Testing the Waters: Founding Team Composition and Search Heuristics in Academic Entrepreneurial Ventures

Abstract

Entrepreneurial action often stems from individual judgment about the value potential of market opportunities. Where entrepreneurs direct their search for and evaluate profitable opportunities has long received scholarly consideration. Attention has been increasingly directed toward how search is conducted, with a distinction between “cognitive” search, where actors are driven by a prior belief about the linkage between actions and outcomes (i.e., “learning–before–doing”) and “experiential search,” in which the solution must be realized through experimentation, trial–by–error, or “learning–by–doing.” We examine founders’ experiential search for market applications in uncertain technological environments. In doing so we seek to uncover how founder background, experience, and depth of knowledge affect the firm’s degree of experiential search. We examine a sample of technology–oriented start–ups founded by researchers from six major U.S. research universities to investigate the role of experiential search in university technology commercialization. In our context of academic entrepreneurship, we find that founding teams that draw from multiple disciplinary perspectives in selecting a market application to pursue exhibit a broader cognitive map of the technological landscape and thus expend more effort in the experiential search process than do teams with less varied backgrounds. Conversely, teams that include individuals with prior commercial experience conduct less experiential search, although this evidence is less strong. The inclusion of students appears to lead to greater experiential search by the founding team. Our findings add new understanding to the application of search heuristics by entrepreneurial firms in technology commercialization.