Why do startups fail? A core competency deficit model

Edit Szathmári; Zoltán Varga; Attila Molnár; Gergely Németh; Zsolt Péter Szabó; Orhidea Edith Kiss

doi:10.3389/fpsyg.2024.1299135

Why do startups fail? A core competency deficit model

Front Psychol. 2024 Feb 8:15:1299135. doi: 10.3389/fpsyg.2024.1299135. eCollection 2024.

Authors

Edit Szathmári^{1

2}, Zoltán Varga³, Attila Molnár⁴, Gergely Németh^{5

6}, Zsolt Péter Szabó^{7

8}, Orhidea Edith Kiss²

Affiliations

¹ Doctoral School of Psychology, ELTE Eötvös Loránd University, Budapest, Hungary.
² Institute of Psychology, ELTE Eötvös Loránd University, Budapest, Hungary.
³ Independent Researcher, Budapest, Hungary.
⁴ TeamINSIGHT Labs Ltd., Budapest, Hungary.
⁵ Institute of Management and Finance, Budapest Metropolitan University, Budapest, Hungary.
⁶ Corporate Values Kft., Budapest, Hungary.
⁷ Institute of Strategy and Management, Corvinus University of Budapest, Budapest, Hungary.
⁸ Institute of Psychology, University of Pécs, Pécs, Hungary.

Abstract

A growing body of work aims to explore the reasons behind startup failures. However, there is a need for integrative approaches organized around conceptual frameworks to avoid fragmented and perplexing knowledge about these reasons. To our knowledge, no previous research has systematically investigated the role of competency deficits in startup failures, a crucial element of these failures. In our study, we adapted Spencer's behavioral competence model specifically for startups to identify the competencies within startup teams that, according to their Chief Executive Officers, contributed to their downfall. Three coders meticulously analyzed 50 online accounts of startup failures using a modified Critical Incident Technique. This analysis revealed two prominent competency deficits as pivotal determinants of these startups' outcomes: information-seeking and customer service orientation. Additionally, deficits in technical expertise, analytical thinking, and flexibility emerged as significant factors contributing to these failures. The competency deficits identified in this study offer focal points for evaluating and enhancing startup teams, thereby helping to prevent failure.

Keywords: competency deficits; core competencies; customer service orientation; information-seeking; startup failures.

Grants and funding

The author(s) declare financial support was received for the research, authorship, and/or publication of this article. ZSPSZ declares that project no. TKP2021-NKTA-19 has been implemented with the support provided by the National Research, Development, and Innovation Fund of Hungary, financed under the TKP2021-NKTA funding scheme.