Prediction Modeling of Software Startup Success By PLS-SEM Approach

  • Abstract
  • Keywords
  • References
  • PDF
  • Abstract

    With the fact that the tendency of startup business fail, it is necessary to understand factor influencing the startup success. It is understood that the lack of knowledge of how to start business creates uncertainty. The uncertainty may increase the likelihood of  startup failure, which leads to economic loss. This paper aims to develop a predictive model of startup success in identifying factors and variables influencing startup success. This study also explores ways to compile and validate predefined startup prediction models in the startup business environment. Furthermore, the significance of factors and variables have also been identified to predict software startup success. The results showed that there were 18 significant factors influencing software startup success. These include the characteristics of the founders, quality of the startup organizations, support of resources, environmental conditions, performance of value creation processes, and  effectiveness of competitive strategies. The result also showed that six variables contributed significantly (74.8%) in the prediction of software startup success.




  • Keywords

    prediction modeling; startup; software startup; startup success; structural equation model; pls-sem approach

  • References

      [1] Anung Asmoro, Lukito Edi Nugroho, and Selo, Software startup ecosystem in Indonesia: A conceptual framework, ISMEE Int Symposium on Material and Electrical Engineering, 2017.

      [2] Michael Giardino, Carmine Abrahamsson, Pekka, Software Development in Startup Companies: The Greenfield Startup Model, IEEE Transactions on Software, 2015.

      [3] Renata Souza, Karla Malta, Eduardo Santana de Almeida, Software Engineering in Startup: A Single Embedded Case Study, IEEE/ACM 1st International Workshop on SE for Startup, 2017.

      [4] Gardner, P.L., a.Y. Fong, and L.S. Graham. 2004. “From Innovation to Enterprise - the Role of Technology Commercialization in Sustaining Economic Growth.” 2004 IEEE International Engineering Management Conference (IEEE Cat. No.04CH37574) 1. IEEE: 229–33. doi:10.1109/IEMC.2004.1407110.

      [5] Hair, Jr., J. F., Hult, G., Ringle, C. M., & Sarstedt, M. A primer on partial least squares structural equation modeling (PLS-SEM). Thousand Oaks, California: Sage Publications, Publications, Inc., 2014.

      [6] Ucbasaran, D., Westhead, P., & Wright, M. (2008). Opportunity identification and pursuit: Does an entrepreneur’s human capital matter? Small Business Economics, 30(2), 153–173.

      [7] Davidsson, P., & Honig, B. (2003). The role of social and human capital among nascent entrepreneurs. Journal of Business Venturing, 18, 301–331.

      [8] Robert, C. (2006). Human capital development and education by Atlantic evaluation and research consultant’s skills and knowledge for Canada’s future: Seven perspectives towards an integrated approach to human capital development. Canadian Policy Research Networks Inc.

      [9] Gibb, A. A., & Ritchie, J. (1982). Understanding the process of starting small businesses. European Small Business Journal, 1(1), 26–45.

      [10] Wohlfeil, Florian, and Orestis Terzidis. “Critical Success Factors for the Strategic Management of Radical Technological Innovation.” 2014 International Conference on Engineering, Technology, and Innovation (ICE), June. IEEE, 1–9. doi:10.1109/ICE.2014.6871529, 2014.

      [11] Kemp, RGM, Folkeringa, M, de Jong, JPJ and Wubben, EFM. 2003. “Innovation and Firm Performance.” Research Report H200207, ISBN: 90-371-0875-X.

      [12] Schumpeter, JA. 2008. Capitalism, Socialism, and Democracy.

      [13] Vesper, K. (1996). New venture experience. Seattle: Vector Books.

      [14] Watson, W; Stewart, W.H. and BarNir, A. (2003). “The effects of human capital, organizational demography and interpersonal processes on venture partner perceptions of firm profit and growth,” Journal of Business Venturing, Vol. 18, Nº 2, pp. 145-164.

      [15] Abdul Hamid, Norhadilah, and Azmawani Abd. Rahman. “A Systematic Literature Review on the Success Factor of Innovation Commercialization Performance.” International Symposium on Technology Management and Emerging Technologies, no. Istmet (May). IEEE: 199–204. doi:10.1109/ISTMET.2014.6936506, 2014.

      [16] Yague, Agustin, Juan Garbajosa, Jennifer Perez, and Jessica Diaz. “Analyzing Software Product Innovation Assessment by Using a Systematic Literature Review.” 2014 47th Hawaii International Conference on System Sciences, January. IEEE, 5049–58. doi:10.1109/HICSS.2014.620, 2014.

      [17] Tung, Cheng-mei, Ta-yu Tseng, and Wan-chang Yen. 2013. “Fostering Innovation Commercialization at Research Institute and University : Strategy and Policy Implications,” 928–34

      [18] Tan, James Ah-kat, Ngee Ann Polytechnic, and Clementi Road. 2012. “3P Approach in Collaboration for Product Innovation and Commercialization,” 1–10.

      [19] Felício, J. Augusto, Couto, Eduardo, and Caiado Jorge (2014), "Human capital, social capital and organizational performance", Management Decision, 52: 350 – 364.

      [20] Geroski, P. A., Mata, José, and Portugal, Pedro (2010), “Founding conditions and the survival of new firms”, Strategic Management Journal, 31: 510 – 529

      [21] Silva 2016 Silva, Daniela. 2016. “Portuguese Startups : A Success Prediction Model,” no. November.

      [22] Unger, Jens M., Rauch, Andreas, Frese, Michael, and Rosenbusch, Nina (2011), “Human Capital and Entrepreneurial Success: A Meta-Analytical Review”, Journal of Business Venturing, 26: 341-358.

      [23] Lussier, Robert N., and Corman, Joel (1996), “A business success versus failure prediction model for entrepreneurs with 0-10 employees”, Journal of Small Business Strategy, 7: 21-35.

      [24] Brinckmann, Jan, and Högl, Martin (2011), “Effects of initial teamwork capability and initial relational capability on the development of new technology-based firms”, Strategic Entrepreneurship Journal, 5: 37–57.

      [25] Mayer-Haung Et al. 2013) Mayer-Haung, Katrin, Read, Stuart, Brickmann, Jan, Dew, Nicholas, and Grichnik, Dietmar (2013), “Entrepreneurial talent a venture performance: A meta-analytic investigation of SME”, Research Policy, 42: 1251 – 1273.

      [26] Lussier, Robert N., and Hyder S. (2016), “Why businesses succeed or fail: a study on small businesses in Pakistan”, Journal of Entrepreneurship in Emerging Economies, 8: 82-100.

      [27] Lussier, Robert N., and Maron, Shaike (2014), “A Business Success versus Failure Prediction Model for Small Businesses in Israel”, Business and Economic Research, 4: 63-81.

      [28] Olugbola, Seun Azeez. 2017. “Journal of Innovation Exploring Entrepreneurial Readiness of Youth and Start-up Success Components : Entrepreneurship.” Suma de Negocios. Journal of Innovation & Knowledge, 1–17. doi:10.1016/j.jik.2016.12.004.

      [29] Alvarez & Barney, 2014 Alvarez, S. A., & Barney, J. B. (2014). Entrepreneurial resources. In C. L. Cooper (Ed.), Wiley encyclopedia of management. John Wiley & Sons, Ltd.

      [30] Wu 2007 Wu, L. Y. (2007). Entrepreneurial resources, dynamic capabilities and start-up performance of Taiwan’s high-tech firms. Journal of Business Research, 60, 549–555.


      [32] Chowdhury, Mohammed S. 2013. “Success Factors of Entrepreneurs of Small and Medium Sized Enterprises : Evidence from Bangladesh” 3 (2): 38–52. doi:10.5296/ber.v3i2.4127.

      [33] Chang et al. 2009. Family Social Capital, Venture Preparedness, and Start-Up Decisions. Sage Publications, 279-292.

      [34] Porter ME. 1980. Competitive Strategy. Free Press: New York.

      [35] Oliver, 1991. Strategic responses to institutional processes. Acad, Manage. Rev. 16, 145-179.

      [36] Aldrich, H., Fiol, M., 1994 Fools rush in The Institutional context of industry creation. Acad. Manage. Rev. 19, 645-670.

      [37] Baum, 1996. Organizational ecology. In: Clegg, S., Hardy, C., Nord, W., (Eds), Handbook of Organization Studies. Sage Publications, London, pp. 77-114.

      [38] Fichman and Levinthal, 1991 Fichman, M., Levinthal, D., 1991. Honeymoons and the liabilities of adolescence: a new perspective on duration dependence in social and organizational relationships. Acad. Manage. Rev. 16, 442–468.

      [39] Adner, R. & Kapoor, R. 2010, "Value creation in innovation ecosystems: How the structure of technological interdependence affects firm performance in new technology generations", Strategic Management Journal, vol. 31, pp. 306-333

      [40] Manuel Bäuml. 2014. The impact of Strategic Performance Management on SME performance. 2014.

      [41] M. Kakati, Success criteria in high-tech new ventures, Technovation 23 (5) (2003) 447–457.




Article ID: 24421
DOI: 10.14419/ijet.v7i4.40.24421

Copyright © 2012-2015 Science Publishing Corporation Inc. All rights reserved.