Time to Reconfigure or Preserve? Reconfiguration and New Firm Survival

Although scholars have investigated reconfiguration as a means for established companies to adapt to changing environments, little is known about reconfiguration in start-up firms. We examined whether it improves start-ups’ survival, and how its timing affects survival odds. Using a cohort of 19,523 Dutch start-ups in services established in 2011, we applied a novel method of multistate survival analysis modeling of the transition across life events, from birth to reconfiguration, to survival or death, as a stochastic (semi-)Markov process. Our results show reconfiguration increases a start-up’s survival likelihood. However, reconfiguration early in a start-up’s life is associated with worse, not better, odds of survival than other start-ups. Our study contributes to the strategy and entrepreneurship literatures by highlighting the importance of reconfiguration as a dynamic survival capability of start-ups and to the emerging research on the temporal perspectives of strategic decision-making by revealing the risks of early reconfiguration.