Entrepreneurial Founding Teams Research Articles

The Entrepreneurial Founding Team - Unveiling the Dual Formation Strategy

The entrepreneurial founding team formation literature provides a continuum where the economics lens focuses on 'resource dependency and the social psychology lens focusing on 'interpersonal attraction' occupy the opposing ends. Subsequently, studies found that resource dependency and interpersonal attraction are not mutually exclusive. Instead, both thew collectively explains the EFT formation. This is referred to as the 'dual formation' strategy. However, the existing studies do not solve the debate on how the 'dual formation strategy' reveals itself in the decision-making process. Considering this, we employ a temporal, longitudinal perspective to investigate EFT formation processes in the context of the emerging economy of India. We collected primary data from the founders and co-founders of 13 entrepreneurial firms each year for a period of three years (2017- 2019). Our provides insights that could inform both the literature on entrepreneurial team formation and practitioners involved in the design and delivery of founder pair-up and matching platforms.

The Why and How of Founding Teams: Key Theoretical and Methodological Directions

Academic research on entrepreneurial founding teams has experienced the proverbial hockey-stick-like growth that founding teams so often envision for their ventures, yet is still in an emergent state. This symposium takes a deep dive into two pivotal challenges facing the field: advancing relevant theoretical developments and mobilizing rigorous methods, with interactive panel discussions among six expert scholars. Participants will also have the chance to engage more closely with panelists through breakout sessions, offering a beneficial opportunity to build a community of multidisciplinary, collaborative, and innovative scholars working together to advance research on founding teams.

It's Time for a Change: The Temporality of Team and Venture Opportunity for Startup Survival

Understanding what drives startup survival is of high interest for entrepreneurship research. We develop a dynamic entrepreneurial process model of early entrepreneurship that includes key input factors of nascent firms, namely the entrepreneurial founding team (EFT), entrepreneurial opportunity, external financing and traces changes in quarterly intervals. Based on a hand-collected sample of 2670 observation on 538 early stage ventures from both Europe (252) and Latin America (286), we jointly analyze the effect of EFT and entrepreneurial opportunity quality on startup survival. Further, we explore external financing by venture capitalists as a mediator mechanism through which EFT and entrepreneurial opportunity influence startup survival. Our paper contributes to the individual-opportunity nexus theory by disentangling the effect of both actor and non-actor input factors for entrepreneurial success and to the entrepreneurial process perspective by analyzing their influence over time. Our findings show that the relevance of EFT and entrepreneurial opportunity shift throughout the development of a startup: EFT becomes gradually less important and entrepreneurial opportunity becomes more important as the startup matures. Further, both effects are partially mediated by external financing.

From latent to emergent entrepreneurship: The role of human capital in entrepreneurial founding teams and the effect of external knowledge spillovers for technology adoption

Building on the latent-emergent entrepreneurship framework, we investigate how different type of skills and combination of skills within entrepreneurial founding teams (EFTs) affect the adoption of latent vs emergent technologies (ICTs). We also examine the role of knowledge spillovers on the firm's adoption of different types of technologies and how their effect is moderated by the set of skills that are present within the EFT. We contribute by showing that latent and emergent entrepreneurs decide differently when it comes to whether they should adopt a latent or an emergent version of a technology, by identifying what type or combinations of skills differentiate between latent and emergent entrepreneurs when it comes to ICT adoption, and finally by showing how entrepreneurs, depending on their set of skills, are able to take advantage of the knowledge gathered from external spillovers to adopt different types of technologies.

Symptoms of Survival: Variance and Temporality of the Entrepreneurship Nexus

Understanding what drives startup survival is of high interest for entrepreneurship research. We develop a dynamic model of early entrepreneurship that includes key input factors of nascent firms, namely the entrepreneurial founding team (EFT), entrepreneurial opportunity, and external financing. Based on a hand-collected sample of 2670 observation on 538 early stage ventures from both Europe (252) and Latin America (286) we jointly analyze the effect of EFT and entrepreneurial opportunity quality and external financing on startup survival. Further, we explore external financing by venture capitalists as a mediator mechanism through which EFT and entrepreneurial opportunity influence startup survival. Our paper contributes to the individual-opportunity nexus theory by disentangling the effect of both actor and non-actor part of the entrepreneurship nexus and to the entrepreneurial process perspective by analyzing the influence over time. Our findings show that the relevance of EFT and entrepreneurial opportunity shift over time: EFT becomes gradually less important and entrepreneurial opportunity becomes more important over time. Further, both effects are partially mediated by external financing.

New ventures: how team motivation affects financial outcomes

Purpose The purpose of this paper is to contribute to understanding the impact of entrepreneurial team composition on new venture performance. Different types of entrepreneurship motivation among founding team members are defined. Using a relatively recent theory as a framework (i.e. self-determination theory), the authors group these motives into two categories: autonomous and controlled motivation. The business impact of the level of each type of motivation within the team, as well as the impact of having team members with different motivational drivers, is examined. New venture performance is modelled in two different ways: financial performance (i.e. return on assets) and innovation performance. Design/methodology/approach The analyses are based on 66 founding teams active in diverse activity sectors. The teams represent a total of 142 business founders. Data was collected through structured interviews, a company questionnaire and a secondary data source (i.e. certified financial statements). Findings The results confirm that the level of autonomous motivation within the team contributes to start-up financial performance, whereas the level of controlled motivation hampers innovation performance. No direct effects of diversity of team member motivation on start-up performance were discovered. Originality/value This is one of the first papers to study multiple firm performance effects of the composition of entrepreneurial founding teams in terms of motivation.

Role Complementarity in Entrepreneurial Founding Team Compositions and New Venture Strategies

ABSTRACT The tale of exemplary founding teams with complementary behavioral and cognitive orientations is not a new narrative in the entrepreneurship practice, to the extent that terminologies such...

Born or grown global? New Venture Internationalization and International Knowledge Resources

What drives the early internationalization of young firms? In this article, we extend our understanding on the international development of new ventures by examining the role of pre- foundation international experiences and ex post foundation international knowledge acquisition of entrepreneurial founding teams [EFTs]. For this, we trace the growth path of 99 high technology IT ventures. We find that congenital international knowledge transfer, i.e. a founder’s prior work and study experience abroad, does not imprint consecutive firm internationalization. Rather, the early professionalization of the initial founding team by means of recruiting internationally trained managers is associated with a more rapid international expansion. Our findings suggest that firms are not “born” global, but rather “grow” global through target oriented knowledge acquisition during their early development phase. These results have implications for the international entrepreneurship literature and international new venture theory. They are also instructive for practitioners such as venture capitalists who are involved in the coaching of young entrepreneurial firms and frequently restructure EFTs.

The First Deal: The Division of Founder Equity in New Ventures

We examine the trade-off between efficiency and equality within the context of entrepreneurial founding teams. Using a formal theory where founders may have preferences over relative outcomes, we derive predictions about the antecedents and consequences of dividing equity equally among all founders. Using proprietary survey data, we empirically test the predictions. Our central finding is that teams that split equity equally are less likely to raise funds from outside investors. The relationship appears not to be causal, but instead driven by selection effects across heterogeneous teams with varying degrees of inequality aversion. This paper was accepted by David Hsu, entrepreneurship and innovation.

Like Attracts Like? Revisiting Demographic Homophily in Entrepreneurship

New high-tech ventures are an important source of job creation in the United States. However, access to job opportunities in high-tech entrepreneurship varies significantly across demographic groups. A well-established finding suggests that there is a strong tendency towards homogeneity both in the formation of entrepreneurial founding teams as well as the hiring of early employees. Prior work has emphasized the importance of founders’ influence over personnel selection processes in explaining the tendency towards homogeneity in start-ups’ workforces. However, disentangling the influence of personnel selection processes in producing workforce homogeneity from other possible mechanisms presents a significant challenge. Here, we propose that workforce homogeneity in start-ups may also result from workers’ tendency to self-sort into start-ups whose founders resemble them demographically. We use a unique dataset on the recruiting and hiring processes at a sample of high-tech start-ups to attribute between the...

Imprinting by Design: The Microfoundations of Entrepreneurial Adaptation

Entrepreneurial ventures need frequently to adapt. Yet their adaptive capacity is often limited by the legacies of imprinted founding characteristics. The question then arises whether it is possible to explain and manage the imprinting process so that the capacity to adapt is enhanced, rather than diminished. I address this question by developing a model of the microfoundations of imprinting based in collective memory. I argue that entrepreneurial founding teams naturally develop transactive autobiographical memory systems. By partially managing the design and imprinting of these memory systems, I argue that founders may improve their venture's long–term capacity to adapt.

Entrepreneurial Entry and New Venture Creation: Determinants and Constraints

This symposium is composed of four papers that advance the entrepreneurship literature by considering previously unexamined factors that influence entrepreneurial entry and new business creation. These factors include organizational characteristics that determine the skill composition of coworkers, the quality of parent firms that determines the nature of entrepreneurial knowledge (general or industry-specific) transferred to employees, constraints on employment choices and career mobility that impede the acquisition of entrepreneurial knowledge, as well as technological change that reduces the cost of experimentation in entrepreneurship. The theory and empirics presented in these studies intend to provide new insights into (1) the contextual and institutional causes of entrepreneurial constraints on building initial human and financial capital, and (2) plausible avenues to reduce these constraints and facilitate startup creation. Entrepreneurship and the Cost of Experimentation Presenter: Michael Ewens; Carnegie Mellon U. Presenter: Ramana Nanda; Harvard U. Presenter: Matthew Rhodes-Kropf; Harvard U. Green Card Timing and Entrepreneurship Decision by Foreign Graduates in Science and Engineering Presenter: Martin Ganco; U. of Minnesota Organizational Bureaucracy and the Structure of Entrepreneurial Founding Teams Presenter: Jing Chen; Copenhagen Business School Presenter: Michael Roach; Cornell U. Firm Size Effect or Performance Effect? Presenter: Daniel Olson; U. of Maryland Presenter: Rajshree Agarwal; U. of Maryland

Entrepreneurial founding team exits in rapidly internationalising SMEs: A double edged sword

Entrepreneurial founding teams (EFTs) are often essential to new venture creation and successful internationalisation. Although the composition of EFTs has been the subject of enquiry, little research exists into the exit of team members and the consequences for rapid internationalisation. We focus on EFT exits in rapidly internationalising small firms and develop categories of EFT exits. We explore the motivations and subsequent impact on internationalisation of case firms to illustrate each category/type of EFT exit. We find that exits are prevalent in the early stages of ventures, and may be either consensual or non-consensual. There are a number of motivations evident and EFT exits are often critical to continued internationalisation. We offer that EFT exits are not always negative, they can allow for the appropriate deployment of resources, extending RBV/KBV as whilst much research effort has been devoted to establishing what new resources/knowledge should flow into a firm, we show that to shed an EFT member and redeploy resources/knowledge can act as a catalyst to further internationalisation. Finally we discuss research, managerial and policy implications.

Export propensity, export intensity and firm performance: The role of the entrepreneurial founding team

We investigate how the characteristics and experience of the entrepreneurial founding team (EFT) affect the export orientation and subsequent performance of the businesses they establish, while allowing for the mutually reinforcing relationship between exporting and productivity. Using a sample of UK technology-based firms, we hypothesise and confirm that the set of EFT human capital needed for entering export markets is different from that required for succeeding in export markets. Commercial and managerial experience helps firms become exporters, but once over the exporting hurdle it is education, both general and specific, that has a substantially positive effect. The overall pattern of human capital effects on productivity is similar to those for export propensity. We also find evidence that productive firms are more likely both to enter export markets and to be export intensive, and that exporting boosts subsequent firm productivity.

Determinants of Successful Entrepreneurship: A Review of the Recent Literature

This paper reviews and evaluates the academic literature on how entrepreneurial performance depends on the characteristics of entrepreneurs and entrepreneurial teams. A number of conceptual and methodological issues in the study of entrepreneurial performance are discussed. Reviews of published and unpublished work suggest that factors such as education, industry experience, managerial experience and prior entrepreneurial experience are positively associated with venture performance. There is some evidence that traits such as tenacity improve performance.Emerging research on the role of social capital and entrepreneurial founding team composition is also reviewed. However, many of the conclusions from prior research should be treated with caution, as the literature generally is characterized by a number of methodological shortcomings. Chief among these is that most studies restrict their analyses to samples of new ventures, which makes the observed associations between variables difficult to interpret. This has important implications for both researchers and policy makers, and suggests that the study of entrepreneurial performance could benefit from the development of a rigorous and systematic research program to identify the drivers of entrepreneurial performance as a distinctive economic activity.

Top Management Teams, Business Models, and Performance of Biotechnology Ventures: An Upper Echelon Perspective*

In this paper we introduce a new contingency variable that moderates the effect of top management team composition on organizational performance – the organization's business model. Arguing from an upper echelon perspective and drawing on data from 99 German biotechnology ventures, we show that founder‐based firm‐specific experience of management team members can have either a positive or a negative effect on performance, depending on whether the venture pursues a platform or a therapeutics business model, respectively. Our results also show that managers' experience collected in the pharmaceutical industry has a positive effect on performance, and that this effect is more positive for therapeutics than for platform ventures. We discuss the implications of these findings for the literature on upper echelons and entrepreneurial founding teams.

Forced to Play by the Rules? Theorizing how Mixed–Sex Founding Teams Benefit Women Entrepreneurs in Male–Dominated Contexts

We examine how establishing a mixed–sex entrepreneurial founding team may benefit women entrepreneurs in male–dominated cultures and industries. We contend that as a result of sex–based stereotypes, women entrepreneurs face unique obstacles in securing access to resources for their ventures. We argue that one way for women entrepreneurs to overcome these obstacles is to partner with a man. Drawing upon institutional, resource–based, and network theories, we theorize how partnering with a man may help provide women entrepreneurs in male–dominated contexts with enhanced legitimacy, access to a larger number of resources, and a stronger, more diverse social network.

Networking Activities in Technology-based Entrepreneurial Teams

Based on social network theory, this article investigates the distribution of networking roles and responsibilities in entrepreneurial founding teams. Its focus is on the team as a collection of individuals, thus allowing the research to address differences in networking patterns. It summarizes the results of two rounds of in-depth interviews carried out in 24 Danish new technology-based ventures over a period of two years and analyses the distribution of networking activity among founding team members. The article identifies six central networking activities and shows that not all founding team members are equally active ‘networkers’. The analyses identify that team members prioritize different networking activities and that one member in particular has extensive networking activities whereas other members of the team are more limited in their networking, while some even reject the notion of networking as a useful activity.