Scale-up failure in startups: a multi-level framework
Zahra Akbarkhah Bazkiaei, Omid Soleymanzadeh, Ali Shaltouki RiziPurpose
This study aims to investigate the main factors contributing to startup failure during the scale-up stage. It attempts to create a multi-level framework that illustrates how individual, organizational, industrial and institutional factors collectively influence failure outcomes.
Design/methodology/approach
Using a qualitative multiple-case study design, data were gathered through semi-structured interviews with the founders of four failed startups in emerging economies. The Gioia methodology directed the analysis, advancing from first-order concepts to second-order themes and aggregate dimensions.
Findings
The results show that at the individual level, it was common for managers to be prematurely overconfident and make poor choices. Weak structures, unclear roles and inadequate financial control hindered the organization’s growth. The industry-level obstacles were caused by intense market competition and mismatches between products and market demands. The institutional barriers were made worse by regulatory burdens and a lack of policy support.
Originality/value
This study advances the understanding of startup failure through two primary contributions. First, it develops a comprehensive multi-level framework that integrates variables from the individual, organizational, industry and institutional levels. Second, this research is grounded in existing theories of entrepreneurial cognition, dynamic capabilities and learning theory, which enable a more in-depth analysis of why scale-up failures occur at these different levels of analysis.