THE EFFECT OF THE FOUNDERS GROUP CHARACTERISTICS IN PRE-START UP PHASE ON INNOVATIVE FIRMS PERFORMANCE (original) (raw)
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Gaining understanding in entrepreneurial team formation during the venture creation process is particularly relevant for investors as well as technology transfer officers. Research has shown that venture capitalists state that the quality of the founding team is one of the most important criteria when they decide to invest in a start-up. Although relatively limited, an emerging body of entrepreneurship and organizational literature has started focusing on team-level issues and only recently, attention has shifted from the lone entrepreneur/founder to the whole entrepreneurial team. This stream of research mainly examined team process and effectiveness. While scholars suggest that diversity is an important topic in both academic research and practice and team heterogeneity has important influence on firm performance, however, research on demographic diversity in entrepreneurial teams is still limited. The present paper focuses on characteristics of founding team groups in pre-start up phase, and on the changes that occurs in terms of founders group's structure in the process of constitution. We asses that predictors of success of an entrepreneurial founders group, measured in terms of turning the business idea in a real company, are group' size, higher levels of education, differentiation in competencies, work experience and heterogeneity of backgrounds of the founders. Moreover we discuss on absorptive capacity and dynamic capabilities (Nelson & Winter, 1982, Cohen & Bacdayan, 1994; Zahra & Georges, 2002; Winter, 2003) stating that changing in the groups' structure in terms of entry and leaving of different members improves the capability of entrepreneurial group and then the chances of constitution of a new company. Our paper contribute to the literature on innovation business venture formation mainly in two way: first in terms of the robustness of results, due to the consistency of the data-set we analyzed in terms of amount of different data and their longitudinal nature. Second because, since we are interested in team formation and development, it is important to get information from the original founding team and from relevant stakeholders in the parent organization and environment and we used different kind of sources to collect data directly from founders even post facto. These conclusions have major implications on how innovative start-ups are evaluated by investors and in terms of policy that support ventures creation. Important managerial implications arise from our findings.
How the founding team impacts the growth process of early stage innovative startups
Sinergie Italian Journal of Management
Purpose of the paper: The paper aims at analysing the process of startup creation at its very early stage, investigating the connection between the distinctive traits of the entrepreneurs (the so-called "founding team") and the arising profiles of their new ventures. Methodology: The data are collected during the determinative initial phases of the venture creation. Specifically, a cluster analysis is applied on a sample of 107 Italian innovative startups and their 254 founders. The three emerging clusters show significant differences in terms of entrepreneurial profile and the startup's fundraising ability. Findings: Some specific traits of the entrepreneurial profile of the new venture (mainly the educational background and previous experience), may have an initial imprinting effect on its firm profile and, hence, its likelihood to grow and be successful. Research and managerial implications: Work and international experience appear to be crucial success factors for startups at the very early stage. These characteristics prove to be strong enablers of fundraising, which happens to be vital at this particular time. Research limitations: A crosscountry analysis should be performed to better understand the positioning of the Italian startup ecosystem, and to overcome the country specificities of the sample. Originality of the paper: The novelty of this work is represented by the exploration of a population on which we have no great prior knowledge, in a significant, yet peculiar, phase of its life. There are not many empirical/qualitative updated works related to the analysis of the characteristics of Italian startups and their founders.
Founding team experience, industry context, and new venture creation
New England Journal of Entrepreneurship, 2018
Purpose-The 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/approach-The 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 hoc analysis was conducted to ensure the confidence of the findings. Findings-The 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/implications-Due 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 implications-The 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/value-This 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.
Many new product innovations are attributed to new venture creation. Although there are many success cases, many new ventures quit before they have fulfilled their greatest potential mainly because the team quits their effort. This research tries to delve into several factors that affect the dynamics of an entrepreneurial team along the different stages of the new venture creation process. Given such direction, primary data from 12 entrepreneurial teams are undertaken within an incubator environment, which is an underresearched context. An in-depth study of these entrepreneurial teams suggests numerous determinants (variation in the intentions and expectations, improper leadership, ineffective communication, engagement, team structure) to have a serious effect on team dynamics and team cohesiveness. Following a grounded theory approach, specific research propositions are formulated and theoretical insights are drawn. Moreover, the results of this research assist nascent entrepreneurs in assessing their potential, recognizing critical team dynamics, and basing their choice on moving to a sustainable new venture creation.
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New Venture Teams: A Review of the Literature and Roadmap for Future Research
As entrepreneurship research has matured, scholars have increasingly recognized that the formation of new ventures is commonly accomplished by teams as opposed to lone entrepreneurs. Over the past two decades, the upper echelons perspective has served as the primary lens for investigating new venture team functioning and performance. However, researchers have begun to move beyond the relationship between team characteristics and team outcomes, to explore intermediary mechanisms that more precisely explain how team inputs lead to team effectiveness. In this article we apply an inputs-mediators-outcomes framework, which has served as a foundation for teams research in organizational behavior over the past 50 years, to first organize and review prior work on new venture teams, and then to provide a roadmap for future research. By integrating the upper echelons approach from strategic management with the inputs-mediators-outcomes framework from organizational behavior, we clarify what is known about new venture teams and shed light on important issues that could help the field of entrepreneurship to develop a more comprehensive understanding of why some new venture teams, but not others, achieve successful outcomes.
While earlier researchers have argued that the founding team's industry and start-up experience should positively affect new venture performance, robust empirical support for these arguments has been lacking. Moreover, theory suggests that the relationship between founding team experience and new venture performance may be more complex than previous empirical research suggests. We test specific hypotheses about the effect of founding team industry and start-up experience on the survival and sales of 223 new ventures initiated by a representative sample of Swedish new ventures, using a methodology that overcomes the limitations to previous research. Our results show that founding team experience enhances both new venture survival and sales, but that the effects are non-linear, and vary with venture age.
New Venture Team Composition, Persistence and Performance
2006
This study explores the relationship between new venture team composition and new venture persistence and performance over time. We examine the team characteristics of a 5-year panel study of 202 new venture teams and new venture performance. Our study makes two contributions. First, we extend earlier research concerning homophily theories of the prevalence of homogeneous teams. Using structural event analysis we demonstrate that team members' start-up experience is important in this context. Second, we attempt to reconcile conflicting evidence concerning the influence of team homogeneity on performance by considering the element of time. We hypothesize that higher team homogeneity is positively related to short term outcomes, but is less effective in the longer term. Our results confirm a difference over time. We find that more homogeneous teams are less likely to be higher performing in the long term. However, we find no relationship between team homogeneity and short-term performance outcomes.