The entrepreneurial logic of startup software development: A study of 40 software startups

TL;DR

This study explores how entrepreneurial mindsets influence software engineering activities in startups, revealing two distinct startup types and emphasizing effectuation as a key logic in their development processes.

Contribution

It introduces a novel analysis of entrepreneurial logic in software engineering within startups, linking effectuation and causation models to practical development patterns.

Findings

Effectuation logic is prevalent in MVP, TD, and CI activities.

Startups are either effectuation-driven or have mixed logics.

Effectuation is crucial for tailoring SE practices in startups.

Abstract

Context: Software startups are an essential source of innovation and software-intensive products. The need to understand product development in startups and to provide relevant support are highlighted in software research. While state-of-the-art literature reveals how startups develop their software, the reasons why they adopt these activities are underexplored. Objective: This study investigates the tactics behind software engineering (SE) activities by analyzing key engineering events during startup journeys. We explore how entrepreneurial mindsets may be associated with SE knowledge areas and with each startup case. Method: Our theoretical foundation is based on causation and effectuation models. We conducted semi-structured interviews with 40 software startups. We used two-round open coding and thematic analysis to describe and identify entrepreneurial software development patterns. Additionally, we calculated an effectuation index for each startup case. Results: We identified 621 events merged into 32 codes of entrepreneurial logic in SE from the sample. We found a systemic occurrence of the logic in all areas of SE activities. Minimum Viable Product (MVP), Technical Debt (TD), and Customer Involvement (CI) tend to be associated with effectual logic, while testing activities at different levels are associated with causal logic. The effectuation index revealed that startups are either effectuation-driven or mixed-logics-driven. Conclusions: Software startups fall into two types that differentiate between how traditional SE approaches may apply to them. Effectuation seems the most relevant and essential model for explaining and developing suitable SE practices for software startups.