Abstract
This research provides an improved understanding of how ventures successfully organize via resource allocations. Conceptually, we apply elements of action theory to account for resource trade-offs that occur as entrepreneurs make decisions about adding staff members to boundary spanning, technical core, and management functions. We then model how these allocation decisions differentially impact nascent venture performance. Empirically, we test our model with a sample of 2484 entrepreneurs captured in the Kauffman Firm Survey, a longitudinal dataset that tracks a random sample of US startups over an 8-year period. Results from dynamic panel estimation reveal evidence of both performance penalties and performance boosts as the result of entrepreneurs adding staff to specific areas, revealing optimality in specific configurations of entrepreneurial organizing elements.
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