What Drives Internet Startups in Berlin? A Qualitative Analysis of the Facilitating and Inhibiting Factors

Abstract

What are the factors that facilitate or inhibit the development of early-stage Internet-enabled startups in Berlin, and how do these factors impact on their decision-making? This chapter gives insight into the local requirements and processes of Internet-based startups. It aims at supporting policymakers to facilitate entrepreneurial processes in Berlin, a city that has grown from a local player into a global entrepreneurial hub.

Appendix

Facilitating and inhibiting factors for software startups—a literature review

Authors	Method	Critical factors	Important factors	Less/least important factors
Chorev and Anderson (2006)	Multi-stage methodology, expert interviews, survey, delphi method	Idea, strategy, core team’s commitment, expertise, marketing	Management, customer relationships, research and development (R &D)	Networking, funding type, economy, complete product/organization Least important: general environment and political situation
Song, Podoynitsyna, Van Der Bij, and Halman (2008)	Meta-analysis of 31 empirical studies: identification of 24 most widely researched success factors (Pearson correlations)	Supply chain integration, market scope, firm age, size founding team, financial resources, founders’ marketing and industry experience, existence of patent protection		Founders’ R&D experience and experience with startups, environmental dynamism and heterogeneity, competition intensity
Kakati (2003)	Identification of 38 criteria: 27 experienced venture capitalists were asked to rate one of their most successful ventures and one of the least successful/failed ventures	Entrepreneur quality, resource-based capability, competitive strategy, ability to develop multiple resource-based capabilities to back up multiple-strategies, ability to meet the unique requirements of customers
Jain and Ali (2013)	Facilitators to entrepreneurial success (all are reviewed in the literature)	Environmental determination; dependency on personal characteristics; ‘opportunity recognition sensitivity’; marketing/entrepreneurial/achievement orientation; innovativeness; internal locus of control; risk-taking propensity; proactiveness; reasonable tolerance for ambiguity; self-efficacy; entrepreneurial parents; education and training; work experience; social networking
Block et al. (2008)	Hindering factors for new business creation in Germany	Difficulties in provision of financial resources, qualified employees, customer relationship/sales , bureaucratic barriers and legal aspects, individual risk tolerance, trust in entrepreneurial competences
Aspelund, Berg-Utby, and Skjevdal (2005)	Based on longitudinal data from 80 Norwegian and Swedish technology-based startups	Small and heterogeneous teams have an increased probability of survival and overcome counterparts; team competence density; higher degree of technological radicalness increases the probability of survival; early strategic decisions determine the path for new ventures and limit the strategic options at later stages; initial internal resources are antecedents of a technology-based firm’s survival		Presence of entrepreneurial experience not have a positive effect on the likelihood of new venture survival
Hyytinen, Pajarinen, and Rouvinen (2015)		Startup’s survival probability engaged in innovativeness is lower; interaction of innovativeness and entrepreneurs’ higher appetite for risk reduces survival prospects of their startups		Negative association between innovativeness and subsequent firm survival
Aaboen, Dubois, and Lind (2013)	Focus on new ventures development, identification of patterns in the network development; method: longitudinal case study of three new ventures, total of 18 interviews; findings: three patterns	Exploration and exploitation of similarities can benefit further relationship development, may impact on ventures’ perception of businesses scope; knowledge sharing among customers can be an effective way of expanding the resource base and strengthening the position in the network without developing specific ‘user knowledge’; developing relationships with mediating partners expands the customer base and builds a position in the network
Nowak and Grantham (2000)	Study of the California software industry, main barriers	Lack of access to low cost infrastructure resources, adequate management skills / knowledge and business networking resources for marketing; prime reason: under-capitalization (lack of experienced management and adequate understanding of seed investing by local investors); lack of a coherent, stable and widely accepted format for structuring early stage deals
Inderst (2013)		Active investors, such as venture capitalists, can affect the speed at which new ventures grow
Collinson (2000)	Small indigenous software companies in Scotland, focusing on the strengths and weaknesses of the region’s socio-economic infrastructure as a foundation for innovative new business ventures	Two kinds of knowledge particularly important: strategic knowledge (strategic decisionmaking) and knowledge of knowledge (knowledge of finding specific expertise); growth of local clusters of new high-tech businesses linked to local agglomerations of specialist knowledge/expertise; provided knowledge and experience strongly influenced by supporting social, cultural and economic environment of a particular region
Branz and Gleizal (2014)	Investigation on how contextual factors impact the entrepreneur’s decision of starting a new business; focusing on Sweden and Brazil; interviews and literature review	Literature review: economic wealth, government policies and procedures, legal and administrative, society’s culture, network and knowledge, financial/non-financial assistance Empirical findings: seven contextual factors do not have the same level of influence in Sweden and Brazil, depend on the environment; most important: network and financial assistance
van Stijn and van Rijnsoever (2014)	Case study, focus on the role of universities in supporting startups; 42 interviews in the Boston startup ecosystem	Culture of ‘paying it forward’ and supportive organizations is a fundamental support; balanced and inspirational startup ecosystem; universities and startups naturally have the incentives to sustainably collaborate; universities can promote entrepreneurship as a career path; teaching entrepreneurship demands an ‘action-based’ approach; ownership, leadership and engagement lead to successful collaboration; universities as excellent piloting sites for new technologies and products