Lean startup orientation and performance in South Africa

Abstract

Knightian uncertainty predicts a disequilibrium in the market which provides an opportunity for Entrepreneurs to capitalise on. Unfortunately, traditional managements theories do not provide guidance for entrepreneurs as they firstly rely on causal logic and secondly assume Startups are just smaller versions of large businesses. Because this has been disproved new management theories have been developed for entrepreneurship. These include Bricolage, Effectuation, Discovery Driven Planning and the Lean Startup Methodology (LSM). In the last 20 years the LSM has gained a cult like following amongst entrepreneurial practitioners. Academics on the other hand have been sceptical of this theory stating a lack of theoretical grounding as the Achilles heel of this theory. This research study firstly set out to investigate the theoretical soundness of the LSM. As this research study is a follow on of a research study in the software industry in Germany (Schwery, 2018) it secondly set out to establish what effect the Lean Startup Orientation (LSM Construct) had on the performance of the Startups. The effects of following secondary factors were also was studied: Radicalness of Innovation, Technology Uncertainty, Market Uncertainty, Industry, Entrepreneurial Experience and Source of Funding. This study has built on this study by improving the performance metrics to nonfinancial metrics. In terms of the theory this study has contributed to the entrepreneurial body of knowledge by showing there is sufficient evidence that the LSM is founded on the theories of bricolage and effectuation. The LSM can easily be improved upon by incorporating it with theories like Design Thinking and the Business Model Canvas. From the statistical analysis the insignificant correlations were observed with all the variables but not enough to make any conclusion with statistical significance. In the context of developing countries, the LSM provides a framework for administrators of the incubators to use to assist the Startups within the incubators to flourish without having qualified, experienced and trained entrepreneurial mentors. The LSM did however show 3 promise as a commercialising mechanism for radical innovation in corporates and academic environments.