The Initial Trajectory of New Venture Start-Ups - Lessons From the Milk Crown Model for Services Management

Summary

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Facing a paradigm shift from an industrial economy to a service-oriented economy, and in order to leverage such a shift, the initiatives of new ventures have been strongly expected. However, there exist some barriers impeding the successful trajectory of new venture start-ups, particularly in the initial stage of start-up. Therefore, identification of the crucial conditions governing the initial trajectory of new venture start-ups is extremely important for a service-oriented economy. Conditions governing this trajectory are similar to the formation process of the milk crown in the co-evolution of oil and water, where the affinity between internal conditions such as viscosity and liquidity and external circumstances is crucial. These conditions are similar to the start-up of new ventures, for which the affinity between the internal structure of ventures and external market conditions is crucial. Stimulated by these understandings and prompted by the Milk Crown Model formation concept, this paper attempts theoretical and empirical analyses that identify the governing factors of the initial trajectory of new venture start-ups. On the basis of a theoretical analysis of the formation process of the Milk Crown model in the co-evolutionary circumstances between water and oil, and also an empirical analysis of the successful trajectory of a leading Internet business, an attempt is made to develop a model depicting the initial trajectory of a new venture start-up. Utilizing this model and based on the empirical analysis, crucial factors decisive to the success of new ventures are identified, and policy suggestions supportive of services management for inducing start-up ventures in a service-oriented economy are extracted.

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The Initial Trajectory of New Venture Start-Ups - Lessons From the Milk Crown Model for Services Management

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INTRODUCTION

While the initiatives of new ventures for leveraging a shift from an industrial economy to a service-oriented economy have been strongly expected, there exist some barriers impeding the successful trajectory of new venture start-ups, particularly in the initial stage of start-up. Identification of the crucial conditions governing the initial trajectory of new venture start-ups is thus important for a service-oriented economy.

Rogers (1962), in his pioneer work on diffusion of innovations, suggested inequality in nature of innovation spread. He has analysed the process by which an innovation is communicated through certain channels over time among the members of a social system. One important role for diffusion research in the future is to explore more effective strategies for creating a greater degree of equality among the members of social systems. While Roger's work has provided informative insight on the identification of the foregoing trajectory, it remains a macroscopic meaning of innovation diffusion. There is a need for application of a universal innovation diffusion theory applicable to the entrepreneur and entrepreneurs who form the new idea stage before becoming the first innovator.

It is generally postulated that the development trajectory of new innovation follows the following steps:

a) Business or technology idea (there is no form),

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