Too Much of a Good Thing? The Nonlinear Effect of Dynamic Capabilities on New Venture Survival

This research conceptualizes and then shows how one type of dynamic capability - network capability - does not always have a positive relationship with the survival of new technology-based ventures. Using data from a survey of 280 new ventures combined with secondary and patent data, we show that although network capability is beneficial at low to intermediate levels, it decreases new venture survival at high levels. The influence of network capability on survival also decreases under conditions of high environmental hostility but no moderation effect is found for environmental dynamism. Our results suggest that investment in dynamic capabilities in new ventures should be optimized, not maximized, for survival. Also, environmental hostility is more relevant than dynamism for entrepreneurs in new ventures to monitor.