Experimentation Strategies and Entrepreneurial Innovation: Inherited Market Differences in the iPhone Ecosystem
Although experimentation is critical to the innovation process in startups, little research has
explored the link between different experimentation strategies and entrepreneurial innovation.
We use unique data on experimentation strategies and innovation outcomes of firms
producing iPhone applications to show that the appropriateness of different strategies depends
on market characteristics. Simultaneous experimentation strategies are better suited to
markets characterized by strong market inheritance, where innovative know-how,
development technologies, and heterogeneous preferences from established markets can be
leveraged by entrepreneurs. In markets with fewer skills, fewer developmental technologies,
and less understood demand expectations, innovations are more likely to result from
sequential product improvements based on customer feedback, allowing the entrepreneur to
develop skills and clarify what may be singular customer preferences.