Perceived uncertainty and multiple embeddedness of digital startups

Purpose This study focuses on the multiple embeddedness of digital startups into digital platforms and explores how digital startups utilize this strategy to cope with the uncertainty of digital entrepreneurship. This study examines the effects of perceived uncertainty (PU) on the multiple embeddedness of digital startups and the boundary condition effects of investment irreversibility (IR) and industry growth potential. Through the lens of real options theory, this study proposes a theoretical model that considers the nature of multiple digital platform embeddedness as a process of constructing a real option portfolio in response to uncertainty and a mechanism for creating strategic flexibility. Design/methodology/approach The current research conducted a two-wave questionnaire survey and collected data from digital startups in China. The final sample consists of 316 digital startups. This study used Stata and Amos to test the hypotheses. Findings The findings reveal that digital startups are more inclined to embed in more digital platforms under uncertainty, and PU negatively affects relational embeddedness and structural embeddedness. These results suggest that digital startups leverage multiple platform embeddedness to manage PU and maintain flexibility. Moreover, IR positively moderates the relationship between PU and flexible multiple embeddedness strategies, whereas industry growth potential negatively moderates the relationships. Originality/value This study contributes to the literature on digital entrepreneurship by extending the nature of digital platform embeddedness. It integrates a novel perspective of real options theory into the research stream of digital platform entrepreneurship, thus offering insights into how startups can navigate the complexities of a rapidly evolving digital landscape.