Applying system dynamics approach to modelling growth engines in the international entrepreneurship era

Zahra Jamshidi, Seyed Mojtaba Sajadi*, Kambiz Talebi, Seyed Hossein Hosseini

*Corresponding author for this work

Research output: Chapter in Book/Published conference outputChapter


Start-ups require a coherent strategy of resource allocation to grow and survive as they encounter environmental uncertainties and resource limitations when they enter foreign markets. Hence, to attain sustainable growth, entrepreneurs can adopt the “growth engines” strategy defined by the lean start-up method. To cope with the complexity of growth decisions in start-ups, and to analyse engines’ feedback loops, system dynamics (SD) simulation methodology has been used through causal relationships between the main variables and the developing stock-flow diagram. In addition to the lean approach, a real-world case study was also applied for model simulation, and an optimum policy was provided for each proposed scenario. Five different scenarios and five practical policies, each related to a specific growth engine, were simulated. Simulation results were discussed to facilitate decision on which engine must be prioritised in particular environmental conditions, and when making a pivot decision is necessary. Ideally, comparing simulation results under different scenarios to the base run revealed a substantial increase in the customer lifetime value resulting from focusing on the sticky engine with no increased customer attraction. Finally, this study highlighted the importance of selecting only one main strategy from customer acquisition and customer retention at a time and tried to attain the optimal value of customers over the long term. Moreover, research findings may be also useful for start-up executives seeking business growth by adopting correct decisions on how to obtain optimal results under conditions of extreme uncertainty.

Original languageEnglish
Title of host publicationEmpirical International Entrepreneurship
Subtitle of host publicationA Handbook of Methods, Approaches, and Applications
EditorsVahid Jafari-Sadeghi, Hannan Amoozad Mahdiraji, Leo-Paul Dana
ISBN (Electronic)9783030689711
ISBN (Print)9783030689711
Publication statusPublished - 22 May 2021

Publication series

NameContributions to Management Science
ISSN (Print)1431-1941
ISSN (Electronic)2197-716X


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