Old Mindsets and New Opportunities: How the Composition ofFounding Teams Affects the Survival of New Ventures Public
Navis, Chad Christopher (2009)
Published
Abstract
The organizational experience that members of the founding team bring to new ventures can influence how new business opportunities are pursued and their ultimate success; and yet, little is known about how the importance of such experience varies across entrepreneurial contexts. In this dissertation, I examine how the composition of founding teams has differential effects on new venture survival depending on the complexity of the business models entrepreneurs pursue.
My study tracks the population (n=406), over twelve years, of new local telecommunications ventures in Georgia, that resulted from Telecom Act of 1996 deregulation. This landmark legislation spawned two distinct business models within the same industry sector; the two models differed in complexity and the demands they placed on founding teams. I use these natural differences to compare, across the two models, the effects of industry, functional, and role experience in founding teams on rates of survival. I analyze these effects using a Cox proportional hazards model and supplement the quantitative evidence with qualitative insights obtained through interviews with founders and industry experts.
Findings from this research provide evidence that not all ventures are alike, revealing how several predictors of survival are contingent on differences in the complexity of the business models founders pursue. In terms of industry experience, the shifting and "rugged landscapes" of complexity appear to quickly devalue the benefits of related industry experience. In terms of functional experience, complexity amplifies the importance of functionally similar teams, enabling more effective communication, coordination, and adaptive learning. Finally, in terms of role experience, complexity reveals critical incompatibilities with the dominant logics, or "old mindsets," that can results from more embedded forms of prior experience.
More generally, this research contributes by advancing a contextualized theory of entrepreneurship that links features of evolutionary adaptation and institutional constraint to inherent differences in the complexity of new ventures. The imprinting processes that underlie these two established bodies of theory are shown to be fundamental in shaping the dynamics of founding teams; yet, their effects appear largely contingent on the unique demands that differences in complexity place on entrepreneurial ventures.
Table of Contents
List of Figures . 12
List of Tables . 13
1. Introduction .. 14
1.1 Motivation . 14
1.2 Research question . 16
1.3 Contributions . 16
1.4 Organization of the dissertation . 17
2. LITERATURE REVIEW ... 19
2.1 Organizational experience as an enabler 21
2.2 Organizational experience as a constraint 24
2.3 Complexity as a Moderator 27
3. THEORY and hYPOTHESES . 37
3.1 Industry experience and complexity . 38
3.2 Functional experience and complexity . 42
3.3 Role experience and complexity . 49
4. RESEARCH SETTING .. 59
4.1 CLEC sector emergence . 59
4.2 CLEC business models . 60
4.3 Summary of research setting . 63
5. DATA AND MethodS . 64
5.1 Research design . 64
5.2 Population and sampling . 65
5.3 Data sources and collection . 69
5.4 Data and measures . 72
5.5 Methods and procedures . 82
6. RESULTS . 84
6.1 Descriptive results . 84
6.2 Tests of hypotheses . 88
6.3 Within and across treatment effect comparisons . 104
6.4 Robustness of results across populations . 105
6.5 Analysis of business model selection effects . 110
6.6 Summary of results . 114
7. Discussion and Conclusion .. 115
7.1 Theoretical synthesis . 115
7.2 Contributions . 122
7.3 Limitations . 124
7.4 Conclusion and research extensions . 126
REFERENCES . 130
Appendices . 140
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