Skip to main content

Applying System Dynamics Approach to Modelling Growth Engines in the International Entrepreneurship Era

  • Chapter
  • First Online:
Empirical International Entrepreneurship

Part of the book series: Contributions to Management Science ((MANAGEMENT SC.))

  • 886 Accesses

Abstract

Start-ups require a coherent strategy of resource allocation to grow and survive as they encounter environmental uncertainties and resource limitations when they enter foreign markets. Hence, to attain sustainable growth, entrepreneurs can adopt the “growth engines” strategy defined by the lean start-up method. To cope with the complexity of growth decisions in start-ups, and to analyse engines’ feedback loops, system dynamics (SD) simulation methodology has been used through causal relationships between the main variables and the developing stock-flow diagram. In addition to the lean approach, a real-world case study was also applied for model simulation, and an optimum policy was provided for each proposed scenario. Five different scenarios and five practical policies, each related to a specific growth engine, were simulated. Simulation results were discussed to facilitate decision on which engine must be prioritised in particular environmental conditions, and when making a pivot decision is necessary. Ideally, comparing simulation results under different scenarios to the base run revealed a substantial increase in the customer lifetime value resulting from focusing on the sticky engine with no increased customer attraction. Finally, this study highlighted the importance of selecting only one main strategy from customer acquisition and customer retention at a time and tried to attain the optimal value of customers over the long term. Moreover, research findings may be also useful for start-up executives seeking business growth by adopting correct decisions on how to obtain optimal results under conditions of extreme uncertainty.

This is a preview of subscription content, log in via an institution to check access.

Access this chapter

Subscribe and save

Springer+ Basic
EUR 32.99 /Month
  • Get 10 units per month
  • Download Article/Chapter or eBook
  • 1 Unit = 1 Article or 1 Chapter
  • Cancel anytime
Subscribe now

Buy Now

Chapter
USD 29.95
Price excludes VAT (USA)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
eBook
USD 149.00
Price excludes VAT (USA)
  • Available as EPUB and PDF
  • Read on any device
  • Instant download
  • Own it forever
Softcover Book
USD 199.99
Price excludes VAT (USA)
  • Compact, lightweight edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info
Hardcover Book
USD 199.99
Price excludes VAT (USA)
  • Durable hardcover edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info

Tax calculation will be finalised at checkout

Purchases are for personal use only

Institutional subscriptions

Notes

  1. 1.

    https://www.ostadbank.com/.

References

  • Amin Moghadasi M, Derakhshandeh B, Ferdosi M, Jafari Sadeghi V (2017) Organizational conformity as an entrepreneurial response to the changes in internationalization process: a study of IT-oriented firms in Saveh. World Journal of Accounting, Finance and Engineering 1(1):53–64

    Article  Google Scholar 

  • Bass FM (1969) A new product growth for model consumer durables. Manag Sci 15(5):215–227

    Article  Google Scholar 

  • Beheshti M, Mahdiraji HA, Zavadskas EK (2016) Strategy portfolio optimisation: a copras g-modm hybrid approach. Transform Bus Econ 15(3C):500–519

    Google Scholar 

  • Biancone PP, Jafari Sadeghi V (2016) Risk management in export compliance: concepts, procedures, and solutions. In: Cantino V, De Vincentiis P, Racca MG (eds) Risk management: perspectives and open issues. McGraw-Hill, London, UK, pp 64–78

    Google Scholar 

  • Björk J, Ljungblad J, Bosch J (2013) Lean product development in early stage startups. IW-LCSP@ ICSOB pp. 19–32)

    Google Scholar 

  • Blank S (2017) Why the lean start-up changes everything. Harv Bus Rev October

    Google Scholar 

  • Bohn N, Kundisch D (2018) Much more than ‘same solution using a different technology’: antecedents and consequences of technology pivots in software startups. Proceedings of the Multikonferenz Wirtschaftsinformatik, Lüneburg

    Google Scholar 

  • Campos A (2017) The study of the Entrepreneur’s values and knowledge: influence in growth expectations. Journal of Evolutionary Studies in Business 2(1):29–65

    Google Scholar 

  • Caseiro N, Coelho A (2019) The influence of business intelligence capacity, network learning and innovativeness on startups performance. J Innov Knowl 4(3):139–145

    Article  Google Scholar 

  • Chanut-Guieu C, Guieu G, Dana LP (2019) Leadership, creativity and routine in small businesses experiencing hyper-growth. Revue de lEntrepreneuriat 18(2):147–171

    Article  Google Scholar 

  • Dabić M, Maley J, Dana LP, Novak I, Pellegrini MM, Caputo A (2020) Pathways of SME internationalization: a bibliometric and systematic review. Small Bus Econ 55(3):705–725

    Article  Google Scholar 

  • Dana LP, Dana TE (2005) Expanding the scope of methodologies used in entrepreneurship research. Int J Entrep Small Bus 2(1):79–88

    Article  Google Scholar 

  • Dana LP (ed) (2011) World encyclopedia of entrepreneurship. Edward Elgar Publishing

    Google Scholar 

  • de Medeiros Júnior JV, de Medeiros Bezerra MH, Calife V (2015) Growth engine strategy analysis based on lean startup approach: case of a Brazilian startup. In Proceedings of the 33rd International Conference of the System Dynamics Society

    Google Scholar 

  • Eisenmann TR, Ries E, Dillard S (2012) Hypothesis-driven entrepreneurship: the lean startup. Harvard Business School Entrepreneurial Management Case (812-095)

    Google Scholar 

  • Etemad H, Wright RW, Dana LP (2001) Symbiotic international business networks: collaboration between small and large firms. Thunderbird Int Bus Rev 43(4):481–499

    Article  Google Scholar 

  • Etemad H, Wilkinson I, Dana LP (2010) Internetization as the necessary condition for internationalization in the newly emerging economy. J Int Entrep 8(4):319–342

    Article  Google Scholar 

  • Forrester BD (1996) Advanced vibration analysis techniques for fault detection and diagnosis in geared transmission systems (Doctoral dissertation, Swinburne University of Technology)

    Google Scholar 

  • Frederiksen DL, Brem A (2017) How do entrepreneurs think they create value? A scientific reflection of Eric Ries’ lean startup approach. Int Entrep Manag J 13(1):169–189

    Article  Google Scholar 

  • Fukugawa N (2018) Is the impact of incubator’s ability on incubation performance contingent on technologies and life cycle stages of startups?: evidence from Japan. Int Entrep Manag J 14(2):457–478

    Article  Google Scholar 

  • Geuvers P, Dana LP (2015) Growth momentum: what entrepreneurial CEOs do to achieve high organic growth (summary). Frontiers of Entrepreneurship Research 35(5):17

    Google Scholar 

  • Ghezzi A (2019) Digital startups and the adoption and implementation of lean startup approaches: effectuation, Bricolage and opportunity creation in practice. Technol Forecast Soc Chang 146:945–960

    Article  Google Scholar 

  • Graham P (2012) Startup = growth. Self published online article, article source: http://www.Paulgraham.Com/growth.Html, accessed October

  • Hajiagha SHR, Mahdiraji HA, Tavana M, Hashemi SS (2018) A novel common set of weights method for multi-period efficiency measurement using mean-variance criteria. Measurement 129:569–581

    Article  Google Scholar 

  • Hajiagha SHR, Hashemi SS, Mahdiraji HA, Azaddel J (2015) Multi-period data envelopment analysis based on Chebyshev inequality bounds. Expert Syst Appl 42(21):7759–7767

    Article  Google Scholar 

  • Hosseini SH, Shakouri H (2016) A study on the future of unconventional oil development under different oil price scenarios: a system dynamics approach. Energy Policy 91:64–74

    Article  Google Scholar 

  • Hosseini SH, Shakouri GH, Kazemi A, Zareayan R, Mousavian HM (2019) A system dynamics investigation of project portfolio management evolution in the energy sector: case study: an Iranian independent power producer. Kybernetes

    Google Scholar 

  • Huang X, Kunc M (2012) Modeling start-ups using system dynamics: towards a generic model. In Annals do International Conference of the System Dynamics Society, St. Gallen, Switzerland

    Google Scholar 

  • Jafari Sadeghi V, Jashnsaz A, Honari Chobar M (2014) Organization’s conformity assessment with Peter Senge’s learning organization principles in municipality of Saveh: a case study. IOSR J Bus Manag 16(5):51–58

    Article  Google Scholar 

  • Jafari-Sadeghi V, Kimiagari S, Biancone PP (2019) Level of education and knowledge, foresight competency and international entrepreneurship. Eur Bus Rev 32(1):46–68

    Google Scholar 

  • Keyhani M, Levesque M (2016) The equilibrating and disequilibrating effects of entrepreneurship: revisiting the central premises. Strateg Entrep J 10(1):65–88

    Article  Google Scholar 

  • Khanna D, Nguyen-Duc A, Wang X (2018) From MVPs to pivots: a hypothesis-driven journey of two software startups. In: International conference of software business. Springer, Cham, pp 172–186

    Chapter  Google Scholar 

  • Larsen ER, van Ackere A, Warren K (1997) The growth of service and the service of growth: using system dynamics to understand service quality and capital allocation. Decis Support Syst 19(4):271–287

    Article  Google Scholar 

  • Mahdiraji HA, Kazimieras Zavadskas E, Kazeminia A, Abbasi Kamardi A (2019) Marketing strategies evaluation based on big data analysis: a CLUSTERING-MCDM approach. Economic research-Ekonomska istraživanja 32(1):2882–2892

    Article  Google Scholar 

  • Mahdiraji HA, Hajiagha SHR, Pourjam R (2011) A Grey mathematical programming model to time-cost trade-offs in project management under uncertainty. In: IEEE 2011 International Conference on Grey Systems and Intelligent Services. IEEE, pp 698–704

    Google Scholar 

  • Mahdiraji HA, Hafeez K, Kord H, Kamardi AA (2020) Analysing the voice of customers by a hybrid fuzzy decision-making approach in a developing country’s automotive market. Manag Decis. https://doi.org/10.1108/MD-12-2019-1732

  • Mahmoudi M, Mahdiraji HA, Jafarnejad A, Safari H (2019) Dynamic prioritization of equipment and critical failure modes. Kybernetes 48(9):1913–1941

    Article  Google Scholar 

  • Mokhtarzadeh NG, Mahdiraji HA, Beheshti M, Zavadskas EK (2018) A novel hybrid approach for technology selection in the information technology industry. Technologies 6:34

    Article  Google Scholar 

  • Pant V, Yu E, Tai A (2017) Towards reasoning about pivoting in startups with I-Star. In CEUR Workshop Proceedings

    Google Scholar 

  • Ries E (2011) The lean startup: how today’s entrepreneurs use continuous innovation to create radically successful businesses. Crown Books

    Google Scholar 

  • Sadeghi V, Biancone PP (2017a) Shariah compliant international entrepreneurship: a study of Islamic finance in Europe. European Journal of Islamic Finance 8. https://doi.org/10.13135/2421-2172/2328

  • Sadeghi V, Biancone PP (2017b) Exploring the drivers of gender entrepreneurship: focus on the motivational perspectives in USA, Italy, and France. In: Ratten V, Ramadani V, Dana L-P, Hisrich RD, Ferreira J (eds) Gender and family entrepreneurship. Routledge, London, UK, pp 124–141

    Chapter  Google Scholar 

  • Sadeghi V, Biancone PP (2018) How micro, small and medium-sized enterprises are driven outward the superior international trade performance? A multidimensional study on Italian food sector. Res Int Bus Financ 45:597–606

    Article  Google Scholar 

  • Sadeghi VJ, Biancone PP, Giacoma C, Secinaro S (2017) Export compliance: a missing component of international entrepreneurship. International Journal of Business and Management 12(11):103–110

    Article  Google Scholar 

  • Sadeghi VJ, Biancone PP, Giacoma C, Secinaro S (2018) How does export compliance influence the internationalization of firms: is it a thread or an opportunity? J Glob Entrep Res 8(1):33–53

    Article  Google Scholar 

  • Sadeghi VJ, Nkongolo-Bakenda JM, Anderson RB, Dana LP (2019) An institution-based view of international entrepreneurship: a comparison of context-based and universal determinants in developing and economically advanced countries. Int Bus Rev 28(6):101588

    Article  Google Scholar 

  • Sadraei R, Jafari Sadeghi V, Sadraei M (2018) Biotechnology revolution from academic entrepreneurship to industrial: chemo-entrepreneurship. Biometrics & Biostatistics International Journal 7(6):546–550

    Article  Google Scholar 

  • Shin SY (2019) Network advantage’s effect on exit performance: examining venture capital’s inter-organizational networks. Int Entrep Manag J 15(1):21–42

    Article  Google Scholar 

  • Sterman JD (2000) Business dynamics: systems thinking and modeling for a complex world. McGraw-Hill Higher Education, New York, NY

    Google Scholar 

  • Sweeney LB, Sterman JD (2000) Bathtub dynamics: initial results of a systems thinking inventory. System Dynamics Review: The Journal of the System Dynamics Society 16(4):249–286

    Article  Google Scholar 

  • Täuscher K, Abdelkafi N (2016) Modelling the lean startup: a simulation tool for entrepreneurial growth decisions. Model-based strategy assessment in virtual environments for sustainable entrepreneurship. Proceedings of the 16th EURAM Conference, Paris, June 1–4 2016

    Google Scholar 

  • Taghavifard MT, Amoozad Mahdiraji H, Alibakhshi AM, Zavadskas EK, Bausys R (2018) An extension of fuzzy SWOT analysis: an application to information technology. Information 9:46

    Article  Google Scholar 

  • Tanev S (2017) Is there a lean future for global startups? Technol Innov Manag Rev 7(5):52–56

    Article  Google Scholar 

  • Terho H, Eggert A, Haas A, Ulaga W (2015) How sales strategy translates into performance: the role of salesperson customer orientation and value-based selling. Ind Mark Manag 45:12–21

    Article  Google Scholar 

  • Van der Ven JS, Bosch J (2013) Pivots and architectural decisions: two sides of the same medal. In Proceedings 8th International Conference on Software Engineering Advances (ICSEA) (pp. 310–317)

    Google Scholar 

Download references

Author information

Authors and Affiliations

Authors

Corresponding author

Correspondence to Seyed Mojtaba Sajadi .

Editor information

Editors and Affiliations

Rights and permissions

Reprints and permissions

Copyright information

© 2021 The Author(s), under exclusive license to Springer Nature Switzerland AG

About this chapter

Check for updates. Verify currency and authenticity via CrossMark

Cite this chapter

Jamshidi, Z., Sajadi, S.M., Talebi, K., Hosseini, S.H. (2021). Applying System Dynamics Approach to Modelling Growth Engines in the International Entrepreneurship Era. In: Jafari-Sadeghi, V., Amoozad Mahdiraji, H., Dana, LP. (eds) Empirical International Entrepreneurship. Contributions to Management Science. Springer, Cham. https://doi.org/10.1007/978-3-030-68972-8_22

Download citation

Publish with us

Policies and ethics