Does Founder Exit Impact Venture Performance in New Ventures?

Posted: 26 Nov 2014

See all articles by Nachiket Bhawe

Nachiket Bhawe

North Carolina State University - Poole College of Management

Vishal K. Gupta

University of Alabama - Department of Management

Date Written: July 2012

Abstract

The role of founder exit in shaping organizational outcomes is an interesting phenomenon that has attracted research interest in recent years. In the present study, we advance and test theory on the impact of founder exits from new venture teams on firm performance. While exits ease coordination problems in founding teams of new ventures, they also deprive the venture of critical resources needed for a venture's growth. We hypothesize and find that founder exits have an inverted-U shaped relationship with venture performance. The relationship between exits and performance varies by context and is attenuated when ownership is consolidated and accented when the venture pursues valuable opportunities and owners are actively engaged in management of the firm.

Keywords: Founder Exit, Coordination in new ventures, Ownership and control in new firms, KFS, Kauffman firm survey

Suggested Citation

Bhawe, Nachiket and Gupta, Vishal K., Does Founder Exit Impact Venture Performance in New Ventures? (July 2012). Available at SSRN: https://ssrn.com/abstract=2530549

Nachiket Bhawe (Contact Author)

North Carolina State University - Poole College of Management ( email )

Hillsborough Street
Raleigh, NC 27695-8614
United States

Vishal K. Gupta

University of Alabama - Department of Management ( email )

101 Paul W. Bryant Dr.
Box 870382
Tuscaloosa, AL 35487
United States

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