The Contingent Effects of Top Management Teams on Venture Performance: Aligning Founding Team Composition with Innovation Strategy and Commercialization Environment

Strategic Management Journal, Forthcoming

MIT Sloan Research Paper No. 4762-09

39 Pages Posted: 3 Nov 2009 Last revised: 7 Aug 2013

See all articles by Charles E. Eesley

Charles E. Eesley

Stanford University - Management Science & Engineering

David H. Hsu

University of Pennsylvania - Management Department

Edward B. Roberts

Founder/Chair, Martin Trust Center for MIT Entrepreneurship

Multiple version iconThere are 2 versions of this paper

Date Written: August 6, 2013

Abstract

How does the relationship between founding team composition and venture performance depend on the venture’s strategy and business environment? Using data from a novel survey of 2,067 firms, we show that while diverse founding teams tend to exhibit higher performance, this is not universally true. We find that founding teams that are diverse are likely to achieve high performance in a competitive commercialization environment. On the other hand, technically-focused founding teams are aligned with a cooperative commercialization environment and when the enterprise pursues an innovation strategy. These results are robust to corrections for endogenous team formation concerns. The findings suggest that ventures cannot ignore founding team composition and expect to later professionalize their top management teams to align with their strategy and environment.

Keywords: entrepreneurship, performance, strategy, founding conditions, founding teams, new firms

Suggested Citation

Eesley, Charles E. and Hsu, David H. and Roberts, Edward B., The Contingent Effects of Top Management Teams on Venture Performance: Aligning Founding Team Composition with Innovation Strategy and Commercialization Environment (August 6, 2013). Strategic Management Journal, Forthcoming, MIT Sloan Research Paper No. 4762-09, Available at SSRN: https://ssrn.com/abstract=1498740 or http://dx.doi.org/10.2139/ssrn.1498740

Charles E. Eesley (Contact Author)

Stanford University - Management Science & Engineering ( email )

473 Via Ortega
Stanford, CA 94305-9025
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HOME PAGE: http://chuckeesley.com

David H. Hsu

University of Pennsylvania - Management Department ( email )

The Wharton School
Philadelphia, PA 19104-6370
United States
215-746-0125 (Phone)
215-898-0401 (Fax)

Edward B. Roberts

Founder/Chair, Martin Trust Center for MIT Entrepreneurship ( email )

100 Main Street, E62-440
Cambridge, MA 02142
United States
617-253-4934 (Phone)
617-253-2660 (Fax)

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