Analyzing factors influencing strategic renewal in young companies: an interpretive structural modeling approach

Purpose The high failure rate of startups has attracted researchers’ attention to uncover the underlying reasons for failure. Most research has focused on the lack of financial resources and the characteristics of entrepreneurs. Although these are critical for startups to survive, we argue that renewal capability guarantees survival in the early stages of development. Thus, the purpose of this research is to identify factors influencing the renewal capability of young companies and establish hierarchical interrelationships among these factors. Design/methodology/approach A systematic literature review of research on strategic renewal was conducted to identify the factors influencing strategic renewal. The interrelationships among these factors were determined by experts in the context of Internet startups, and a structural model was developed using interpretive structural modeling (ISM). Additionally, MICMAC analysis was performed to classify the factors based on their driving and dependence power. Findings The results show that all twelve factors identified through the literature review and expert opinions are relevant and require careful consideration in the context of Internet startups. Furthermore, the results indicate that most factors exhibit high driving power, categorized as linkage or independent, suggesting that any action taken to alter them impacts other factors within the system. Therefore, assessing the potential effects of modifying these factors on the entire system is essential before devising strategies to enhance renewal capability. The results also reveal that although top management plays a critical role in the renewal process of Internet startups, other factors enable top management to undertake renewal actions more effectively and efficiently. Originality/value To the best of our knowledge, this study is the first to analyze factors affecting strategic renewal in young companies and to develop a structural model of these factors.