On the Timing of Pivots: Jumping the Gun or Late Out of the Gate?

Abstract

Startup literature has demonstrated a growing interest in topics related to strategic pivots however very little is known about the impact pivoting has on new venture survival and many aspects remain unexplored. While some studies treat pivots as though there are no tradeoffs involved, others suggest pivoting has either positive or negative effects. This paper seeks to better understand the impact of pivoting, namely does the timing of pivoting impact startup survival. Using change in a venture’s North American Industry Classification System code as a proxy for pivoting, we find that earlier pivoting activity has a more positive impact on survival than later pivoting activity among Kauffman Firm Survey participants. This longitudinal empirical study on the relationship between pivot timing and revenue aims to attract attention to this important topic in startup literature, and help the entrepreneur facing the difficult decision of when to pivot.