Strategic Adaptation of Startups Under Prolonged External Shocks: A Grounded Theory Process Model Across the COVID-19 Pandemic Phases

Key Points

• The study analyzes how startup founders perceive and adapt to prolonged external shocks like the COVID-19 pandemic over time.
• Conducted in-depth interviews with 12 startup founders from various industries.
• Applied grounded theory to analyze their experiences during the pandemic.
• Examined the strategic adaptation phases: emergence, continuation, and transition.
• Strategic adaptation varied across pandemic phases, each exhibiting different mechanisms of tension.
• Cognitive tension was predominant during the emergence phase as existing strategies were disrupted.
• During the continuation phase, uncertainty fostered repeated reconfiguration of strategic choices.
• In the transition phase, changing funding environments and market structures shaped strategic pathways.