The Effect of Competitor Interaction on Startup’s Product Development

Abstract

[Context and motivation] Due to lack of resources and teams with low levels of experience, startups face several challenges during their product development, such as product customization, attracting new customers, and mastering the technology uncertainty. To increase their market presence and compensate for their lack of resources, startups need to consider other options such as joint ventures and partnerships. [Question/problem] Some companies that share highly similar resources and businesses can be potential competitors with one another. The effect of interaction with such potential competitors with respect to startups to obtain expertise has not been often reported in the literature to date. [Principal ideas/results] In this study, we simulated two software startups in a controlled experiment to evaluate the effect of interaction with a potential competitor in the effort estimation process. A real startup case was also involved in analyzing the effect. The results of the study show that there is a statistically significant difference in the effectiveness when co-operating with a competitor in the process. Experiment participants also considered the interaction with the potential competitor useful based on the exchange of important information and ideas regarding the product domain. [Contribution] This paper contributes by demonstrating the effect of interaction with a potential competitor in the effort estimation process. In addition, our study encourages further research on startups working in with the competitors in other software engineering knowledge areas.