Team Size and Effort in Start-Up Teams - Another Consequence of Free-Riding and Peer Pressure in Partnerships

35 Pages Posted: 21 Mar 2004

See all articles by Uschi Backes-Gellner

Uschi Backes-Gellner

University of Zurich - Institute for Business Administration; Swiss Leading House

Alwine Mohnen

TUM School of Management; IZA Institute of Labor Economics

Arndt Werner

Institute for Small and Medium Sized Enterprises, Bonn (IfM Bonn)

Date Written: March 2006

Abstract

The paper analyzes the effect of team-size on effort in start-up teams. We extend the model of Kandel and Lazear (1992) to study the joint effect of free-riding and peer pressure, which both dependent on team size in our model. The special characteristic of start-up teams is their unique monitoring technology, which is characterized primarily by spatial proximity and high-frequency decision making. For such teams our model predicts an inverted U-shape relation between effort and team-size. Based on a large sample of start-ups we find strong evidence for the inverted U-shape relationship, with maximum effort in teams with three members.

Keywords: Peer pressure, free riding, start-up-teams, team size

JEL Classification: M5, M13, M21

Suggested Citation

Backes-Gellner, Uschi and Mohnen, Alwine and Werner, Arndt, Team Size and Effort in Start-Up Teams - Another Consequence of Free-Riding and Peer Pressure in Partnerships (March 2006). Available at SSRN: https://ssrn.com/abstract=518443 or http://dx.doi.org/10.2139/ssrn.518443

Uschi Backes-Gellner (Contact Author)

University of Zurich - Institute for Business Administration ( email )

Plattenstrasse 14
8032 Zurich
Switzerland
+41 44 6344281 (Phone)
+41 44 6344370 (Fax)

Swiss Leading House ( email )

Plattenstrasse 14
Zurich, 8032
Switzerland

Alwine Mohnen

TUM School of Management ( email )

Arcisstrasse 21
Munich, 80333
Germany

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072
Germany

Arndt Werner

Institute for Small and Medium Sized Enterprises, Bonn (IfM Bonn) ( email )

Maximilianstra9e 20
53111 Bonn
Germany
+ 49 228 72997 44 (Phone)

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