The role of human and financial capital in the business model design-performance relationship: evidence from Austrian start-ups

Business models are of crucial importance for the success of start-ups. Previous research suggests that the relationship between business model design and performance depends on the underlying resource situation. However, there is little empirical evidence about how business models contribute to firm performance taking into account the firm's resource bundles. In this exploratory paper, we test some hypotheses regarding how business model design, human capital and financial capital affect firm growth. We focus on two different types of business models, namely novelty-centred and efficiency-centred business models, which reflect fundamental alternatives for entrepreneurs to create value in the highly competitive environments in which they operate. The study is based on a sample of 182 start-up companies in Austria in the period 2008-2018, during which the start-up sector has been growing. The study delivers evidence that both the consideration of resources, such as an entrepreneur's human capital characteristics in the form of previous start-up experience, and financial capital contribute to the performance of start-ups with a novelty-centred business model. For the efficiency-centred business models, the direct effect of human and financial capital has the highest explanatory power in explaining firm performance. Considering the peculiarities of the Austrian context, the findings should be interpreted as an initial step towards understanding the role of business models in start-up performance. While the study provides evidence that business model elements in combination with specific resources may account for some previously unexplained variance in start-up performance, the results are not intended to establish generalizable conclusions.