TEAM RESOURCES AT FIRM FOUNDING: IMPLICATIONS FOR NEW VENTURE SURVIVAL
Arild Aspelund, Norwegian University of Science and Technology
Principal Topic
This investigation explores entrepreneurial teams in new technology-based firms. Recent research indicates that entrepreneurship is an organising process that involves many people, and especially in technology-based start-ups where the complexity of the process demands input from multiple talents.
The research question raised in this paper is whether the initial resources embedded in the entrepreneurial team are predictors of short-term new venture survival. We know that characteristics of the entrepreneurial team are of great importance to investors evaluating an investment prospect. However, there is little empirical evidence on which entrepreneurial team characteristics that increase the probability of new venture survival. Based on resource-based theory this paper seeks to present empirical evidence for the positive relationships between some initial resources controlled by the entrepreneurial team and new venture survival. It also seeks to investigate whether the relationship changes dependent on which stage in the entrepreneurial process the firm has reached. More specifically, it investigates the influence team member experiences, capabilities and control of strategic resources on new venture death rates at different stages in the entrepreneurial process.
Method
The data set consists of 40 Norwegian new technology-based start-ups. The firms were identified through an acceleration program administered by a Norwegian university in the time period 1993–2000. The sample is cross sectional and the projects came into the program at approximately the same time stage in the entrepreneurial process, namely in the early product/service development stage. The business plans severed as the primary data source in addition to follow-up surveys in 1999 and 2001.The hypothesis was assess with an event-history model using Cox regression.
Results and Implications
The results support the hypothesis that initial resources embedded in the entrepreneurial team do affect the survival rate of new technology-based firms. Further, the study indicates that it is not the team size in itself that influence the most; it is the bredth of the experience-base of the team members. Also, broad experience matters more than team heterogeneity, a result which the author assumes is grounded in lower levels of affective conflict. The study also supports the resource-based assumption of the necessity of technology uniqueness, but the results above suggest that a view beyond resources of VRIN characteristics is necessary when applying the RBV on new business ventures.
CONTACT: Arild Aspelund, NTNU, Dept. for Industrial Economics and Technology Management, 7491 Trondheim, Norway; (T) +47 908 40 017; arild.aspelund@iot.ntnu.no
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