A Mixed Blessing: Resilience in the Entrepreneurial Socio-Technical System of Bitcoin

Abstract

Studies of resilience highlight the tension between actions that allow a firm – and a system – to be robust and those that allows it to be flexible. Studies suggest that an entrepreneurial firm will prioritize flexibility, given resource constraints. However, what occurs when a number of firms are embedded in a common socio-technical system and an extreme event affects them collectively? This paper tests whether existing theory about resilience predicts the responses of entrepreneurs in such a system, with reference to an extreme event in the Bitcoin socio-technical system: the much-publicized bankruptcy of Mt.Gox, a key player. It relies on in-depth interviews with 8 entrepreneurs in Europe, triangulated with other data. We find that robustness is the dominant strategy for those interviewed. This is partly because the firms rely on pooled resources supplied by the collective, and partly because robustness builds trust, giving the firms a competitive advantage.