Does Founder Exit Impact Venture Performance in New Ventures?
Posted: 26 Nov 2014
Date Written: July 2012
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
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