Team Heterogeneity in Startups and Its Development over Time

University of Zurich, Department of Business Administration, UZH Business Working Paper No. 337

30 Pages Posted: 5 Jul 2013

See all articles by Ulrich Kaiser

Ulrich Kaiser

University of Zurich; ZEW – Leibniz Centre for European Economic Research; University of Copenhagen - Centre for Industrial Economics; Government of the Kingdom of Denmark - Centre for Economic and Business Research

Bettina Mueller

Center for European Economic Research (ZEW)

Multiple version iconThere are 3 versions of this paper

Date Written: July 3, 2013

Abstract

We investigate the workforce heterogeneity of startups with respect to education, age and wages. Our explorative study uses data on the population of 1,614 Danish firms founded in 1998. We track these firms until 2001 which enables us to analyze changes in workforce composition over time. Such a dynamic analysis constitutes a hitherto neglected area of entrepreneurship research. To assess relative workforce heterogeneity, we construct a simulated benchmark to which we compare observed workforce heterogeneity. We find that the initial workforce is relatively homogeneous compared to our bench-mark. Our result holds both for non-knowledge-based and, to a lesser extent, knowledge-based startups. This seems surprising since a vast management literature advocates heterogeneous teams. The difficulties associated with workforce heterogeneity (like affective conflict or coordination cost) as well as "homophily" (peoples inclination to bound with others with similar characteristics) hence appear to generally overweight the benefits of heterogeneity (like greater variety in perspectives or more creativity). We also document that workforces become more heterogeneous over time - startups add workers with skills different from the workforce at startup. The initial supposedly "poor" mix of workforce characteristics is hence adjusted as the startup matures. This increase in workforce heterogeneity is, however, smaller compared to our benchmark but substantially larger than is team additions had the same characteristics as the initial team members.

Keywords: Entrepreneurship, Startups, Skill Heterogeneity, Team Dynamics

JEL Classification: C10, L26, M13

Suggested Citation

Kaiser, Ulrich and Mueller, Bettina, Team Heterogeneity in Startups and Its Development over Time (July 3, 2013). University of Zurich, Department of Business Administration, UZH Business Working Paper No. 337. Available at SSRN: https://ssrn.com/abstract=2289252 or http://dx.doi.org/10.2139/ssrn.2289252

Ulrich Kaiser (Contact Author)

University of Zurich ( email )

Rämistrasse 71
Zürich, CH-8006
Switzerland

ZEW – Leibniz Centre for European Economic Research ( email )

P.O. Box 10 34 43
L 7,1
D-68034 Mannheim, 68034
Germany

University of Copenhagen - Centre for Industrial Economics ( email )

University of Copenhagen, Building 26
Øster Farimagsgade 5
Copenhagen K., DK-1353
Denmark

Government of the Kingdom of Denmark - Centre for Economic and Business Research ( email )

Langelinie Alli 17
DK-2100 Copenhagen
Denmark

Bettina Mueller

Center for European Economic Research (ZEW) ( email )

P.O. Box 10 34 43
L 7,1 D-68161 Mannheim
Germany

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