Defining a Startup - A Critical Analysis

8 Pages Posted: 21 Apr 2021

See all articles by Zaeem-Al Ehsan

Zaeem-Al Ehsan

The World Bank; East West University

Date Written: April 9, 2021

Abstract

The word “startup” has become a buzzword in contemporary policies and public debate. Every year, a whopping 100 million startups begin their operations worldwide and hence have a profound impact on the economy they are operating in. Hence, there lies a dire need for governments to foster the growth and fruition of startups since it directly correlates to economic growth.

This salient need to support startups highlights the question – “what constitutes a startup?”. This paper analyses past literature to arrive at a quantifiable definition of "startup". The paper identified 4 overlapping variables used to define a startup.

While past literature fixated on the “newness” of a startup, contemporary scholarly papers show a growing consensus of classifying a startup as being innovative due to the increasingly complex requirements of both domestic and foreign markets9 and is reflected in the change in definitions used by researchers.

This paper identifies “innovation” as being the key differentiator of a startup and growth/risk being the following outcome of said “innovation”. While this paper develops a cut-off point based on the “age of incorporation”, it uncovers a more significant need for researchers to define and measure “innovation” in more absolute, universal and quantifiable terms.

Keywords: Startup, Entrepreneurship, Business, Investment, FDI

JEL Classification: M10, M13, M20, M21, M38

Suggested Citation

Ehsan, Zaeem-Al, Defining a Startup - A Critical Analysis (April 9, 2021). Available at SSRN: https://ssrn.com/abstract=3823361 or http://dx.doi.org/10.2139/ssrn.3823361

Zaeem-Al Ehsan (Contact Author)

The World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

East West University ( email )

Bangladesh

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
2,308
Abstract Views
4,546
Rank
11,891
PlumX Metrics