Internal and External Drivers of Radical Strategic Changes in High Technology New Ventures

High-technology new ventures, often funded by venture capital firms, operate in a turbulent environment. Consequently, these ventures frequently make radical changes in their strategies, adapting internal resources and capabilities to their changing environment. Those changes involve relatively high risk, as well as involvement of the investors. Building on previous research of strategic changes in established corporations, this study explores the common causes for radical changes in strategy of high-technology new ventures from the perspective of their venture capital investors, using a SWOT model. A dataset of 60 phrases extracted from interviews with 16 venture capital investors from 8 developed countries regarding their experience of 36 radical strategic changes in their 76 portfolio companies was analysed. The findings indicate significantly more unfavourable than favourable events. Internal factors were considered more likely than external factors to drive radical strategic changes, but only with marginal significance. Further research is required to validate these findings.