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Publications
  • June 2020
  • Article
  • Administrative Science Quarterly

Parallel Play: Startups, Nascent Markets, and the Effective Design of a Business Model

By: Rory McDonald and Kathleen Eisenhardt
  • Format:Print
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Abstract

Prior research advances several explanations for entrepreneurial success in nascent markets but leaves a key imperative unexplored: the business model. By studying five ventures in the same nascent market, we develop a novel theoretical framework for understanding how entrepreneurs effectively design business models: parallel play. Similar to parallel play by preschoolers, entrepreneurs engaged in parallel play interweave action, cognition, and timing to accelerate learning about a novel world. Specifically, they (1) borrow from peers and focus on established substitutes, (2) test assumptions, then commit to a broad business-model template, and (3) pause before elaborating the activity system. The insights from our framework contribute to research on optimal distinctiveness, and to the learning and evolutionary-adjustment literature on search. More broadly, we blend organization theory with a fresh theoretical lens—business-model processes—to highlight how organizations actually work and create value.

Keywords

Search; Legitimacy; Organizational Innovation; Organizational Learning; Mechanisms And Processes; Institutional Entrepreneurship; Qualitative Methods; Business Model Design; Business Model; Business Startups; Entrepreneurship; Emerging Markets; Adaptation; Competition; Strategy

Citation

McDonald, Rory, and Kathleen Eisenhardt. "Parallel Play: Startups, Nascent Markets, and the Effective Design of a Business Model." Administrative Science Quarterly 65, no. 2 (June 2020): 483–523.
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About The Author

Rory M. McDonald

Technology and Operations Management
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    • 2022
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    Productive Tensions: How Every Leader Can Tackle Innovation’s Toughest Trade-Offs

    By: Chris Bingham and Rory McDonald
    • April 2022
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    The Past Is Prologue? Venture-Capital Syndicates' Collaborative Experience and Start-Up Exits

    By: Dan Wang, Emily Cox Pahnke and Rory McDonald
    • March 2022
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    Managing Innovation at Atrium Health: 'Never Let a Good Crisis Go To Waste'

    By: Derek van Bever, Rory McDonald and Anibha Singh
More from the Authors
  • Productive Tensions: How Every Leader Can Tackle Innovation’s Toughest Trade-Offs By: Chris Bingham and Rory McDonald
  • The Past Is Prologue? Venture-Capital Syndicates' Collaborative Experience and Start-Up Exits By: Dan Wang, Emily Cox Pahnke and Rory McDonald
  • Managing Innovation at Atrium Health: 'Never Let a Good Crisis Go To Waste' By: Derek van Bever, Rory McDonald and Anibha Singh
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