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Purpose: The quantity of platform start-ups is rising consistently. Nonetheless, it has been discovered that a large number of the new businesses crash and burn toward the starting stages and the greater part of them fall flat in under five years. The reasons for such failure are still to be uncovered in a systematic way. While there are adequate investigations that have independently propounded different reasons, this study aims to examine these reasons together by proposing a theoretical structure that will recognize the elements impacting the failure of platform start-ups. Methodology: An extensive systematic literature review was led to uncover and examine the different elements answerable for the failure of such platforms. A sum of 113 scholarly and non-scholastic sources were inspected and broke down to distinguish the basic elements. Findings/Contribution: For platform failure, three classes have been revealed including organizational, business model innovation, and environmental. In addition, 29 basic elements have been identified and classified into six categories while concentrating on similar ramifications. Utilizing the recognized components, the authors have proposed a map. This map uncovers that different elements are liable for platform failure. Media platform start-ups can be profited to a great extent from this study.
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Nordic Journal of Media Management
Issue 1(3), 2020, DOI: 10.5278/njmm.2597-0445.6090
To Cite This Article: Akter, B & Iqbal, A. (2020). Failure Factors of Platform Start-ups: A Systematic Literature Review.
Nordic Journal of Media Management, 1(3), 433-459. DOI : 10.5278/njmm.2597-0445.6090
Aalborg University Journals
Research article
Failure Factors of Platform Start-ups: A Systematic
Literature Review
Beauty Akter 1,*, Md. Asif Iqbal 2
1 Department of Innovation and Entrepreneurship, Daffodil International University, Dhaka, Bangladesh.
Email: beauty.de@diu.edu.bd (* Corresponding author )
2 Department of Innovation and Entrepreneurship, Daffodil International University, Dhaka, Bangladesh. Email:
asif.de@diu.edu.bd
Abstract:
Purpose: The quantity of platform start-ups is rising consistently. Nonetheless, it has been
discovered that a large number of the new businesses crash and burn toward the starting stages and
the greater part of them fall flat in under five years. The reasons for such failure are still to be
uncovered in a systematic way. While there are adequate investigations that have independently
propounded different reasons, this study aims to examine these reasons together by proposing a
theoretical structure that will recognize the elements impacting the failure of platform start-ups.
Methodology: An extensive systematic literature review was led to uncover and examine the
different elements answerable for the failure of such platforms. A sum of 113 scholarly and non-
scholastic sources were inspected and broke down to distinguish the basic elements.
Findings/Contribution: For platform failure, three classes have been revealed including
organizational, business model innovation, and environmental. In addition, 29 basic elements have
been identified and classified into six categories while concentrating on similar ramifications.
Utilizing the recognized components, the authors have proposed a map. This map uncovers that
different elements are liable for platform failure. Media platform start-ups can be profited to a great
extent from this study.
Keywords: Media Start-up; Platform Business; Failure Factors; Ecosystem; Financial Performance.
1. Introduction
In recent times, the platform business model has pulled in more consideration than the
customary plans of action due to its basic, single-track structure, one which wipes out the guards or
the middle people in the middle. There are a lot of pipeline business exits in the market, yet
considering the idea of the stage plans of actionit generally wins for all intents and purposes. It
gets consumers and the producers a solitary line. The end of guardians likewise permits shoppers
more prominent opportunity to choose items that suit their requirements (Parker et al., 2016). What
is more, it is generally less expensive to begin a platform business than a linear one where, as a rule,
434 B.Akter & A.Iqbal
the main way to begin a business is to have enough capital. The same number of youthful business
visionaries are getting into new companies, they think that its simpler to begin platform organizations
(Parker et al., 2016).
Parker et al. (2016) defined “a platform is a business based on enabling value-creating
interactions between external producers and consumers”. Platform business is often considered as
‘Multi-sided platforms’ (Hagiu, 2007) that are technologies, products or services that create value
primarily by enabling direct interactions between two or more customer or participant groups. Not
all technological platforms are multi-sided platforms as they do not create value between the
customers and suppliers connecting members of communities and enabling them to transact.
Platform business models can be tailored to meet a wide range of needs (Salamzadeh, Kawamorita
& Karami, 2019). They include: Marketplaces, Social and content networks, Payment platforms, and
Operating systems for computers, mobiles, game consoles, VR equipment and associated app stores
(Reillier & Reillier, 2017). Therefore, there is a difference between the product platforms and multi-
sided platforms. According to Hagiu, the key difference among them is, in a multi-sided platform,
each group of participants (“side”) are customers of the multi-sided platform in some meaningful
way whereas product platforms violate this rule. His illustration of platform business goes like the
below:
Figure 1: Multi-sided platform businesses (Hagiu, 2011)
However, the platform business model does not follow traditional management principles. They
are uniquely able to attract, match and connect people to enable them to transact (Reillier & Reillier,
2017). They often use the open business model that is required for their business. But, unlike linear
business, network effect has the utmost importance on the platform business. Network effects are the
effects that incremental participants (and participation) have on the value of the network to other
participants (Reillier & Reillier, 2017). This creates direct and indirect network effects. They are crucial
for the growth and the value creation of the platform to its participants. Currently, we can see most
of the media companies are following the platform business model and by connecting the
communities for creating and sharing contents, they are creating values.
Digital platforms have provided media entrepreneurs with new tools to engage with a vast
array of users more deeply and precisely (Khajeheian, 2017; Tokbaeva, 2019; Salamzadeh, Williams
& Labafi, 2019; Roshandel Arbatani, Kawamorita, Ghanbary & Ebrahimi , 2019). Therefore, inferable
from the effortlessness of their temperament, most of the cutting-edge media organizations are
platforms (Bucher & Helmond, 2017). Facebook, Instagram, Twitter, etc are largely platforms, which
trade content as worth. They likewise include a ground for nascent entrepreneurs (Nieborg & Poel,
2018; Nieborg & Helmond, 2019; Khajeheian, 2020). However, media start-ups that start their
endeavors utilizing platform are coming up short at high rates (Salamzadeh & Markovic, 2018). For
instance, VidMe, a video facilitating administration propelled before general society in 2014, fizzled
in 2017. These start-up claimed that they fizzled because of the solid rivalry in the market. A few
Nordic Journal of Media Management 1(3), 2020 435
endeavors have fizzled and there are numerous explanations for such failure. This examination
expects to distinguish and research the components answerable for such failure.
The Startup Genome Project from 2012 surveyed data from 3,200 companies (Marmer et al.,
2012). To find out the main reason for the failure of companies that are founded, the study identified
problems that arise when a company grows rapidly, even though it is not yet ready for rapid growth.
The problems are: The start-up does not have enough customers yet; the product is not mature
enough; the team decays in this situation; the business model does not work; or the necessary capital
is missing at the decisive moment. From the perspective of the authors of the study, it is essential that
these factors need to be balanced for the success of start-ups (Marmer et al., 2012). Moreover, several
start-ups could not comply with the demand of the consumers and the market and could not reach
the critical mass of participants. It is essential for a platform to reach a critical mass to grow as part
of business model innovation. But when that does not occur, platform start-ups must exit the market.
Because of cart innovation and helpless management, media stage like MySpace, Google Plus have
neglected to pull in the clients thus, presently, these are at serious risk. Without having a legitimate
administration, it is very hard for rising new start-ups.
Mancha et al. (2019) confirmed seven mistakes by analysing 16 emerging platform start-ups: 1.
Failing to create a seamless digital experience; 2. Failing to develop a vibrant ecosystem; 3. Failing to
protect monetization opportunities; 4. Failing to recognize and balance strategic options at three
crucial pivot points; 5. Failing to exploit the synergy of digital and physical assets; 6. Failing to
innovate beyond the digital experience; and 7. Failing to follow emergent strategies. Platform
innovation, process innovation, and business model innovation, too, are drivers of platform failure
(Fu et al., 2017). An article in Harvard Business Review spotlights five key factors that impact the
failure: failure to devise a good strategy, network effects, failure to put customers’ trust in front,
product timing, and the entrepreneurs’ hubris. Yoffie et al. (2019) grouped the most common
mistakes of platform failure into four categories: (1) mispricing on one side of the market, (2) failure
to develop trust with users and partners, (3) prematurely dismissing the competition, and (4) entering
too late.
Previous findings on the factors responsible for the failure of new ventures have been highly
divergent. Several studies have reported that financial challenges are one of the key factors for
platform failures (Bednár & Tarišková, 2017). Atsana (2016) referred to such challenges as the internal
factor of the organization. Moreover, getting the price right is necessary in any platform (Yoffie et al.
2019). For a platform to sustain in the market, it needs to design their pricing strategies in such a way
that overall value for the platform is maximized (Reiler & Reiler, 2017).
Regulatory challenges or legal issues include one of the noteworthy challenges for new-age new
start-ups. If the platform does not give a base affirmation on quality of service and security, it risks
losing customers. Regardless, normally, giving a guarantee may destroy the business suggestion that
makes the platform approach reasonable regardless. In this manner, governance can be a challenge,
especially for small start-up bunches with low resources (Choudary, n.d). Now and again a start-up
can create from a clear idea and enter a vast expanse of legitimate complexities that can finally close
it down. For instance, by far most of the media platform start-ups access personal information of
visitors to direct arrangements or their exhibiting endeavors. Generally speaking, they use
nonexclusive substance for the security procedure appeared on the site which makes them powerless
against be sued for violate of individual data laws. On this note, Khajeheian (2020) asserts that
“proliferation of obscene content including pornographic, violent, abuse, piracy, fraud and illegal
activities within the first generation of social media resulted to numerous lawsuits, not only against
the producers of contents that in many cases were anonymous, but the platforms as the distribution
channels”. Therefore, the platforms that promote media entrepreneurship are like building blocks of
an entrepreneurial economy; but they need to adopt some new requirements to benefit themselves,
society and other businesses. Where policy makers can help this process by drafting some measures
436 B.Akter & A.Iqbal
to free data from the blackhole after a certain period of time, or to ask social platforms to share some
levels of data that can be used for analysis of social patterns, preferences, trends etc.
On the other hand, Hubris, along with overconfidence and arrogance, to name a few
misdirected traits, can produce spectacular failures” (Yoffie et al. 2019). Human competencies were
also considered in another workin combination with financial datato foresee the failure (Cooper
et al., 1994). Khelil (2016) observed that the personality traits of entrepreneurs are linked to failure,
as also the psychological/emotive aspects of entrepreneurship. Even the platforms are highly
dependent on the entrepreneurs’ ability to fully harness the opportunities that digital platforms offer
(Dal Zotto & Omidi, 2020). According to Dal Zotto & Omidi (2020), entrepreneurs to take into account
not only the social-cultural changes reflected in both audience and customers’ preferences, but also
changes in the nature of work.
Aside from every one of these reasons, a couple of different variables and some different
challenges have been distinguished that assume an indispensable job in changing the destiny of new
businesses. The platform business has brought about countless investigations that endeavor to unfurl
opportunity acknowledgment. The quick development of the field has likewise added to troubles
amassing and organizing the examination, and it is trying to increase a diagram of the idea. In
addition, customer relationships are quite significant, with direct relations (producer to consumer)
and interactive (via social media) to be the standard (Crespo et al., 2020). Moreover, governments
and political institutions have always been trying to increase their power to influence public opinion
by penetrating the media sphere (Dal Zotto & Omidi, 2020).
Notwithstanding, further research is required to compose the failure factors in an efficient
manner and separated those variables into classes which might be helpful to comprehend why
platform start-ups fall flat. Hardly any examination would be found to propose a map which would
be fundamental in exploring the start-ups’ failure in locale. Different studies suggested different
forms: while some have identified human factors, some have claimed business model innovation.
Some other researchers have also investigated the micro- and macro-environments (Maulana et al.,
2018) as reasons for platform start-ups’ failures. The authors can start to see the important studies
and assemble a few significant contributions into a holistic framework. We refined our study based
on one crucial themethe key factors behind the failures of platform start-ups. This theme has led
us to think about the measurement of failure. To carry out this study, we had the following research
question in mind: Which are the factors that influence the failure of platform and platform-based
start-ups?
This study is divided into four sections. Section two describes the research methodology of the
study; Section three elaborates the analysis of the findings of the literature. The discussion of the
findings has been delineated in section four.
2. Research Method
A systematic literature review is a clear and reproducible procedure consisting of a series of
phases that help researchers define the goal of research and plan the way in which articles are
retrieved and reported (Ardito et al., 2015). Such published works represent validated knowledge
and high impact on the research field (Podsakoff et al. 2005; Reim et al. 2014). The authors design a
systematic literature review based on Booth et al. (2016) approach. They undertake four sequential
steps following the Search, Appraisal, Synthesis, and Analysis (SALSA) Framework (Grant & Booth,
2009).
At the first step, so as to discover the response to the study question, we directed a deliberate
writing review from scholastic papers (journals, books, and experimental examinations) as well as
non-scholarly sources (site pages, media sources, magazines, and reports). Initially, the search source
Nordic Journal of Media Management 1(3), 2020 437
was started from the journal banksScienceDirect, Springer Link, IEEE Xplore Digital Library,
Emerald, and Google Scholar. We had also conducted relevant searches using the Google search
engine on topics related to our study. It began by searching the keywords and descriptors from the
primary articles in the defined banks (Chan-Olmsted et al. 2020). The review was limited to articles
in peer-reviewed journals, books, book chapters, and conference proceedings. We focused mostly on
the scholarly articles as these are considered valid knowledge and represent authoritative statements
on the subject (Ardito et al., 2015). The underlying pursuit indicated 3,865 outcomes from the diary
banks.
In the next step, utilizing the consideration and rejection models (Table 1 and 2), we have
reclassified our quests. We considered optional references from the articles when appropriate.
Table 1: Inclusion Criteria
Inclusion Criteria
Reasons for inclusion
Research focus
Studies that recognize the basic failure variables of the platform start-ups and
platform failure and, at times, classify in the different life stages.
Qualitative and
Quantitative studies
Studies that present the empirical and quality data on the failure factors
English Language
For this study, we chose only English Language
Table 2: Exclusion Criteria
Inclusion Criteria
Reasons for exclusion
Research focus
The studies that do not talk about the failure factors (we included this criterion after
reading abstract and body).
Analysis of the
study
Studies that do not include the platform start-ups
At the third step, based on the research goals, it was crucial to obtain the result of the previous
research in a systematic way. After analysing the titles and abstractswhich do not provide a clear
understanding of the failure factorswe found 714 sources.
Finally, we continue to read the whole text of the articles which provide the holistic view of the
failure factors. Therefore, it gives us a result of 88 academic papers that discuss the failure factors.
These determined the relevance of our present study and provided information about the critical
failure factors required for our study. The search process excluded the high number of articles
because of the general nature of our search terms. These are commonly used in entrepreneurship and
start-up studies.
Some research works can be found that have done contextual analyses of the start-ups. But there
are some organizations which examine the new businesses' excursion. They composed the narratives
in different distributions like-magazines, articles, online journals, etc. Along these lines, in the
following stage, utilizing Google web index, we have recognized a couple non-scholarly papers. This
time, we utilized the serious setting capacity of Google web crawler. We utilized similar catchphrases
and selected English language alternative. This came about 221 web pages that are relevant for our
investigation. After cautiously going through all the pages, we have distinguished 25 sources that
portray the platform new companies failure reasons. A few articles even gave legitimate information
like-CB Insights, Kotashev. The cycle of precise literature review is appeared in fig 2.
438 B.Akter & A.Iqbal
Figure 2: Flow process of the Systematic Literature Review
Table 3: Potentially Eligible Studies and Selected Studies
Sources
Potentially eligible studies
Selected studies
Science Direct
758
17
Springer
1730
33
IEEE Xplore
520
22
Emerald
857
16
Others
221
25
Total
4086
113
The first and second author examined the retrieved papers, where each author separately
reviewed the papers based on titles and abstracts. By discussing the full text of the relevant papers,
disagreements were resolved. This was necessary since some of the abstracts were incomplete or
poor. In the 113 sources, various methods were adopted, which are shown in Figure 3.
Figure 3: Methods Used in the Reviewed Literature
3. Analusis/Results
The results from the extracted data are presented in this section. The research questions will also
be analysed in this section.
Nordic Journal of Media Management 1(3), 2020 439
3.1. What are the Factors that Influence Platform Failure?
Many prior research works have been directed on platform start-ups and their endurance in the
market. Parker et al. (2016) talked about three capacitiespull, facilitate, and matchought to be
adjusted to make a fruitful platform. It is additionally contended that not all platforms would have
all these three capacities, yet to endure, a platform needs one specific capacity. In any case, this
examination additionally found the three key variables of liquidity, coordinating quality, and trust,
stay essential in estimating the soundness of for all intents and purposes any sort of recently
propelled platform. The new start-ups require more cautious consideration from the management
and the environment.
The present study investigates the factors behind the platform failures that directly lead to the
failure of platform start-ups. Mancha et al. (2019) confirmed seven mistakes by analysing 16 emerging
platform start-ups. In the literature, a few investigations have introduced the factors behind platform
failure. If a platform falls flat, it positively prompts the failure of the start-ups. By breaking down
past examinations, the authors have distinguished a decent number of factors, and they have ordered
these components into three unique classes: organizational, business model innovation, and
ecosystem (Table 4).
3.1.1. Organizational
In this classification, a few variables must be thought of. Different examinations have named the
variables in different structures. Mancha et al. (2019), who contemplated 16 emerging, failed, and
successful platforms, recognized seven mix-ups to dodge in the structure, dispatch, and scaling of
new and new computerized platforms. In the paper, Mancha et al. (2019) alluded to the failure of
adaptation openings, inability to misuse the cooperative energy of computerized and physical
resources, and inability to perceive and adjust key choices at three critical turn focuses. These are
viewed as slip-ups in stage plan with respect to the businesspeople.
Marshall et al. (2016), in his study, revealed six reasons for platform failure: it was mentioned
that if a start-up fails to engage developers, it will lead to the failure of the platform. ‘Successful
platforms engage in platform evangelism, providing developers with resources to innovate, feedback
on design and performance, and rewards for participation,’ said Van Alstyne, Parker and Choudary,
(2016). Moreover, there should be interactions among the consumer, the producer, and the platform.
Everybody must get enough value which, in future, would bring all the stakeholders onto the
platform. According to Van Alstyne, Parker and Choudary, (2016), ‘A simple rule for platform
managers is to take less value than you make and share value fairly with all participants.’
It is essential to reach the critical mass of participants for any platform start-up to sustain itself
in the market. Contrariwise, too much attachment to money instead of critical mass (Marshall et al.,
2016) would be certain to generate the failure of the platform. Cennamo & Santalo (2015) also focused
on this fact of pursuing an intermediate approach between the mass market and a niche.
440 B.Akter & A.Iqbal
Table 4: Factors that Influence the Platform Failure
Category
Factors
References
Organizational
Failing to protect monetization
opportunities
Mancha et al., 2019
Failing to exploit the synergy of
digital and physical assets;
Mancha et al., 2019
Organizational performance
Spender et al., 2017
Failing to recognize and balance
strategic options at three crucial
pivot points
Mancha et al., 2019
Failure to engage developers
Marshall et al., 2016
Failure to share the surplus
Marshall et al., 2016
Failure to put critical mass ahead of
money
Marshall et al., 2016
Business Model
Innovation
Product innovation
Fu et al., 2017; Crowne, 2002; Jimenez, 2012; Joshi
& Satyanarayana, 2014; Vesper, 1990
Process innovation and business
model innovation
Fu et al., 2017; Still et al., 2017; Long et al., 2017;
Jimenez, 2012; Lundvall, 2009; Porter, 1998
Innovation performance
Spender et al., 2017
Costs
Gabriel and Sabatier, 2020;
Flawed business model
Bajwa et al., 2017; Ganesh, 2015
Failing to create a seamless digital
experience
Mancha et al. 2019;
Failing to innovate beyond the
digital experience
Mancha et al., 2019; Cennamo, & Santalo, 2015
Failing to follow emergent
strategies
Mancha et al., 2019; Cardon et al., 2010; Cennamo
& Santalo, 2015
Failure to launch the right side
Marshall & Parker, 2016
Environmental
Network structure
Spender et al., 2017; Battistella et al., 2017
New ventures
Spender et al., 2017
Universities
Spender et al., 2017
Venture capital
Spender et al., 2017; Santisteban & Mauricio,
2017;
Failing to develop a vibrant
ecosystem
Mancha et al., 2019
Government support
Santisteban & Mauricio, 2017; Khelil, 2016;
Spender et al., 2017
Customer
Choshin & Ghaffari, 2017; Long et al. 2017; Still et
al., 2017; Jimenez, 2012;, Joshi & Satyanarayana,
2014; Ganesh, 2015
Nordic Journal of Media Management 1(3), 2020 441
3.1.2. Business Model Innovation
This category represents innovation in the business model, on which the growth of the venture
is dependent. Many researchers point out that platform development is the key value driver for many
start-ups (Crowne, 2002). While the costs (Gabriel & Sabatier, 2020) matters in the innovation
performance (Spender et al., 2017), the process innovation and business model innovation (Fu et al.,
2017; Still et al., 2017; Long et al., 2017; Jimenez, 2012; Lundvall, 2009; Porter, 1998) should be taken
into consideration. Otherwise, the platform will not work. As business model innovation is one of
the key elements, greater emphasis should be given to this before launching and building bridges
among the stakeholders. Failure to create a seamless digital experience, innovate beyond the digital,
and follow emergent strategies (Mancha et al., 2019) would make it difficult for the platform to create
a viable impression on the consumers. In addition, Marshall and Parker (2016) elaborated the point
that a platform should launch at the right side, or the effort would go in vain.
3.1.3. Environmental Factor
Apart from the organizational and business model innovation category, some other factors in
the environment also have a great impact on platform failures. How a platform structures its network
has holistic implications for the growth of the platform (Spender et al., 2017; Battistella et al., 2017;
Vesper, 1990). New ventures and universities (Spender et al., 2017), venture capitals (Spender et al.,
2017; Santisteban & Mauricio, 2017), vibrant ecosystem (Mancha et al., 2019), government support
(Santisteban & Mauricio, 2017; Khelil, 2016; Spender et al., 2017 ), and customers (Choshin & Ghaffari,
2017; Long et al., 2017; Still et al., 2017; Jimenez, 2012; Joshi & Satyanarayana, 2014; Ganesh, 2015) also
play a big role in platform failure.
3.2. What are the Factors that Influence the Failure of Platform Start-ups?
In an investigation on the post-mortems of 101 new businesses by CB Insights, it assembled a
rundown of the best 20 reasons platform start-ups come up short: in this, a lack of market need (42%),
running out of cash (29%), and the absence of the right team (23%) got the best three positions. Even
though, it is not an academic article, it has a demonstrated record, since it legitimately researched the
platform start-ups. As usual, the real scenario of the market gives genuine information. Be that as it
may, Bednár and Tarišková (2017) indicated five fundamental issues identified with money. As per
this investigation, these are: lack of money for further development (34%), no need for a
product/service in the market (28%), no investors (16%), cost issues (16%), absence of the right team
(14%). The literature review has permitted us to make sense of different sorts of variables identified
with our study. In the wake of investigating the scholarly and non- scholarly papers, the authors have
discovered 29 basic failure components of the platform start-ups. These variables have been
referenced in various articles, and a portion of the articles have gathered these elements. In Table 5
(underneath), these 29 variables have been recorded and expounded for better understanding just as
for giving the references. Factor IDs, as well, have been incorporated to distinguish these without any
difficulties. It ought to be noted, notwithstanding, that the elements are not recorded consecutively
arranged by the degree of effect on the failure of the platform start-ups.
Table 5: Factors that Influence the Platform Start-ups Failure
Factor
ID
Factor
Factor Elaboration
References
F1
Run out of cash
The inability to
utilize the cash and
raise funding
Cantamessa et al., 2018; Kolari et al., 2002;
Gage, 2012; CB Insights, 2019; Tobak, 2014;
Skok, 2016; Davis, 2020; Kotashev, 2020;
Cortes, 2019
F2
Not the right team/ Not
Having the Right Team
Failed to get the
right team members
Bednár & Tarišková, 2017; Atsana, 2016;
Love, 2016; Lukason and Hoffman, 2015;
442 B.Akter & A.Iqbal
who will facilitate
the growth of the
start-ups
Giardino et al. 2015; Jimenez, 2012; Gaynor,
2012; Almakenzi et al., 2015; Haque et al.,
2020; Kulicke & Kripp, 2013; Jong, 2018; CB
Insights 2019; Kotashev, 2020
F3
Get outcompeted
New entries in the
market make it
difficult to sustain in
the market
CB Insights, 2019; Skeldon, 2019
F4
Pricing/cost issues/
Getting the pricing wrong
It is the cost of the
product that, in
some cases, does not
align with the
consumer demands
and product
requirements.
Bednár & Tarišková, 2017; Atsana, 2016;
Gabriel and Sabatier, 2020; Love, 2016;
Cantamessa et al., 2018; Beaver, W.H.; DIHK,
2014; CB Insights, 2019; Kotashev, 2020;
Eastwood, 2019; Kash, 2018; Eschberger,
2018; Eastwood, 2019; Yoffie et al., 2019
F5
User Unfriendly product
The product which is
not user-friendly to
the consumers
Feinleib, 2011; Love, 2016; Crowne, 2002;
Giardino et al. 2015; Jimenez, 2012; Haque et
al., 2020; Joshi & Satyanarayana, 2014; DIHK,
2014; Jong, 2018; CB Insights, 2019; Tobak,
2014
F6
Product without Business
Model
Viability and
scalability of the
product which has a
strong business
model
Bednár & Tarišková, 2017; Fu et al., 2017;
Santisteban & Mauricio, 2017; Love, 2016;
Cantamessa et al., 2018; Cennamo & Santalo,
2015; Jimenez, 2012; Gaynor, 2012; Almakenzi
et al., 2015; Haque et al., 2020; DIHK, 2014;
Vesper, 1990 ; Lundvall, 2009; Porter, 1998;
CB Insights, 2019; Tobak, 2014; Kotashev,
2020
F7
Poor marketing/ Lack of
Marketing and Sales
Strategies/ Lack of
Strategy
It the the poor
management skills
of the founders how
they market their
product and set
strategies
Feinleib, 2011; Cennamo & Santalo, 2015,
Almakenzi et al., 2015; Jong, 2018;
Duchesneau & Gartner, 1990; CB Insights,
2019; Kotashev, 2020; Ganesh, 2015; Kash,
2018
F8
Ignore customers
Do not give enough
concentrate on
customer needs
Cantamessa et al., 2018; Haque et al 2020.; CB
Insights 2019; Kotashev, 2020; Kash, 2018;
Eschberger, 2018; Skeldon, 2019; Mashauri,
n.d.;
F9
Product mistimed/
Product mistiming
Wrong timing of the
product in the
market
Kalyanasundaram, 2018; Guzmán & Lussier,
2015; Vesper, 1990; Battistella et al., 2017;
Bruno, Mcquarrie, & Torgrimson, 1992;
Vesper, 1990; CB Insights, 2019; Eastwood,
2019
F10
Loose focus/ Lack of
Passion/
Lack of Commitment
Founders’ disinterest
to scale-up the
venture
Kalyanasundaram, 2018; CB Insights, 2015;
Duchesneau & Gartner, 1990; Gelderen et al.,
2005; CB Insights, 2019; Tobak, 2014;
Kotashev, 2020; Ganesh, 2015; Cortes, 2019;
Cantamessa et al., 2018; Cennamo & Santalo,
2015
F11
Pivot gone bad/ Failure to
Pivot
Failure to take
alternative road to
success
CB Insights, 2019; Tobak, 2014; Davis 2020;
Kotashev, 2020
F12
Failed Geographical
explanation
Chosen location for
the product went
wrong
Jaeger, 2003; Ziegler, 2013; CB Insights, 2019
F13
No Financing/Investor
Interest/ Poor Creativity
Not enough funding
for the venture
Bednár & Tarišková, 2017; Beaver, 1966;
Bocken, 2015; Cardon et al., 2010; Egeln et
Nordic Journal of Media Management 1(3), 2020 443
with Funding/ Lack of
Finance/ Insufficient
financial resources
which may,
sometimes, come
from investors.
al., 2010; Giardino et al. 2015; Jimenez, 2012;
Haque et al., 2020; Jaeger, 2003; Ziegler, 2013;
Kulicke & Kripp, 2013; DIHK, 2014; Jong,
2018; Battistella et al., 2017; Vesper, 1990;
Bruno et al., 1992; Duchesneau & Gartner,
1990; CB Insights, 2019; Feinleib, 2011; Rogoff
et al., 2004; Liao et al, 2008; Gelderen et al.,
2005; Song et al., 2008; Morteza et al., 2013;
Kakati, 2003
F14
Did not Use Network
Failed to use the
network to reach
critical mass of
participants,
Battistella et al., 2017; Blank, 2012; Lundvall,
2009; Vesper, 1990; CB Insights, 2019
F15
Burn out
Excessive cash burn
without proper plan
CB Insights, 2019; Krishna, 2016; Kotashev,
2020
F16
Mismanagement of Funds
No proper direction
of the use of funds
Cooper et al., 1994; Tobak, 2014; Kotashev,
2020; Giardino et al., 2015
F17
Lack of Experience
Founders do not
have enough domain
knowledge in the
field
Kalyanasundaram, 2018; Thornhill & Amit,
2003
F18
Bad Management/ Lack of
Management
Lack of managerial
skills of the founders
and team members
to run the venture
Shepherd et al., 2011; Shepherd et. al, 2009;
Gaskill et al., 1993; Lukason & Hoffman,
2015; Mwizerwa, 2013; Almakenzi et al., 2015;
Bruno & Leidecker, 1988; Krishna et al., 2016;
Ries, 2011; Tobak, 2014
F19
Not Having A Powerful
Internet Marketing
Strategy
For platform
startups, it is crucial
to use the powerful
marketing strategy
Cardon et al. 2010; Almakenzi et al., 2015;
Battistella et al., 2017; Blank, 2012; Lundvall,
2009
F20
Not Effectively Managing
Company Cash Flow
It is the failure of the
cash flow
management
Rogoff et al. 2004; Kotashev, 2020
F21
Lack of market demand
Without analyzing
the market need, the
product is launched
and failed
Cardon et al., 2010; Lukason & Hoffman,
2015; Giardino et al., 2015; Almakenzi et al.,
2015; Jong, 2018; Tobak, 2014
F22
Strong competition/ Fail to
Beat Your Competitors
Too many
competitors are out
there in the market
Lukason & Hoffman, 2015; Almakenzi et al.,
2015; Kulicke & Kripp, 2013; Stuart & Abetti,
1987; Battistella et al., 2017; Tobak, 2014;
Kotashev, 2020
F23
Failure to Lead/ Fear of
Failure
Means the inability
to understand the
situation of the
market demand by
the founders
Morgan et al., 2015; DIHK, 2014; Davis 2020
F24
Not Having A Good
Social Media Presence
Failure to reach the
mass people through
social media
Kotashev, 2020
F25
Government policies/
support/ environment/
Legal Challenges
It is the support from
the ecosystem and
environment where
government plays a
big role.
Atsana, 2016; Santisteban & Mauricio, 2017;
Bocken, 2015; Dahlqvist et al., 2000; Khelil,
2016; Cardon et al., 2010; Rogoff et al., 2004;
Gaskill et al., 1993; Lukason and Hoffman,
2015; Thornhill and Amit, 2003; Kshitija Joshi
& Krishna Satyanarayana, 2014; N. Bocken;
Haque et al., 2020; DIHK, 2014; CB Insights
2019
444 B.Akter & A.Iqbal
F26
Clash Between Partners/
Internal Team Issues/
failure to develop trust
with users and partners/
Disharmony among
team/investors
Dispute between the
founders or the team
members which
leads to potential
failure
Mantere et al., 2013; M. Marmer et al., 2011;
Crowne, 2002; Cennamo & Santalo, 2015;
Almakenzi et al., 2015
F27
Negative customer
reaction
It is the negative
impression of the
customers regarding
product
Bajwa et al., 2017; Choshin & Ghaffari, 2017;
Jimenez, 2012; Kotashev, 2020
F28
Entrepreneurial attitudes/
entrepreneurs’
overconfidence/ human
competencies
Personality and
attitudes of the
entrepreneurs which
cause venture failure
Seshadri, 2007; Hayward et al., 2006; Cooper
et al., 1994; Khelil, 2016; Kalyanasundaram,
2018; Mantere et al., 2013; Hayward et. al.
2006; Almakenzi et al., 2015; Hyder &
Lussier, 2016; Kulicke & Kripp, 2013; Ries,
2011
F29
Willingness to avail
mentorship
It refers to the
professional advice
or the mentorship
from the experts
Kalyanasundaram, 2018; Khelil, 2016.;
Battistella et al., 2017; Duchesneau & Gartner,
1990
3.2.1. Stratification of the Factors
In the table above, we have combined the variety of distinguished components. A portion of the
components show a similar kind of importance. Mulling over this reality, the authors have separated
29 elements into six classes including organizational factors, product factors, human variables,
finance factors, market elements, and ecosystem factors. These classes have been shown underneath
(Table 6).
Table 6: Stratification of the Factors
Category
Factors under this category
Organizational Factors
F7, F8, F11, F12, F18, F19, F26
Product Factors
F5, F6, F9, F21
Human Factors
F2, F10, F17, F23, F28, F29
Finance Factors
F1, F4, F13, F15, F16, F20
Market Factors
F3, F22
Ecosystem Factors
F14, F25, F27
3.2.1.1. Organizational Factors
A few elements are inseparable from one another and have similar ramifications. For example,
poor marketing, lack of marketing and sales strategies, and lack of strategy have similar ramifications:
these are joined into the factor F7. In the investigation by Cantamessa et al. (2018), the significant
expense of gaining consumers has been learned at the business improvement stage by the team
members. The association and its administration are liable for drawing in clients. Overlooking
customers (Haque et al., 2020; CB Insights, 2019; Kotashev, 2020) would prompt the failure of the
platform. Also, if the management of the association neglects to turn (CB Insights, 2019; Tobak, 2014;
Davis, 2020) the business to the market needs, it will, obviously, realize a negative outcome for the
endeavor. Jaeger (2003), CB Insights (2019), and Ziegler (2013) referenced that an off-base decision of
area or a bombed topographical clarification could likewise hamper the accomplishment of platform
start-ups. Moreover, while management and strategic choices (Cardon et al., 2010) are assembled, the
Nordic Journal of Media Management 1(3), 2020 445
absence of an incredible web showcasing technique has been referenced in different investigations
(Almakenzi et al. 2015; Battistella et al., 2017; Blank, 2012; Lundvall, 2009). All these are identified
with the management of the association. Notwithstanding, it is to be noticed that if the organization's
income is not successfully overseen (Rogoff et al. 2004; Kotashev, 2020), it goes about as another factor
for the failure of the platform.
3.2.1.2. Platform Factors
To have successful platform start-ups, it is essential to have a good platform, which might be
called a good product in a few cases. The study by CB Insights 2019 pointed out that user-unfriendly
products exert a key influence on the failure of the start-ups. Another study of Crowne (2002) noted
that, ‘A company which can show that it has produced one or more successful products in a
marketplace, and has the vision, road map and capability to produce more can expect a trade sale at
a good valuation.’ Recently, Giardino et al. (2015) and Haque et al. (2020) found that start-ups fail
because of the product-market viability. Either the product went wrong, or it did not fulfil the needs
of the market. In an analysis of Indian start-ups, Joshi and Satyanarayana (2014) talked about the
product consciousness as a driver of young firm failure. Product failure occurs when there is no, or
less, innovation in the business model (CB Insights 2019; Tobak, 2014; Kotashev, 2020; Love, 2016;
Cantamessa et al., 2018; Cennamo & Santalo, 2015). It, therefore, affects the growth of the start-ups
(Jimenez, 2012). Apart from that, the mistiming of platform launches creates a dilemma in the market
(Kalyanasundaram, 2018; Guzmán & Lussier, 2015; Vesper, 1990; Battistella et al., 2017; Bruno,
Mcquarrie, & Torgrimson, 1992; Vesper, 1990; CB Insights 2019; Eastwood, 2019). Given these
circumstances, it can be implied that there is no market demand for the platform. Hence, a lack of
market demand (Cardon et al., 2010; Lukason & Hoffman, 2015; Giardino et al., 2015; Almakenzi et
al., 2015; Jong, 2018; Tobak, 2014) would make a platform less viable, putting the start-ups at risk of
failure.
3.2.1.3. Human Factors
In this category, we have included the factors that are related to the human beings who are
responsible for operating the venture. Any failure to devise the right strategy for the company would,
perhaps, define a start-up’s failure. The literature shows that this includes not having a team (CB
Insights, 2019; Kotashev, 2020; Bednár & Tarišková, 2017; Atsana, 2016; Love, 2016; Lukason and
Hoffman, 2015; Giardino et al., 2015; Jimenez, 2012; Gaynor, 2012; Almakenzi et al., 2015; Haque et
al., 2020; Kulicke & Kripp, 2013; Jong, 2018) for the innovation of the product (Gaynor, 2012). This
denotes the entrepreneurial attitudes of the founders or the members in the team. Another study
combines the environmental data and the resource analysis of the company with the personality traits
of entrepreneurs, and links failure to the psychological/emotive aspects of entrepreneurship (Khelil,
2016). Sometimes, entrepreneurs’ overconfidence (Hayward et al., 2006) may lead to failure. In some
cases, wrong decisions are taken for the venture; it is essential to take mentorship from the experts
who have domain knowledge. However, if the entrepreneurs are unwilling to take professional
mentorship (Kalyanasundaram, 2018; Khelil, 2016.; Battistella et al., 2017; Duchesneau & Gartner,
1990), it leads to a negative outcome for the venture.
3.2.1.4. Finance Factors
Capital, by far, is one of the key components for the ventures, as cited by the start-ups. Again,
when the start-ups run out of cash (Cantamessa et al., 2018; Kolari et al., 2002; Gage, 2012; CB Insights,
2019), they are unable to scale up their respective ventures. This factor has been mentioned in many
studies on the success or failure of start-ups. Not only finance but also the management of the funds
is necessary to grow a business. Mismanagement of funds (Cooper et al., 1994; Tobak, 2014), no
financing or disinterest of the investors (DIHK, 2014; CB Insights, 2019; Feinleib, 2011; Rogoff et al.,
2004; Gelderen et al., 2005; Song et al., 2008; Morteza et al., 2013), burnout (CB Insights, 2019), and
446 B.Akter & A.Iqbal
not effectively managing a company’s cash flow (Rogoff et al. 2004; Kotashev, 2020) are linked to a
start-up’s failure. All these factors together comprise the finance factors, as described by the authors.
3.2.1.5. Market Factors
This class incorporates the market-related components, for example, getting out-competent (CB
Insights, 2019) and strong competition (Battistella et al., 2017; Tobak, 2014; Kotashev, 2020).
Extraordinary rivalry has been examined as an outer factor for the failure of the endeavor by Lukason
and Hoffman (2015). Kulicke and Kripp (2013) called attention to that considering competition
growing, new companies weakened their own market openings.
3.2.1.6. Ecosystem Factors
The ecosystem and the stakeholders, being important elements for start-ups, exert significant
influence on the failure of start-ups. An ecosystem involves the network, government, legal issues,
consumers, and so on. After gaining insights from start-ups, CB Insights (2019) mentioned that many
of the start-ups did not use their networks properly (Battistella et al., 2017; Blank, 2012; Lundvall,
2009; Vesper, 1990), which eventually caused their ventures to fail. Government policies and support
(Atsana, 2016; Khelil, 2016; Cardon et al., 2010) would make the operations of the venture in the
market easier. However, too many legal challenges (Bocken, 2015; Haque et al., 2020; DIHK, 2014; CB
Insights 2019) from the ecosystem may cause start-ups to fail.
4. Discussion
In this section, we present the findings and discuss the factors in brief. We discuss the identified
factors and present a map for the failure of platform start-ups.
4.1. About the Failure Factors of Platform Start-ups
This examination means to investigate the determinants that cause platform start-ups to fizzle.
In the wake of concocting a systematic literature review drawn from a few scholastic and non-
scholarly papers, different factors have been recognized. Platform start-ups failure happens for an
assortment of reasons. We have seen that for any platform failure, the platform is the primary key
driver that permits start-ups to pick up the trust of the customer. An article in Harvard Business
Review spotlights five key factors that impact the failure: failure to devise a good strategy, network
effects, failure to put customers’ trust in front, product timing, and the entrepreneurs’ hubris. Every
one of these components have been talked about in different investigations, as well. While examining
the components, three significant classes were recognized: organizational, business model
innovation, and environmental.
Notably, these three categories and factors under these categories have a huge impact on the
failure of platform start-ups. One cannot deny the fact that without these key drivers, it would be
difficult to make a visible difference and grow. The analysis of the platform failure revealed that most
of the platforms failed to grow on account of problems in the business model innovation. Not only
problems in platform model innovation, but a flawed platform, too, may lead to a platform failure.
With proper cost analysis, innovation performance, and quality assurance, the right platform may
create an impact. And to bring about the critical mass of participants, it is required to launch the
product at the right side. Suppliers and the consumers should get equal value from the platform.
Then they would contribute to the platform’s growth.
A platform may fall if the environment or the surroundings of the venture fail to support it. The
environment includes the government, the network structure, venture capital, universities,
customers, and so on (see Table 4). These factors have a significant effect on the growth of the
Nordic Journal of Media Management 1(3), 2020 447
platform, either directly or indirectly. A lesser amount of support from any of the factors would
probably cause platform failure.
4.2. Platform Failure leads to Failure of Platform Start-ups
Concerning failure of platform start-ups, 29 components have been appeared in Table 5. The
literature review helped us make sense of these reasons. However, it, by a wide margin, does not
include all the components. All things considered, these are talked about in more prominent detail
and the factors are referred to by past studies. While checking on the literature, the authors found
that there are a few factors that are co-related, or they give similar sort of results. Remembering this,
the authors have grouped these variables into six classes (see Table 6).
Among the eight factors in the organizational category, poor marketing and clashes between the
team members were given significant importance by the researchers: not the right team, 23% (CB
Insights, 2019) and 14% (Bednár & Tarišková, 2017) and poor marketing, 14% (CB Insights, 2019).
Ignoring the customers also got the same percentage as poor marketing from CB Insights (2019).
Then again, the product class consolidates factors like user-unfriendly product, product without
a business model, product mistiming, and lack of market demand. A large portion of the new
companies have said that no market need (42%) is one of the top explanations behind their failure
(CB Insights, 2019). If a product is propelled without dissecting the necessities of the customers, it
would confront a major test in the market. This has a relationship with product timing. In this regard,
another factor ought to be considered too: the business advancement of the platform. For what reason
does it make a difference, one may inquire. The appropriate response would presumably be the
supportability of the platform. It ought to tackle the issue of the suppliers and bring another vibe
which would put a decent impact on the buyer's brain.
A venture is controlled by a gathering of individuals, and a solid administration should set the
methodology. The disposition of the business visionaries assumes as a major job in the failure of the
venture. In the event that the founder or the team members neglect to set the methodology, at that
point it influences the endurance of the venture. Picking the correct team member is likewise part of
pioneering quality, and an off-base part can hamper the development of the organization. Individual
variables have been examined distinctively in different explores, which have been talked about in the
class of human components in our examination. Moreover, business visionaries ought not need center
or enthusiasm as it is conceivable that over the long haul, they may stop if they face hindrances. Once
in a while, an absence of involvement with the field may cause failure.
Apart from the factors stated above, financial factors also matter in the failure of the start-ups.
Running out of cash (29%) has been placed in the second position as a reason for failure by CB Insights
(2019). It is also discussed in the study of Bednár and Tarišková (2017), which says that cost issues
(16%) have an impact on the failure. Finding a good source of investment or investors is another
factor. It may happen that investors show disinterest to invest their money, and, so, start-ups get into
trouble while managing their venture. Therefore, they become aimless and are forced to shut down
their ventures. Some other financial factors like burnout, mismanagement of funds, and not having
enough strategy to manage the cash flow can also negatively impact the venture. Conversely, market
factorswhich one cannot denyhave a strong connection with the failure of start-ups. While
competition is good, strong competition in the market can cause the product to get out-competed,
and then the start-up fall flat.
Like the environmental effect on the failure of platforms, there are some factors from the
ecosystem which lead to the failure of platform start-ups. These include not using the network
properly, legal challenges, governmental policies, and support from external sources. These are
448 B.Akter & A.Iqbal
referred to as external factors by Atsana (2016) and Bocken (2015). ‘Policies of the government and
unexpected unlucky events as the causes of failure,’ according to Atsana (2016).
4.3. A Map of Factors for Failure of Platform Start-ups
From the above discussion, it can be extracted that, obviously, a few components are liable for
the failure of platform start-ups. The failure of the platform is one of the key reasons. This platform
failure has been talked about independently in our study. Our literature likewise shows that
numerous researchers have brought up that platform failure causes platform start-ups to come up
short. Additionally, platform factors have been connected to platform start-ups’ failure on the
grounds that both the classes have similar ramifications. To picture the entire thought examined
before, the authors have structured a map (Fig. 3).
Figure 3: A Map for the Failure of Platform Start-ups
5. Conclusion
This examination adds to the failure of the platform start-ups by recognizing the explanations
behind their failure. In this study, it is accepted that no single factor is answerable for the failure of
platform new businesses. Or maybe, a few elements happen simultaneously to cause such failure.
This system would assist us with envisioning all the elements together.
In addition, the literature review allowed us to contribute to the research field of platform failure
in four specific regions. First, we perceive that a tremendous piece of pertinent investigates platform
failure also the platform start-ups’ failure. We could show the number of scholarly and non-scholarly
articles that mentioned about platform failure. Second, we identified the factors that leads to platform
failure. Other than this work, we have similarly isolated those components into arrangements to
make various scholars and readers to perceive among the internal and external components. Third,
we summarized the names of the factors that causes platform start-ups failure. Earlier, some research
Nordic Journal of Media Management 1(3), 2020 449
were conducted to identify the factors for a specific venture. Through our research, we have
accumulated all the relevant factors and categorised those into six categories to have a good
understanding of the possible factors that have influence on platform start-ups’ failure. Fourth, we
have proposed a map to consider the probable factors by the start-ups.
The study shows that more researchers ought to be done in this area to acquire substantial
information. A few factors have been examined in just a couple of articles while a few components
have been talked about broadly in numerous articles. This issue opens another way to additionally
explore.
5.1. Research Limitations
As far as the constraints of this study, this investigation has just taken information from 113
scholarly and non-scholarly papers. A wide scope of articles has been excluded from this study
because of the nature and substance of the papers. To acquire a more extensive view, a couple of non-
insightful articles have been contemplated as these articles give a top to bottom information on the
platform start-ups. For scholastic purposes, some may raise worries on this issue. Be that as it may,
to direct this study, the predisposition has been diminished, however, as much as could reasonably
be expected by taking the perspectives of both the authors. Future investigates can be driven by using
this map whether this model work on the platform start-ups or not.
5.2. Suggestions for Future Research
Based on literature review, models, and investigation into business enterprise, this paper
distinguishes the underlying drivers of failure of new companies, which empower us to comprehend
the systems and approaches vital for fortifying the achievement of new businesses. The discoveries
will be essential to the 1) platform-based start-ups as they can know the different variables of
accomplishment in the market and comprehend the related difficulties, and 2) policymakers,
researchers, and organizations for the advancement of business in their locale. Platform start-ups can
find out about the slip-ups of prior start-ups and find a way to improve just as continue themselves
over the long haul. While researchers can lead further investigation into whether the model works in
their separate districts, policymakers can devise approaches for the new businesses so that these get
profited. Besides, the legislature can devise new approaches in the wake of breaking down the vital
elements and the new arrangements can make the framework simpler. As media platform is
developing in number and falling flat in high rates, future researchers can embrace this model in their
area and carry the outcomes to improve their start-ups’ performance.
Apart from the points stated above, much more comparisons are to be done in research following
the developed map presented above, to have more real data and case studies. Future research could
create a database based on the platform business model canvas and the propose a set of indicators
and store, and statistically compare data. This would help to discover and identify further common
relations and patterns.
450 B.Akter & A.Iqbal
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© 2020 by the authors. Submitted for possible open access publication under the terms
and conditions of the Creative Commons Attribution (CC BY) license
(http://creativecommons.org/licenses/by/4.0/).
Biography:
Beauty Akter is a faculty at the Department of Innovation and Entrepreneurship, Daffodil
International University, Bangladesh. She holds the title of Executive Director of Global
Entrepreneurship Research Network (GERN)- DIU, GEN. She is additionally a faculty of the World
Business Angels Investment Forum (WBAF) Business School. She has been certified as an
Accredited and Qualified Global Mentor for Startups by the WBAF. She became the International
Partner of WBAF in 2019 where her key job is to add value to the entrepreneurial ecosystem. Her
research mastery incorporates Entrepreneurship, Entrepreneurial Ecosystem, Entrepreneurship
Education, Women Entrepreneurship, Strategic Entrepreneurship, Startups. She holds an MBA
specializing in Entrepreneurship.
Md. Asif Iqbal is serving as a faculty at the Department of Innovation and Entrepreneurship,
Daffodil International University, Bangladesh. Specializing in Entrepreneurship, he has completed
his MBA degree. His research expertise includes Entrepreneurial Ecosystem, Entrepreneurship
Education, Entrepreneurship, Technology and Entrepreneurship, Strategic Entrepreneurship.
Since 2018, he is the National Director and International Partner of World Business Angel
Investment Forum, Executive Director of Startup Huddle Dhaka, and the Director of Startup Grind-
U. Moreover, he is the Country Director of the Entrepreneurship World Cup in Bangladesh. He is
an Accredited Global Mentor for Startup by WBAF.
Other Information:
Received: 22 July 2020, Revised: 24 August 2020, Accepted: 31 August 2020
Funding: This research received no external funding.
Conflicts of Interest: The author declares no conflict of interest.
... Earlier research is mostly about the success factors of high-tech start-ups, not their failures (see Santisteban and Mauricio 2017 for a review). However, the literature on the failure of high-tech start-ups has been growing during the last decade (Akter and Iqbal 2020;Cantamessa et al. 2018;Giardino et al. 2014). In addition, there is no consensus on what the key failure factors are (Santisteban and Mauricio 2017). ...
... External factors in the general and immediate environment include not having enough customers to recover recurring expenditures, an economic crisis, a pandemic such as COVID-19, sudden fluctuations in prices or inflation, and a weak network of lenders resulting in undercapitalization (Cantamessa et al. 2018;Kuckertz et al. 2020;Ooghe and De Prijcker 2008;Scaringella 2017). In another classification, Akter and Iqbal (2020) provide six types of failure factors, namely organizational factors, product factors, human factors, financial factors, market factors, and ecosystem factors. Whereas organizational factors include the lack of strategy, poor marketing, poor management, and internal clashes among team members, product factors cover a user-unfriendly product or mistiming of the product, and human factors consist of a lack of commitment, a lack of experience, the fear of failure, overconfidence, and a lack of willingness to utilize mentorship (Akter and Iqbal 2020). ...
... In another classification, Akter and Iqbal (2020) provide six types of failure factors, namely organizational factors, product factors, human factors, financial factors, market factors, and ecosystem factors. Whereas organizational factors include the lack of strategy, poor marketing, poor management, and internal clashes among team members, product factors cover a user-unfriendly product or mistiming of the product, and human factors consist of a lack of commitment, a lack of experience, the fear of failure, overconfidence, and a lack of willingness to utilize mentorship (Akter and Iqbal 2020). Financial factors include the lack of cash and financing possibilities, wrong pricing, and the mismanagement of funds, while market factors are about strong competition, and ecosystem factors reflect the failure to make use of existing networks, legal challenges, and negative customer reactions (Akter and Iqbal 2020). ...
Article
Full-text available
This research aims to identify the causes of high-tech start-up failures and the ways to prevent them. It responds to calls for more research on why high-tech start-ups, potential drivers of economic development and growth, mostly fail during their early years. Following the work of Cantamessa et al. (2018), which adopted the SHELL model by Hawkins and Orlady (1993) to study start-up failures, this research adopts and applies the same model for the causes of failures of high-tech start-ups. Using a qualitative research approach, data is collected from interviews with 16 high-tech entrepreneurs, who have experienced failure in their past. Results suggest a taxonomy of four categories of the causes of failures, together with two sub-categories in each category, and several ways to avoid each of them are presented. Findings contribute to the scarce entrepreneurship literature on the failures of high-tech start-ups by providing a toolkit on how high-tech entrepreneurs can avoid different kinds of failures.
... Earlier research has mostly looked into success factors of high-tech startups (see Santisteban and Mauricio, 2017 for a review). There is scarce but growing literature that studies failure in the context of high-tech startups (Akter and Iqbal, 2020;Cantamessa et al., 2018;Giardino, Wang and Abrahamsson, 2014). Among this scarce literature, there is not consensus what the key success and failure factors are (Santisteban and Mauricio, 2017). ...
... External factors in the general and immediate environment include not having enough customers to recover recurring expenditures, an economic crisis, a pandemic such as COVID-19, sudden changes in prices or inflation, and a weak network of lenders resulting in undercapitalization (Cantamessa et al, 2018;Kuckertz et al, 2020;Ooghe and De Prijcker, 2008;Scaringella, 2017). In another classification, Akter and Iqbal (2020) suggest six types of failure factors, which are organizational factors, product factors, human factors, finance factors, market factors, and ecosystem factors. Organizational factors include the lack of strategy, poor marketing, poor management, and internal clashes among team members. ...
Conference Paper
Full-text available
Objectives: Most high-tech startups quit their operations within five years after establishment. This study aims to increase understanding of their causes of failures and suggest ways to prevent them. Prior Work: Earlier studies in the context of high-tech startups have mostly looked into their success factors. They have identified a variety of organizational, individual and external determinants of success. Prior work on their failures, however, is scarce. There is a need for more research on why high-tech start-ups fail, and how such failures can be prevented. This study utilizes the earlier adaptation of the SHELL model in the context of high-tech startups by Cantamessa et al. (2018). Approach: The approach in the empirical study is qualitative. Data is collected through semi-structured interviews from a total of 16 respondents, who have established high-tech startups and experienced their failures in the United States, Canada, and Finland. Data is analyzed with the aid of codes, which are derived from the adapted SHELL model. Results: The analysis presents a taxonomy of four types of causes of the failures of high-tech startups. These are product problems, market problems, financial problems, and managerial problems. Product problems arise due to introducing the product to the market at bad timing or having issues with the product design. Market problems are because of lacking proper distribution channels, or not having a large enough market. Financial problems occur due to initial undercapitalization or high debt burden, resulting in the startup's failure to meet its short-term financial obligations. Managerial problems include the lack of a competent management team as well as the occurrence of managerial errors. The study suggests ways to manage these shortcomings and prevent the failure of high-tech startups. Implications: High-tech startups are promising for future growth and employment possibilities. Since a majority of them fail in their early years, it is important to understand their causes of failure and have remedies for them in order to reverse the trend and contribute to the fulfilment of their promise. This study provides a toolkit for this purpose. Value: This study contributes to the scarce entrepreneurship literature on failures of high-tech startups by providing a taxonomy and suggesting ways how to prevent them.
Conference Paper
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شناخت سازمان‌ها به‌عنوان یکی از بنیادی‌ترین مفاهیم زندگی بشر برای افزایش اثربخشی و کارایی آنها یک ضرورت به شمار می‌رود. در بررسی سازمان‌ها می‌توان آنها را از جنبه‌های مختلفی طبقه‌بندی کرد که در یکی از رایج‌ترین نوع طبقه‌بندی‌ها که بر اساس اندازه سازمان است می‌توان به سازمان‌های نوپا که در طبقه‌بندی میکرو قرار می‌گیرند اشاره کرد که از اهمیت بالایی برخوردار هستند. این نوع سازمان‌ها معمولاً در نتیجه کارآفرینی ایجاد می‌شوند و در شرایط ابهام و عدم قطعیت در جهت تولید راه حلی نوآورانه برای حل یک مشکل در بازار به فعالیت می‌پردازند. معماری سازمانی به‌عنوان رویکردی یکپارچه برای شناخت سازمان‌ها که با نگاه مهندسی در قالب لایه‌های مختلف معماری به تحلیل سازمان‌ها می‌پردازد غالباً بر سازمان‌های بزرگ متمرکز بوده و اولین یافته این مطالعه عدم توجه به سازمان‌های نوپا در ادبیات بوده است. در این مطالعه با مروری چندوجهی بر ادبیات موضوع معماری سازمانی و سازمان‌های نوپا ضمن بررسی مثال‌هایی از مطالعه‌های موردی صورت‌گرفته به این یافته می‌رسد که معماری سازمانی نه‌تنها محدود به سازمان‌های بزرگ نیست بلکه با رعایت یکسری اصول قابل به‌کارگیری در سازمان‌های نوپا می‌باشد و سپس مسیری نو در راستای مطالعات بعدی مطرح می‌کند.
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A significant number of startups fail during their first years of operations, and most of them crash within five years. A wide range of reasons for startup failures has been identified in the literature. However, most of the reasons for startup failures are too general in that they focus on startups in general. In this regard, not every factor may be responsible for the failures of some startups. Although there are adequate investigations that have provided substantial evidence about different reasons that cause startups failure, this study aimed to review these reasons collectively to determine how they relate to high-tech startup failure. This study used a qualitative research method to collect and analyze data from 15 founders of high-tech startups in the United States (US), Finland, and Canada. The researcher conducted interviews through Skype and analyzed data using thematic analysis to derive relevant themes to the study. Likewise, the researcher conducted a profound, systematic review to identify themes relating closely to startup failures. The results showed that high-tech startups failures relate closely to product and market challenges (product timing difficulties, product design problems, improper or absence of selling strategy/ distribution channels, and small market size), financial problems (initial undercapitalization and debt burden), and management issues ( lack of competent teams and human errors). The study showed that a wide range of factors leads to the failure of high-tech startups. Therefore, founders and personnel working in these high-tech startups should pay attention to the identified areas to minimize the chances of failure.
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