Strategic Experimentation Mechanisms of Business Model Innovation in Youth-Led New Ventures under Uncertainty

Abstract

The objective of this study is to investigate how startups founded by young entrepreneurs utilize strategic experimentation to manage uncertainty and drive business model innovation during their formative stages. Existing scholarship addresses experimentation either as an abstract theoretical construct or as discrete pivots, yet the process through which young entrepreneurs constrained by limited resources move from one pivot to the next remains inadequately theorized. This qualitative multiple-case study uses data from six ventures founded by youth and specializing in various spheres, namely, in building digital platforms, developing consumer technologies, and pursuing green entrepreneurship, acquired from sources like Crunchbase, CB Insights, company web pages, interviews with founders and mainstream media and transformed into cases through the application of a three-step approach based on the Gioia’s method. It was found out that the six cases are characterized by three types of uncertainty and there is the mechanism which facilitates movement through articulation, minimal-cost probing, and redirection depending on the results of previous rounds, the latter being of great importance for this analysis because it triggers a new cycle of articulation. The three dimensions - value proposition, value creation, and value capture - are identified as the areas where business model is subject to revision in the course of the described process, which is considered to be cyclic. The findings of this study contribute middle-range perspectives to the current body of research concerning business model innovation which should be beneficial for incubators, accelerators, and policymakers.