What does a start-up need to grow? An empirical approach for Italian innovative start-ups

Purpose – The purpose of this paper is to capture the role of internal and external characteristics in favouring the growth of innovative start-ups at an early stage of their life. Design/methodology/approach – The empirical approach of this paper is based on an econometric analysis applied to all Italian innovative start-ups with four and five years of life. Growth is analysed after four and five years from the constitution, depending on internal investments in research and development (R&D), in tangible assets and on characteristics external to the firm (110 Italian provinces) related to industrial variety, specialisation, public investments in R&D, etc. Findings – The results achieved in this study reveal the importance of internal R&D investment even though there is missing evidence on the relevance of general and government specific R&D investment in the area. Other interesting results concern the importance of the firm’s involvement in the technological specialisation of the area and the need for general variety in technological diversification in the area to favour the growth of start-ups. Practical implications – The results imply that entrepreneurs should evaluate carefully their strategic choices in terms of the location of the start-up and the investment in R&D as these could be important factors for the firm’s growth. Originality/value – This paper is an original attempt to measure the importance of both internal and external characteristics for the growth of start-ups. Moreover, the analysis covers the overall population of a new interesting category of firm, the innovative start-up.