How Do Founding Teams Form? Towards a Behavioral Theory of Founding Team Formation

46 Pages Posted: 2 Jul 2018 Last revised: 3 Nov 2021

See all articles by David Clough

David Clough

University of British Columbia (UBC) - Sauder School of Business

Balagopal Vissa

INSEAD

Date Written: November 2, 2021

Abstract

We advance entrepreneurship research by developing a theoretical model of how founding teams form. Our neo-Carnegie model situates nascent founders in particular network-structural milieus, engaging in aspiration-driven search for and evaluation of prospective co-founders. The formation of co-founding ties between nascent founders can be divided into four theoretical steps, which we label activation, evaluation, approach, and reciprocation. Successful founding team formation is a consequence of mutually favorable evaluations by nascent founders in a multi-sided matching process. Nascent founders with higher and less flexible aspirations are more likely to undertake distant search for co-founders by seeking referrals, forming ties with strangers, and forming new ties to social foci where they might meet potential co-founders. Churn in newly formed founding teams emerges as a consequence of shifting dominant coalition dynamics in the founding team caused by organic venture evolution and intentional changes in strategic direction. Our theoretical model provides new insights on the formation pathways of founding teams, their initial task and relational resource endowments, and initial team dynamics.

Keywords: Behavioral Theory, Dominant Coalition, Founding Teams, Social Networks, Team Formation

Suggested Citation

Clough, David and Vissa, Balagopal, How Do Founding Teams Form? Towards a Behavioral Theory of Founding Team Formation (November 2, 2021). INSEAD Working Paper No. 2021/61/EFE, Available at SSRN: https://ssrn.com/abstract=3206701 or http://dx.doi.org/10.2139/ssrn.3206701

David Clough

University of British Columbia (UBC) - Sauder School of Business ( email )

2053 Main Mall
Vancouver, BC V6T 1Z2
Canada

Balagopal Vissa (Contact Author)

INSEAD ( email )

F-77305 Fontainebleau Cedex
France

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