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New Venture Creation within the Mobile Application Industry: An Examination of Success Factors for Start-Up Companies

Dälken, F. (2016) New Venture Creation within the Mobile Application Industry: An Examination of Success Factors for Start-Up Companies.

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Abstract:The development of new venture creation over the past years has revealed the tremendous potential within mobile application industry. It is remarkable how quickly apps for mobile devices changed the behaviour of people regarding communication, working and playing during the last eight years. However, the constantly growing number of mobile applications leads to higher competition intensity among app developers and app founders. Furthermore, the survival rate is very limited and only a few mobile applications will be considered as financial success and generate enough revenue in order to meet obligations. Especially the high failure rate of software start-up firms indicates the difficulty for new ventures to survive. In the academic literature, there are several studies with the focus on success factors for new venture creation. Unfortunately, the empirical results are partly too general and therefore only useful to a limited extent for new venture creation within the mobile application industry. This research contributes to filling this gap by analysing potential success factors for new venture creation within the mobile application industry. The theoretical framework of this paper is based on different literature sources, which analysed success factors for new venture creation. Due to the fact that the existing literature is not much reporting about the mobile application industry and related success factors, an online research survey was conducted in order to analyse the key to success. Based on literature review, a research model was built to test the relationships between Exogenous Market factors, Endogenous Opportunity Factors, characteristics of the Entrepreneurial Team, Resources, Revenue Models and organizational performance in the form of financial success. An online questionnaire was used to gather the necessary data to be able to find a valid answer to the main research question of this thesis. The participants were app developers and app founders from the Apple App Store as well as from the German app developer directory. A total of 109 responses was received, of which 108 were useful for the analysis. New variables and scales were developed for the online survey to measure the different relationships. After assessing the collected data regarding reliability and validity, correlation and logistic regression analyses were performed. Five out of six hypotheses were refuted by the outcome of the analysis part. In other words, among the 21 possible success factors identified in the literature, one meta-factor reveals a significant negative relationship with financial success: Market Growth Rate. Interesting findings were identified with respect to the approach of monetization. The outcome shows that the choice of Direct Revenue Models positively influences a start-up’s financial success within the mobile application industry. Also Combined Revenue Models indicate a positive and significant result in relation to financial success. Generally, it is recognised that classical payments achieve faster cash flow. This research contributes to theory and practice in several ways. First of all, the outcome offers new insights into the mobile application industry and successful new venture creation. Specifically, the thesis provides empirical evidence of the impact of Market Growth Rate, Direct Revenue Models, and Combined Revenue Models on financial success. Secondly, the newly developed variables provide the opportunity to analyse other industries with respect to organizational performance and expand the research on new venture creation. Thirdly and finally, the findings of this study also enrich new venture creation in practice as well. Especially, the importance of the selection of different Revenue Models for mobile applications is clearly proved.
Item Type:Essay (Master)
Faculty:BMS: Behavioural, Management and Social Sciences
Subject:85 business administration, organizational science
Programme:Business Administration MSc (60644)
Link to this item:http://purl.utwente.nl/essays/70340
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