Inside out: cutting-edge methods to decode external opportunities for startup growth

We examine how both internal resources and the external environment influence startup growth, addressing the challenge of measuring the knowledge structure in which the startup operates. We introduce, in relation to firm growth, two indicators belonging to the economic complexity paradigm, complexity and relatedness, to respectively assess the economic sophisticatedness and connectedness of the local area. Using a longitudinal analysis over three-, four-, and five-year growth windows, as well as sustained growth patterns, we investigate the early growth of 902 innovative startups in Italy. Our results confirm previous findings, identifying a positive association between effective organizations, managers’ external relationships, and initial R&D investments and startup growth. Among the external factors, we find a supportive role for relatedness, but not complexity. All variables remain stable and consistent over the period examined.