing.
Regarding the assumption that financing is the main concern in the growing stage, we think
there’s a significant importance not only in the growing stage but also during all stages of the
life cycle. Furthermore, most of the startups suffer from the lack of sufficient financial
resources up to the point where owners/managers invest their own personal assets. According
to the literature, financial resources are one of the most important resources known as key
requirement for the performance of the startup. Therefore, we think a long term sufficient
financing is a previous condition for the survival and sustainable growth of the startup.
Public assistance obtained has a positive effect over the growth of the startup.
Governments must be aware about the importance of providing the startup with a long term
sufficient financing in order to manage the delay between the development of the product or
service and the entrance to the market. Thus, financing from the government, short term
assistance policies and the introduction of new capitals of other businesses tend to increase the
growth of the startup. However, we believe the initial capital for the launching doesn’t
influence in a significant way because there are other factors far more relevant such as the
innovative business idea, market and team work.
About the Development Stages and the Factors
Some authors claim that a startup is like a baby because at the beginning one must take
care of it for as long as it’s necessary so that it has no problems in its development, it has to be
guided through stumbles and, because there are many things that could divert it away from the
path or simply harm it. An entrepreneur not only must know what it means and the
possibilities a startup can offer, but also the life cycle that it must go through in order to
achieve success, we believe these stages are: seed, it can be identified as the idea phase, it’s a
stage where the founding team is formed and the development of the product is launched, the
product might start being validated without the actual product, there are experiences and the
clients’ opinion is heard; early, in this phase the product should be on the market, investment
is necessary and the first investment round must be conducted; growth, the startup is around
two to four years old, it must consolidated and the product is optimized. However, rounds
about important financing towards the product and marketing are still being conducted;
expansion, this is the most strategic stage where the business must escalate and expand,
additionally, the startup has an important presence in the market. Nevertheless, investments are
not obtained from investment angels, these stay behind and it’s time to gather with investment
funds and venture capital. However, the selected studies that addresses the development stages
don’t consider a stage referring to the closure or sale of the startup that in other literature is
called exit or also “exit strategy”. There are many exit options: the sale to a strategic buyer is
the quick and very lucrative sale of a startup to another company that sees in it an opportunity
to grow or enhance its product or service. The public offer sale, that is to list their shares in the
stock, is not a usual exit done by startups. The liquidation or decline, if things are not doing
well, it’s better to contemplate if it’s worth liquidating and exiting, instead of extending the
agony.
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From selected studies, few authors connect a success factor to a development stage,
Figure 3 shows that out of the 21 success factors identified in the selected studies, only 5
factors (F2, F4, F11, F12 and F20) have been connected to a development stage. However,
there still are 16 factors that haven’t been connected. This could be due to, although is true that
there are many studies that identify the success factors in startups, only a few are aware of the
importance of identifying the factors that impact the development stages. Once all the success
factors during the development stages are known and studied, the design of the startups growth
and development support strategies could be enhanced, thus, guiding them towards being
competitive and sustainable with time.
Our study opens future research, for example, we must determine the degree of
influence of the 21 factors identified in this study on the success of the IT Startup, through
empirical tests, in addition to analyzing the correlation between the 21 factors identified.
Another future research is to link the remaining 16 success factors to one of the development
stages IT Startup, including the exit phase. Like all researches, this study has its limitations,
since it focuses on the critical success factors of a startup in just one industry, Information
Technology and therefore, it cannot be generalized to a startup within other industries. It could
also be possible that some of the research literature, which may be of importance for this
study, might have been left aside.
CONCLUSION
This study has done a Systematic Literature Review about the critical success factors of
Information Technology startups, 1013 primary studies about the subject have been identified,
out of those 74 turned out to be the selected research studies. Even though there are many
studies about the growth and success determinants of the startup, there’s no real agreement in
the literature about success factors. Therefore, this study did a Systematic Literature Review
with the goal of identifying the critical success factors of the startup.
From selected studies, 21 were the critical success factors identified the same that are
classified by the researchers into three categories: organizational, individual and external. The
startups go through a series of development stages that are also known as the life cycle.
However, in the literature there is no established consensus about that matter. This study
considers the following stages: seed, early, growth and expansion.
There few releases in South America about success factors, according to Table 4.
However, the governments of the countries are making the necessary efforts in order to
provide policies and programs that foster the growth and development of the startup. For
example, in Peru, the central government promotes the assistance for this type of business,
through its program startup Peru. A similar situation is seen in Chile, with its business
escalation program startup Chile. In Brazil, there are incubators that have been supporting
these companies for more than 40 years.
The obtained results of this study contribute to adding more knowledge to the existent
literature about success factors. Furthermore, the results will be important for managers of the
startup, entrepreneurs, Information Technology advisors, researchers and governments of the
countries, because they can use the reported results in this document as a reference when
developing strategies and programs that help the survival, growth and development of these
types of companies.
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