Startup Innovation and Growth: Resource Constraints and the Mediating Role of Dynamic Capabilities

Despite 70-80% of startups failing, how do some become so successful in generating exponential growth and value for their stakeholders? This thesis investigates the ‘black box’ of startup innovation — the unknown mechanism by which startups convert the input of resources into the output of growth and innovation. It synthesised three theoretical frameworks (resource-based view, dynamic capabilities, and constraint theory of innovation) to develop an integrated model of startup innovation. While the findings validate the conventional wisdom that higher resources generate high growth, they reveal that an overabundance of resources might hinder radical and disruptive innovations. Startups with abundant resources tend to skip the innovation process and focus on achieving immediate growth. This study provides theoretical and practical implications for startups and policymakers to leverage the interplay between resource constraints and dynamic capabilities development for startup innovation and growth.