Sustaining superior performance through a boom and bust period

This paper develops and empirically tests a theoretical framework that identifies new venture strategies that are robust to a severe change in environmental conditions. Specifically, it develops a typology of strategic options among new ventures in the context of an emerging industry that experiences an Entrepreneurial Boom and Bust (EBB) Period. An analysis of the performance drivers of 104 e-consulting firms from January 1998 through December 2001 suggests that initial endowments shape strategy during the expansion phase of the EBB, and both predict firm survival at the end of the EBB period. We find that firms followed four strategy archetypes Ư Conservative Growers, Focused Consultants, Expansionists and Aggressive Acquirers. Further, differences are systematically associated with differences in performance. Whereas Conservative Growers, Focused Consultants were most successful in weathering the contraction phase, Expansionists and Aggressive Acquirers were most susceptible to failure.