Entrepreneurial passion diversity in new venture teams: An empirical examination of short- and long-term performance implications

Empirical evidence is mounting that passion is an important part of entrepreneurship, contributing to behavior and outcomes for entrepreneurs, employees, and ventures. Yet knowledge of the performance implications of passion within new venture teams is sorely lacking. We examine how both the average level of entrepreneurial passion and the diversity of passion within new venture teams contributes to venture performance in both the short- and long-term. We test our model with multi-source, multi-wave data collected from 107 new venture teams participating in an accelerator program. Our findings indicate that average team passion is not significantly related to performance, but passion diversity, particularly intensity separation, is negatively related to performance. These findings have important implications for the literature on passion, new venture teams, and group affective diversity.Executive summaryWhile existing studies have substantially improved our understanding of entrepreneurial passion, its sources, and its subsequent impact, insight into this topic remains limited in at least three ways. First, most new ventures are founded and led by teams rather than individuals, yet existing studies predominantly focus on entrepreneurial passion at the individual rather than team level. Second, while there is a prevailing assumption in existing literature that entrepreneurial passion leads to beneficial outcomes consistent with longstanding work in psychology, there is emerging evidence in entrepreneurship that passion may not always be functional and that it can even be dysfunctional. Despite this, we have limited understanding of what types of passion or when or for whom it is dysfunctional. And third, extant work on entrepreneurial passion for individuals and within teams has focused on behavioral or self-report measures of performance (e.g. Cardon and Kirk, 2015; Santos & Cardon, 2019) as well as venture survival, rather than objective team or firm performance in the short- and long-term.In this paper, we study the influence of team passion on new venture team performance. We draw on theory concerning entrepreneurial passion within venture teams (Cardon et al., 2017) that suggests that different aspects of entrepreneurial passion within teams shape team dynamics and venture outcomes. While generally, theories of passion suggest that entrepreneurial passion is positively related to team outcomes due to the positive emotions it brings about, we find that in teams, the relationships are more complex. While the average level of passion among team members is positively related to team performance when considered alone, this effect is not significant when passion diversity is also considered. Diversity of passion among individual team members has a negative relationship with team performance, including diversity in the level of passion team members experience (intensity separation), as well as diversity in the object of their passion (focus variety). These negatively affect team dynamics due to conflicting emotions and identities among team members associated with passion diversity. We examine these relationships on specific team performance outcomes including evaluation of the business idea in the short-term and venture performance five years after their participation in an accelerator.The sample used in this study includes 107 entrepreneurial teams that were part of an accelerator program in the Netherlands. Teams were evaluated on the quality of their business ideas at the end of the accelerator program and the amount of investment the team had received five years later. Our results provide no support for positive effects of average team passion on the quality of the business ideas and confirm the negative effects of passion intensity separation on the quality of the business idea and the negative effects of passion focus variety on later venture performance.This paper makes several contributions. First, we expand the literature on passion in entrepreneurship, specifically adding to our understanding of passion within new venture teams. More specifically, we contribute to the growing body of evidence concerning potential dysfunctions of passion by uncovering a dysfunctional property of team passion diversity that uniquely manifests itself at the team level of analysis. We contribute to the literature on new venture teams by examining team composition in the form of passion diversity, and its relationship with team performance. Finally, our study extends work on the effects of entrepreneurial passion by looking at objective team performance outcomes in both the short- and long-term.For entrepreneurs, our findings confirm the importance of affect and identity for new venture teams, and specifically our findings indicate that there is a dark side to team passion. While passion is generally positioned as a positive phenomenon, we highlight the negative outcomes that passion can have in the team context. Diversity in the amount of passion team members experience can diminish the quality of the business ideas the team is able to generate in the short-term, while diversity in the focus of team members' passion can diminish the firm's long-term performance. For investors and accelerator communities this research validates the importance of considering entrepreneurial team composition and specifically entrepreneurial passion levels and domains when investing in teams or when supporting venture building.     

Understanding the dynamics of new venture top management teams: cohesion,conflict, and new venture performance

Research conducted under the upper echelon perspective has produced consistent evidence of a relationship between top management team (TMT) interaction and firm performance. We draw upon and extend this research in an effort to explain new venture performance as a function of cohesion and conflict within the top management team. Based upon data collected from a sample of 70 new ventures, we find that TMT cohesion is negatively related to affective conflict and positively related to cognitive conflict. As expected then, we also find that TMT cohesion is positively related to new venture growth.     

Do others think you have a viable business idea? Team diversity and judges' evaluation of ideas in a business plan competition

The study examines how team diversity affects external evaluation of the teams' business ideas. Using an information perspective, we argue that task-related diversity of member characteristics enhance team effectiveness. Nontask diversity hurt team effectiveness by steering teams away from their tasks. Some support was found. Task-related diversity of education level was positively related with evaluation while nontask diversities of age and employment status negatively related with evaluation. The positive relationship of task diversity on evaluations was higher for larger teams. The findings were robust across different functional forms for the demographic factors. Implications of team affects on venture outcomes are discussed.     

The Effects of Cultural Diversity in Virtual Teams Versus Face-to-Face Teams

Diversity in the national background and culture of team members is common in virtual teams. An experimental study, with short term teams, was undertaken to examine the effect of cultural diversity on team effectiveness and to examine if this effect changes depending if the team worked face-to-face (F2F) or virtually. Heterogeneous teams were created that had greater diversity than homogeneous teams of individualism/collectivism values, different languages spoken, country of birth, and nationality. The teams worked on a desert survival task either F2F or virtually (via audioconference and electronic chat tools). The overall results indicated that heterogeneous teams were less satisfied and cohesive and had more conflict than the homogeneous teams, although there were no statistical differences in team performance levels. However, examining just the heterogeneous teams found that the performance of the virtual heterogeneous teams was superior to that of the F2F heterogeneous teams. The results support Carte and Chidambaram's (2004) theory that the reductive capabilities of collaborative technologies are beneficial for newly-formed diverse teams.     

New venture internationalization: The role of venture capital types and reputation

This study examines how different types of venture capital relate to new venture internationalization. Using a sample of 646 U.S. new ventures that executed IPOs between 1995 and 2010, we find that ventures with foreign or corporate venture capital have higher levels of international intensity. We also investigate the moderating role of VC reputation on the relationship between foreign venture capital and international intensity and corporate venture capital and international intensity. Our results suggest that VC reputation weakens the positive relationship between corporate VC and international intensity.     

A dynamic perspective of internal fit in corporate venturing

Managers of corporate parents and their ventures have long been faced with the question of how closely to tie the parent and venture. A close connection may enable a venture to capitalize on the competencies and resources of the parent. However, venture autonomy could prevent corporate inertia and bureaucracy from constraining venture growth.The lack of consensus on this issue leads us to the first of two complementary research questions that we address in this paper: “What is the effect of internal strategic fit between a corporate parent and its venture on venture performance?” We suggest that a tight fit is positively associated with venture performance because of the venture's access to its parent's resources.Managers and researchers alike have often observed that growing enterprises are dynamic entities. In the case of corporate ventures, this implies that the relationship between parent and venture evolves over time. Our second research question directly addresses this issue by asking: “Does the relationship between a corporate parent and its venture(s) evolve over time, and if so, how?”We identify two dimensions of the fit between corporate parents and their ventures: relational and economic. A relational fit reflects organizational culture and structure, while an economic fit is a function of the needs of the venture and the resources of the parent. We develop a series of hypotheses and test them with survey data from 97 Canadian corporate ventures. For the purposes of this study, we define success as the ability of a firm to meet internal milestones on schedule.We find that the degree of fit between a corporate parent and its venture does affect the success of a venture, and that success is associated with high levels of awareness, commitment, and connection. Further, the relational dimension of the parent-venture interface appears to have a greater association with venture success than does the economic dimension.Our data support the idea that the parent-venture relationship is dynamic in nature as ventures in our sample generally lessened their economic connections with their parents as they matured (or vice-versa). We did find, however, that the relational bonds remained more or less intact. The exceptions to these general trends were an increasing emphasis on financial targets along with decreasing CEO involvement as ventures matured. Both of these findings make intuitive sense. Greater financial independence is accompanied by greater financial accountability. And, as a venture gains in both independence and accountability, there is less need for the CEO to provide “air cover.” These two issues aside, the basic model of enduring relational ties and diminishing economic ties was supported. As well, the increasing accountability is consistent with our expectation that a close connection is preferable to high venture autonomy.     

Communication Strategies and Marketing Performance: An Application of the Mohr and Nevin Framework to Intra-Organisational Cross-Functional Teams

Communication, and its key role in facilitating teamworking and knowledge management, is at the heart of research designed to understand the best approaches to managing teamwork and integration across functions and business partners. This understanding is necessary to improve the development of new products and services, and improve marketing efficiency. The research framework of Mohr and Nevin (1990) provides an interesting model, relating aspects of channel communication with channel performance, to achieve such improvements. Our model and hypotheses utilises Mohr and Nevin's unique framework as our starting point in examining the impact of communication strategy in intraorganisational cross-functional teams upon their team outcomes. We tested our model by collecting data from 42 organisational teams (237 respondents) and found that the model Mohr and Nevin proposed transfers well to the intra-organisational context. Our main finding supported the relationship between team communication behaviours and team performance. In addition, we found significant differences in this relationship depending upon the nature of the offer created by the industry (tangible good or intangible service) examined.     

Antecedents,moderators, and performance consequences of membership change in new venture teams

This paper focuses on initial team size and membership change of new venture teams in two studies: (1) a panel study of 408 emerging ventures, and (2) a cross-sectional study of 124 new ventures. The findings suggest that larger initial team size provides an advantage for new organizations, and that the benefits of adding and dropping team members are contingent on the stage of development of the organization and the dynamism of the environment. Both external environment and team composition factors are associated with turnover in venture teams.     

Do market information processes improve new venture performance?

Does market information improve new venture performance? While some researchers argue that entrepreneurs do not need formal processes to collect and use market information, others suggest that the use of formal market information processes is positively related to firm performance. In this paper, we hypothesize that new venture performance is an increasing function of (1) the firm's level of customer interaction and (2) the use of formal processes for collecting and utilizing market information. We also hypothesize that these linkages will be stronger among new ventures serving emerging markets (i.e., markets in which customer needs and segments are evolving). We test these hypotheses using data collected from 224 new ventures located in the United States. Our findings indicate that, regardless of market condition, formal processes for the collection of market information are positively associated with the use of formal processes for market information utilization and this relationship is stronger among firms serving established markets. In addition, new venture performance is positively associated with the use of formal processes for utilizing market information and this relationship is also stronger in established markets. We also find that, in emerging markets, new venture performance is a positive function of the use of formal processes for collecting market information. Contrary to expectations, we find that, regardless of market condition, the level of customer interaction has a negative relationship with the use of formal processes for market information utilization and no significant relationship with performance.     

The association between venture capitalists’ selection and value adding behavior: evidence from early stage high tech venture capitalists

Building upon self-efficacy and collective effort theories, we study the association between the selection behavior of venture capitalists and their involvement in value adding activities. We argue that investors, who prioritize different characteristics of a business proposal during selection, will be more or less confident of their own abilities and the abilities of entrepreneurial teams to effectively add value to portfolio companies and hence will be more or less involved in providing value adding activities. In order to test this claim, we use a stratified sample comprising 68 European early stage high tech venture capitalists. Results show that venture capitalists, who focus on entrepreneurial team characteristics or financial criteria during selection, are less involved in value adding activities compared to their peers, who focus on technological criteria. We discuss these findings from a theoretical and practical perspective.     

Performing Under Pressure: Winning Customers Through Improvisation in Team Selling

The sales presentation is one of the most challenging and dynamic aspect of the sales process. Often-times, the presentation is composed of teams. The purpose of this study is to examine how improvisation manifests itself in the context of the sales team presentation. Utilizing the theoretical foundations of team dynamics and relationships, unplanned behavior, and emotional intelligence, a model of sales team improvisation is developed. A two-phase research design was employed via qualitative in-depth interviews from buyers and sellers followed by a quantitative survey of experienced sales team professionals. Our results find that improvisation impacts the relationship between emotional intelligence and team presentation performance outcomes. Although team selling is common in practice, a dearth of research exists in the sales literature. This study contributes to the growing body of knowledge on team dynamics and emotion in selling. Additionally, this study is one of the first to specifically investigate improvisation in the high pressure context of sales team presentations.     

Rise and fall of stars: Investigating the evolution of star status in professional team sports

This article describes an empirical study of the rise and fall of star athletes, using data from the National Basketball Association (NBA) from 1987 to 2008. We measure star status by the number and share of all-star votes, and we apply both Tobit regression and hazard models to investigate the determining factors for star status. We find that the attainment of star status begins with the athlete's exceptional individual performance. We also find that having won a championship in the past can have a long-lasting effect on a player's popularity. The popularity of an athlete depends on his team in two ways: the attainment of star status is associated with strong team performance, and star teammates can reinforce each other's popularity. Interestingly, whereas stars can move from a losing team to a winning team to extend their star life, a team change can be very risky for new stars. Our results also suggest that teams with a large fan base, winning records, and star players should leverage these assets in attracting and retaining star players.     

Novelty and new firm performance: The case of employment systems in knowledge-intensive service organizations

This paper investigates a question at the core of entrepreneurship research: how does novelty affect new venture performance? We address this question for a type of factor-market innovation deemed critical in the contemporary economy: novelty in employment systems. Our longitudinal study of new firms in a knowledge-intensive service industry shows that the relationship between employment-system novelty and organizational productivity is curvilinear and U-shaped. We also find suggestive evidence that new firms with employment systems exhibiting discrepant degrees of novelty (i.e., combinations of highly conforming and highly novel practices) are less productive than those with coherent employment systems.     

What you are is what you like—similarity biases in venture capitalists' evaluations of start-up teams

This paper extends recent research studying biases in venture capitalist's decision making. We contribute to this literature by analyzing biases arising from similarities between a venture capitalist and members of a venture team. We summarize the psychological foundations of such similarity effects and derive a set of hypotheses regarding the impact of similarity on the assessment of team quality. Using data from a conjoint experiment with 51 respondents, we find that venture capitalists tend to favor teams that are similar to themselves in type of training and professional experience. Our results have important implications for academics and practitioners alike.     

CEO Entrepreneurial Leadership and Performance Outcomes of Top Management Teams in Entrepreneurial Ventures: The Mediating Effects of Psychological Safety

This study examines whether the exhibition of entrepreneurial leadership by CEOs within entrepreneurial ventures fosters higher levels of top management team performance and job performance of team members, and whether psychological safety explains such effects. Utilizing four waves of multisource, multilevel data from 262 team members across 56 top management teams, we find that the exercise of entrepreneurial leadership by the CEO leads to higher levels of performance at the team and individual levels, and that psychological safety mediates such relationships.     

The fit of home to foreign market environment: An exploratory study of the relationship of congruence to performance

This research draws on the foreign market entry and organizational strategy literatures to address the relationship between home and foreign market environmental congruence and overseas venture performance. Theoretical arguments from prior studies have been juxtaposed in that transaction cost and diversification perspectives hypothesize different outcomes of firm entry into heterogeneous or homogeneous market environments. Using polynomial regression we test hypotheses regarding the home and overseas environmental congruence–venture performance relationship, and the organizational factors which act as moderators of this relationship. The results show that traditional transaction cost and market replication theories fail to fully explain the value of environmental fit when matching overseas market with domestic market profiles. Furthermore, the findings reveal that the moderating effects of organizational factors on the market congruence–venture performance relationship are also counter-intuitive to traditional perspectives. Managerial implications, study limitations, and directions for future research are offered.     

Goals,Conflict, Politics,and Performance of Cross-Functional Sourcing Teams—Results from a Social Team Experiment

Strategic sourcing is carried out in cross-functional teams to account for the complexity and multidimensionality of modern procurement decisions. However, such teams not only enable the integration of distinct interdependent skill sets and viewpoints, they are also characterized by functional goal misalignment. We focus on the resulting behavioral challenges, namely conflict and politics, and their effects on team satisfaction and rationality, which ultimately leads to observed outcomes. We test our hypotheses in a structural equation model based on data gathered from 468 participants in a social team experiment. We find a mediated effect of goal misalignment on political behavior via two types of team conflict. Political behavior, in turn, obstructs rational team sourcing decisions and reduces team members’ satisfaction with the process. Our study indicates that behavioral challenges in the framework of Organizational Buying Behavior not only co-occur but affect each other via mediation. Hence, managers need to closely monitor the escalation chains’ origin, task conflict, which constitutes a necessary condition for further emotional dissent and political biasing. We contribute to the understanding of the challenges in cross-functional sourcing teams, thereby providing advice to executives in their pursuit to rationalize and improve sourcing team decisions and their outcomes.     

The Price of Team Spirit for Sensemaking Through Task Discourse in Innovation Teams

Despite interest in innovation teams, we have only limited insights into how team members make sense of innovation teams’ inherent ambiguity. By referring to the sensemaking literature and to the research on task discourse, our study introduces task discourse as a valuable sensemaking mechanism in innovation teams. We argue that team creativity and feasibility testing increases the need for task discourse, which in turn improves team performance. Beyond this, we consider ambivalent effects of team spirit. On the one hand, team spirit allows leveraging smoothly synergies to emerge but on the other hand, high team spirit can limit team member’s willingness to challenge each other’s different perspectives and opinions critically. Data on 250 innovation teams of German manufacturing teams support the assumed beneficial effects of task discourse and the ambivalent effect of team spirit. Teams need sensemaking through task discourse when they want to achieve benefits from team creativity. The total effect of creativity on team performance is insignificant, while the indirect effect of team creativity on team performance is significantly positive. Our study enriches current research on ambiguity and sensemaking in innovation teams, answers the call to elaborate benefits and drawbacks team spirit might bring to teams, and provides valuable managerial implications.     

A temporal analysis of how entrepreneurial goal intentions,positive fantasies,and action planning affect starting a new venture and when the effects wear off

The road from intentions to actions and new venture creation is long. So far, the literature has provided insights into action-regulatory factors that contribute to new venture creation. However, the literature has neglected to take into account the temporal dynamics underlying these relationships. We contribute to action-regulation theories in entrepreneurship by theorizing about and investigating how the effects of action-regulatory factors hold over time. We hypothesize that the action-regulatory factors of entrepreneurial goal intentions, positive fantasies, and action planning have combined effects on new venture creation. Furthermore, we hypothesize that these effects become weaker over time. To test our hypotheses, we studied 96 Ugandan entrepreneurs over 30 months. Our results supported our hypotheses. Action planning moderated the effects of entrepreneurial goal intentions and positive fantasies on new venture creation. Furthermore, the effects were significant in the beginning and wore off over time. Our study shows that including a time frame in theoretical models is important to derive valid conclusions from empirical results and to develop more precise theories.     

Entrepreneurial visions in founding teams: Conceptualization,emergence, and effects on opportunity development

Prior research on entrepreneurial visions has typically taken a leadership perspective and explored how the founders’ future images of their ventures motivate themselves and followers. Drawing on an upper echelon perspective and longitudinal case studies of eight founding teams, this study finds that founders’ entrepreneurial visions do not only capture the future images of their ventures, but also the future images of the founders’ relationship with it. Taking into account this personal aspect of visions, we show that within a founding team, the members’ visions can be incongruent, i.e., they cannot be realized simultaneously within the current venture. While our data reveal that vision incongruence tends to occurs when all team members perceive to have an equal status, vision congruence emerges when the attributed status in the team is heterogeneous. Founding teams with more congruent visions tend to follow a focused opportunity development path, while those with less congruent visions tend to follow a comprehensive opportunity development path. Depending on the teams’ behaviors in the face of challenging situations either path can lead to successful opportunity commercialization or failure. We discuss the implications of these findings for the literatures on entrepreneurial visions, opportunities, and upper echelons.