Abstract
PurposeThe purpose of this paper is to examine the role of founding team experience (industry and venturing) in new venture creation. This paper posits the following questions: How does founding team experience influence the likelihood of new venture creation, in the nascent stage? How does industry context moderate this relationship? The study aims to fill an important gap in the literature by unpacking the impact of different types of founding team experiences on venture outcome, and by focusing on the influence of founding team in the venture creation process, specifically at the nascent stage.Design/methodology/approachThe paper utilizes data from the Second Panel Study of Entrepreneurial Dynamics, a longitudinal data set of 1,214 nascent entrepreneurs in the USA. Logistics regression was employed to analyze the effect of founding team experience on new venture creation.Post hocanalysis was conducted to ensure the confidence of the findings.FindingsThe paper provides empirical insights about how founding team experience influences the likelihood of new venture creation in the nascent stage. At the nascent stage, founding team industry experience positively affects new venture creation while founding team venturing experience does not. However, in the high-technology industry environment, the influence of the founding team’s venturing experience on new venture creation is stronger than that in the low-technology industry environment.Research limitations/implicationsDue to the design of the data set, there is a risk of “right-censoring” problem. Also, because the study used archival data on founding teams, the methodology did not allow for uncovering the underlying team processes and dynamics during the venture creation process based on learning from experience. Future studies are encouraged to examine other types of founding team experience and the underlying process-level factors on venture creation.Practical implicationsThe paper provides important practical implications for nascent entrepreneurs/entrepreneurial teams on team assembling and composition. In general, a team with higher-level industry experience is critical for venturing success. A team with higher-level venturing experience is more desired in the high-technology industry.Originality/valueThis paper fulfills an important gap in the entrepreneurial team literature by highlighting the complex and nuanced ways in which founding team experience influences the likelihood of venture creation in the nascent stage of the firm, especially after incorporating the additional impact of the industry context.
Highlights
Creating a new business requires significant knowledge about an emerging opportunity, market, product/service and associated organizational processes, all of which rarely reside in one person
In contrast to most extant research that tended to examine the impact of founding team experience on firm outcomes post-venture creation, this study considered to what extent founding team experience affects the likelihood of the venture creation process itself
The study advances the understanding of the differential roles played by different types of team experience, by teasing out the differential impact of founding team industry experience vs the founding team venturing experience
Summary
Creating a new business requires significant knowledge about an emerging opportunity, market, product/service and associated organizational processes, all of which rarely reside in one person. In the past two decades, considerable Founding team research has been conducted on entrepreneurial teams ( referred to as founding teams or new venture teams) (see Klotz et al, 2014 for a review). Scholars have examined a variety of experience founding team characteristics and their influence on new venture performance and/or other firm outcomes, such as founding team composition ( Jin et al, 2017), team demographic diversities (Chowdhury, 2005), team social interactions (Lechler, 2001), team personalities (Zhou et al, 2015) and so on. The extant research has largely tended to focus on the impact of founding teams on outcomes for a venture already created. How does founding team experience influence the likelihood of new venture creation, in the nascent stage?
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