Jewels in the Crown: Exploring the Motivations and Team Building Processes of Employee Entrepreneurs

44 Pages Posted: 28 Apr 2017

See all articles by Sonali Shah

Sonali Shah

University of Illinois at Urbana-Champaign

Rajshree Agarwal

University of Maryland - Robert H. Smith School of Business

Raj Echambadi

Independent

Date Written: September 30, 2016

Abstract

This study uses inductive methodology to examine the motivations and team building processes of employee entrepreneurs through the analysis of thirty founding narratives of disk drive industry spinouts founded between 1977-1997. Our grounded theory building approach uncovers the underappreciated role of non-pecuniary motivations and human capital corridors in the team assembly process. We find ringleaders — the founders who spearhead spinout creation — are often driven by a non-pecuniary desire to create given a fertile industry environment, particularly when they encounter bureaucracy, interpersonal/ethical frictions, or strategic disagreements within the parent firm. They seek out, through human capital corridors, the best cofounders possessing complementary knowledge, skills, and problem-solving abilities but similar values, and work ethic. Cofounders, particularly those without prior startup experience, were eager to ensure they left on good terms with their parent firms, to retain the option of return to paid employment as a safeguard against risks inherent in entrepreneurship. These motivations and team building processes shape the spinout firm’s strategic considerations: the founding team seeks to create unique value propositions, with a reluctance to steal technologies from their parent firms, but a willingness to poach talent. Triangulation with quantitative data reveals that spinouts created with human capital corridors team building processes had significantly better capabilities and success than spinouts with that lacked some aspects.

Suggested Citation

Shah, Sonali and Agarwal, Rajshree and Echambadi, Raj, Jewels in the Crown: Exploring the Motivations and Team Building Processes of Employee Entrepreneurs (September 30, 2016). Available at SSRN: https://ssrn.com/abstract=2959720 or http://dx.doi.org/10.2139/ssrn.2959720

Sonali Shah

University of Illinois at Urbana-Champaign ( email )

Wohlers Hall
1206 South Sixth Street
Champaign, IL 61822
United States

Rajshree Agarwal (Contact Author)

University of Maryland - Robert H. Smith School of Business ( email )

College Park, MD 20742-1815
United States

Raj Echambadi

Independent

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