Evolution, Adaptation and Entrepreneurial Learning in the Emerging Nordic Wireless Internet Industry

The wireless Internet industry is only in the beginning of its’ innovative evolution. The structure and roles of the companies active in the industry are far from settled and the entrepreneurial activity in the area is very strong. For new ventures in emerging industries rapid learning is key. Opportunistic adaptation and strategy formation is likely to be characterized by frequent changes in the business model. These efforts at strategic experimentation are reflective of the trialand-error learning process associated with trying to establish a viable competitive position. This paper presents an identification and analysis of 139 unlisted Nordic start-up companies related to wireless Internet. Primary geographical focus of the study has been the Swedish market but companies in other Nordic countries have been included. Personal interviews have been conducted with 67 of the companies. The interviews were conducted during July September 2000. Follow up data gathering on funding and business model adaptation was done in March 2001. The start-ups in the study employ (late 2000) approximately 2 700 persons, a figure expected to double within the coming year. We estimate the present total financial need among Swedish start-ups in the industry to approximately SEK 2.3 billion. There is a compact resistance against traffic revenue sharing among mobile network operators in Sweden. The revenue models of many start-ups include traffic sharing with cellular network operators, why we believe those start-ups will have to revise their business models. Start-ups learning from experience and adapting their definition of target customer as well as their business model to the market evolution showed a significantly higher propensity to secure additional funding compared to non-adapting ventures. Empirically grounded theoretical models of learning to better understand the individual and group cognitive processes of learning in innovative entrepreneurial contexts are much needed. Some lines for further theoretical development are suggested.