Applying Population Dynamics Theory on Entrepreneurial Survival Strategy: Case of Financial Technologies and its Promoter
XLRI Jamshedpur Working Paper 2009-19
27 Pages Posted: 18 Jan 2010 Last revised: 9 Aug 2010
Date Written: December 5, 2009
Population dynamics is a branch of life sciences dealing with the way populations are affected by the birth and death rates, the changes in the size and age composition of populations, and the biological and environmental processes influencing those changes. This paper applies the Population Dynamics Theory on Entrepreneurial Survival Strategy observing the developments in the nascent commodities exchanges in India, especially focussing on the Financial Technologies (FT) and its Promoter, Jignesh Shah. As the currency and commodity trading environment was new, the strategies which exchanges implement were of paramount importance. As per population dynamics theory, in turbulent times when ecosystem is new, one should follow r-strategy and during stable environment, K-strategy is best. r-strategy is to exploit the opportunities fast. K-strategy focuses on long term growth rather than short-term survival. There are tradeoffs in pursuing these two kinds of strategies. If we concentrate on r strategy than we cannot focus on the development of the business ecosystem as the focus will be on making quick gains. But if we focus on K strategy we will not be able to get the quick start required.
This work finds some interesting clues from the laws of the nature by applying it on the emerging commodities exchanges in India, especially the privately-owned Jignesh Shah promoted Financial Technologies baby MCX and state-owned national level institutions promoted National Stock Exchanges’ baby NCDEX. During the initial turbulent period, Financial Technologies, focused on quick growth strategies like focusing itself towards mirror image products which were highly popular in the foreign commodities markets, especially Chicago. Once it was able to survive, FT focused on building ecosystem so as to cater for long term growth. However, NCDEX followed exactly opposite strategies. It decided to build the ecosystem right from start such as developing spot markets which were to act as benchmark for the futures market. However, this helped MCX gain early lead in the futures market and gain large market share.
Keywords: Entrepreneur survival, opportunity identification, population dynamics, Verhulst equation, R & K strategy
JEL Classification: M13, L20, Z00
Suggested Citation: Suggested Citation