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.     

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.     

Turning water into wine? Exploring the role of dynamic capabilities in early-stage capitalization processes

Technology-based ventures face considerable challenges when attempting to raise early-stage capital during the early-stages of development. To create an operational business they need access to financial capital, but external investors prefer to see an operational business before investing capital. This study extends arguments grounded in dynamic managerial capabilities theory to examine the extent to which various trade-offs among the quality of a venture's management team, radicalness of the firm's technological resources, and demand uncertainty in focal markets impact the ability of ventures to resolve these capitalization challenges. We find that higher levels of demand uncertainty and more radical innovations do not appear to enhance the impact of strong management teams on the raising of early-stage capital. However, lower levels of uncertainty do appear to strengthen the effects of strong management teams. Implications of these findings for dynamic capabilities theory and early-stage capitalization processes are discussed.     

Using founder status,age of firm,and company growth rate as the basis for distinguishing entrepreneurs from managers of smaller businesses

This article examined the empirical implications of definitions that distinguish entrepreneurs from managers of smaller businesses based on their founder-nonfounder status, and their firms' ages, and growth rates. The best distinctions were created using: (1) founders, (2) younger companies, and (3) the combination of founders and younger companies. Growth indicators did not discriminate well. The two founder-based distinctions shared a profile of entrepreneurs as running smaller companies with higher return on assets (ROA) than nonentrepreneurial managers, having shorter tenure in their positions, having previous work experience in the same industry, and having higher risk-taking propensity. The distinction based on age of firm also showed strong ability to discriminate among respondents.The field of entrepreneurship has few longer standing controversies than the one surrounding the question of what distinguishes entrepreneurs from nonentrepreneurial managers. In trying to separate entrepreneurs from managers of smaller businesses in particular, questions exist concerning the key defining differences. Definitions of entrepreneurship have utilized founder versus nonfounder status, company age, and company growth rates as distinguishing elements. Entrepreneurs have been defined by one or more of the following elements: being a company founder, running a young company, and running or desiring to run a high growth company.This article tests these elements to see if they provide a clearly differentiated profile of entrepreneurs. It uses the founder-nonfounder distinction, for example, to see if this distinction functions well in identifying a number of company, financial, and personal attributes that associate with founders rather than nonfounders. The approach advocated here borrows from configurational theory as it has emerged in the fields of strategic management and organizational theory (Meyer, Tsui, and Hinings 1993) to look for a constellation of variables that group together in depicting entrepreneurs. If founder status, company age, and growth rate are useful definitions of entrepreneurship, they should point to a configuration of factors that together comprise a profile of an entrepreneur.In predicting what configuration of factors will emerge, this article adopts a strategic adaptation perspective (Low and MacMillan 1988) to argue that differences between entrepreneurs and nonentrepreneurs spring from divergent thought processes and personal attributes of individuals who face the question of whether and how to enter business for themselves. Using the founder-nonfounder distinction, we view individuals who decide to start a new business rather than buy or manage an existing one as more likely to have previously founded a business, have experience in the same industry, be higher in risk-taking, show more Type A behavior, and be more growth-oriented.Findings from a sample of CEOs in the Smaller Business Association of New England indicated that neither of the two tests based on high growth as a definition of entrepreneurial firms proved adept at creating a distinct entrepreneurial profile. Distinctions based on founder status, younger firm status, and founder of a younger firm status, on the other hand, proved effective in creating such profiles. Dimensions shared by the two founder-based definitions of entrepreneurship included company attributes of smaller size and higher ROA, and CEO attributes of shorter tenure on the job, previous experience in the same industry, and higher risk-taking propensity. Additional attributes showed in the younger company founder group, including company attributes of lower liquidity and higher sales growth, and personal attributes of having previously founded a business, ranking ROA as a high priority, and external locus of control. The distinction based on younger firm status performed well in discriminating among respondents in this study. In addition to sharing several variables with the founder-based distinctions, it alone identified younger firms' CEOs as having lower education and Type A tendencies and higher expectations of children succeeding them in the business.As one implication of these findings, knowledge of the profiles may help people who deal with these groups to have a better sense of how to interact with and respond to them. The young company founder profile, for example, presents a picture of a relatively small company experiencing high rates of sales growth squeezing all it can from its assets in the face of high comparative liabilities. Because the company is young, its founder has relatively short tenure but may well have had previous experience in the industry and have previously founded a company. Personally, the founder is a risk-taker who is external in locus of control and places high priority on ROA. If this configuration holds firm in future research, those who deal frequently with entrepreneurs, such as bankers, venture capitalists, consultants, accountants, and lawyers, will be able to use a few identifying factors such as founder status and age of firm to draw reasonable inferences about a host of other characteristics of their clients. The attempt to profile the entrepreneur, in recent years thought to be futile, may yet prove viable.     

Teams developing business ideas: how member characteristics and conflict affect member-rated team effectiveness

Team researchers have found that the diversity to effectiveness ratings are mediated by team conflict. Using a sample of 73 teams developing their business ideas, I found direct effects of diversity and conflict on member-rated team effectiveness. Here, I explain how the circumstances under which these teams operate can lead to these findings. For these teams, task conflict was found to relate negatively to member-rated team effectiveness. This finding contrasts with research on organizational teams, where task conflict usually relates positively to team effectiveness ratings. I also found that both diversity and average member experience influence member-rated effectiveness. These findings imply that diversity, conflict, and ratings of team effectiveness may differ for teams developing business ideas as compared to organizational teams. Thus, findings from organizational team research should be applied with caution to teams developing business ideas and possibly to new venture teams in general.     

The ambiguous role of cultural moderators in intercultural business negotiations

Many modern business negotiations cross borders, and one plausible idea for successfully managing such negotiations is to equip negotiation teams with a “cultural moderator,” an individual who has the same cultural background as the business partner. This study investigates the effect of cultural moderators on both the negotiation process (e.g., use of integrative strategies) and economic outcomes (e.g., profit). Using German and French negotiators in an experimental setting, the authors show that a cultural moderator's influence on the team's use of integrative strategies depends on the moderator's degree of collectivism. With respect to economic outcomes, the presence of a cultural moderator always improves a team's results. Together, these findings suggest that the benefits of using a cultural moderator are not unconditional; rather, they depend on the cultural moderator's cultural background and on the negotiation goals (process vs. outcome) of the team that employs the moderator.     

Team resilience building in response to co-founder exits

Founding teams often experience the exit of co-founders. To develop theory about how founding teams deal with adversity emerging from the exit of one of their members, we take a team-resilience perspective and study the development of six founding teams. Our inductive model highlights how founding teams take different trajectories following team member exits, leading to different types of psychological closure, which impact the teams' resilience building. Our model also suggests how teams not engaging in distancing from the exit-related adversity experience additional adversity within the continuing team, eventually leading to team failure. Our findings challenge and extend extant studies on exits in founding teams and team resilience.     

Managing Global Virtual Teams Across Classrooms,Students and Faculty

Virtual teams are becoming commonplace in business today so our business school students should have experience in effectively working in virtual teams. Based on a month-long virtual team project conducted by the authors between classes in South Africa and the United States, this paper discusses the opportunities and challenges of using global virtual teams as part of a business school curriculum. The authors describe the use of a virtual team life cycle to assess the month long project to identify key elements to retain and to change for the next time the virtual project is implemented.     

Legitimacy of team rewards: Analyzing legitimacy as a condition for the effectiveness of team incentive designs

This article illustrates how the legitimacy of pay and evaluation processes in teams affect the effectiveness of team-based incentive designs in organizational work teams. We present a theoretical model of the development of legitimacy in team-based incentive designs and propose that the development of legitimacy for both pay dispersion in teams (i.e., difference in allocations of incentives among team members) and for the use of interdependent evaluations of performance promote team effectiveness. Our model introduces a new perspective to theorize about the conditions under which team rewards are an effective incentive design.     

Task Conflict,Narcissism and Entrepreneurial Capability in Teams Planning a Business: A Moderated Moderation Approach to Explaining Business Planning Performance

Drawing on the dynamic self‐regulatory processing model of narcissism, we hypothesize that in teams planning a business, task conflict relates positively to business planning performance and that this link is reinforced by the team's narcissism. By integrating aspects of human capital theory, this brighter side of narcissism is amplified where the narcissism is aligned with entrepreneurial capability and the team members' belief in their entrepreneurial capability. The findings of the moderated moderation analysis examining 66 teams of entrepreneurship students support the study's assumptions and provide meaningful implications for social psychology and personality researchers in entrepreneurship.     

Nationality biases in peer evaluations: The country-of-origin effect in global virtual teams

In a post-COVID-19 world, due to the increasing reliance on virtual work, global virtual teams (GVTs) are critical for the international success of firms. A fundamental challenge that firms face in this new remote work context is the need to measure the performance of individuals in GVTs. Peer evaluations are advocated as a way to improve the validity of performance appraisals. Peers work closely with one another and, presumably, are better positioned to observe and evaluate fellow team members’ performance. Even when completed in good faith, however, a fair evaluation of individual contributions and performance in GVTs could be distorted by subjectivity, bias, cultural and institutional differences, and the limitations of online communication tools. Based on a sample of 6634 GVTs comprised of 33,271 people in 79 countries that worked on an international business (IB) project, we tested the country-of-origin (COO) effect in peer evaluations within the context of GVTs. Results indicate that the nationality of the team member is a source of significant bias in peer evaluations. Our tests show that the prestige and the level of economic development of the country that a team member is from is a better predictor of peer evaluations received than objective measures of individual skills and competencies, including English proficiency, technical ability, and cultural intelligence, or national per-capita spending on education, suggesting that a COO effect based on personal bias may affect performance ratings more than actual contributions. We conclude that the COO effect in peer evaluations in GVTs has to be taken into account when designing evaluation systems and discuss implications for theory, practice and future research.     

Superstars as Drivers of Organizational Identification: Empirical Findings from Professional Soccer

This paper examines the effect of superstars on external stakeholders’ organizational identification through the lens of sport. Drawing on social identity theory and the concept of organizational identification, as well as on role model theories and superstar economics, several hypotheses are developed regarding the influence of soccer stars on their fans’ degree of team identification. Using a proprietary data set that combines archival data on professional German soccer players and clubs with survey data on more than 1,400 soccer fans, this study finds evidence for a positive effect of superstar characteristics and role model perception. Moreover, it is found that players who qualify for the definition of a superstar are more important to fans of established teams than to fans of unsuccessful teams. The player's club tenure, however, seems to have no influence on fans’ team identification. It is further argued that the effect of soccer stars on their fans is comparable to that of executives on external stakeholders, and hence, the results are applied to the business domain. The results of this study contribute to existing research by extending the list of personnel‐related determinants of organizational identification.     

Team interpersonal process effectiveness in venture partnerships and its connection to perceived success

Many business ventures are started by entrepreneurial teams, and an extensive theoretical literature suggests that the interpersonal process of these teams impact venture performance. Whereas some work has been done to identify key issues in how well such teams work together, there has been no in-depth research to develop an instrument to measure specific dimensions of interpersonal process effectiveness. This article documents the importance of venture business, develops a measure to evaluate venture team interpersonal process effectiveness, and shows the relationship of interpersonal process effectiveness and partner agreement on specific aspects of interpersonal process to reports of venture success.Over 190 venture dyads were surveyed such that each partner evaluated themselves and their partner on items describing team interpersonalprocess. We found four dimensions for team interpersonal process: leadership, interpersonal flexibility, team commitment, and helpfulness. Leadership involved partners who contributed to the leadership functions of problem-solving, setting quality standards, continually improving, and setting goals. Interpersonal flexibility described partner exchange with the other partner. Team commitment meant having enthusiasm for team performance and focusing on common team goals. The final element was helpfulness, which involved helping their partner beyond what was required and being friendly and cooperative.We defined successfully perceived ventures as those in which the two partners independently agreed on evaluating the business to be both growing and profitable. Venture businesses that were described by the partners as not growing and/or not profitable were defined as less successfully perceived ventures. Teams that evaluated themselves as more effective on team interpersonal process also regarded themselves as more successful venture businesses. The factors that were evaluated as more effective in successfully perceived ventures were leadership, team commitment, and their mutual interaction.Our agreement hypothesis held for all three interpersonal perception perspectives. The first agreement correlation is a comparison of partner self-evaluations. The more successfully perceived ventures rated themselves similarly; the less successfully perceived ventures did not. The second agreement correlation was a comparison of what partners thought of each other and is the source of many interpersonal assumptions (Wilmot 1979). Partners from successfully perceived ventures agreed with each other, whereas the less successfully perceived ventures did not. The third agreement analysis was particularly noteworthy. It involved a comparison of one partner's self-rating with how the other partner rated him/her. In addition to mere agreement, this represents an interpersonal verification or validity check between separate perceptual systems. As partners, this correlation suggests that you understand my contribution to the team in the same way that I understand my contribution to the team. When there is agreement on this perspective, miscommunication and interpersonal conflict may become less likely. As with the other two agreement indices, partners from successfully perceived ventures showed more agreement than partners in less successfully perceived ventures. An important notion is the use of these three perspectives to more fully utilize the team effectiveness instrument. Each of the perceptual perspectives is different, and a breakdown in one perspective may not always show in the others. However each view is critical to maintaining effective team interpersonal process.To develop a venture dyad, we suggest using our instrument as a tool to enhance a team's interpersonal process. When using an interpersonal method with venture dyads, there are several issues we should consider. First, team interpersonal process issues can be sensitive topics for discussion. In some cases, relationship building with a third party may be needed for this approach to be constructive. Second, a third party, familiar with team interpersonal process, should have a team meeting with the participants to establish a common vocabulary regarding our team concepts. Third, additional team interpersonal process items could be provided by the team to better fit the idiosyncrasies of each dyad.     

Team challenges: Is artificial intelligence the solution?

Artificial intelligence (AI) is emerging as a potential growth area for facilitating the improvement and development of teams in the workplace. AI, as used in the team context, is currently underdeveloped and limited, thus reducing the wide-scale adoption and implementation of AI to improve team effectiveness. The use of AI to provide team diagnostics and improvements represents a significant shift in the approach organizations currently use to facilitate and strengthen effective teamwork. We describe the challenges involved in developing team effectiveness in organizations and the potential application of AI to improve teamwork. Further, we report on our experiences using AI in business school student project teams, the important advantages and disadvantages that emerged from this, and insights for future consideration when adopting and implementing AI in the workplace. Based on our use of AI and our experience training high-performing teams, we propose a multistep process for analyzing and improving teams in organizations.     

A cross-national study on the impact of management teams on the rapid internationalization of small firms

While the importance of top management teams in the formation and development of new ventures is well recognised, their impact on the rapid internationalization of such firms remains relatively under-researched. This article presents the findings of a cross-national study conducted in Australia, Canada, Ireland and New Zealand that demonstrate the significant impact that such teams have in creating the core internal capabilities and leveraging the external resources required for rapid and dedicated internationalization. The need to augment the management team in order to address key resource or knowledge gaps and/or to expand international networks is also evident among many firms, as is the impact of changes in team structures on business strategy and internationalization. Directions for future research and implications for public policy in support of rapidly internationalizing small firms are presented and discussed.     

Smaller teams-better teamwork: How to keep project teams small

Scholars and practitioners have long suggested that smaller teams perform better teamwork, yet it is surprising to find that many organizations are using teams of 10 and more members. This paper explains how large team size affects teamwork. Moreover, it suggests four ways to keep teams small: (1) Create a multiteam project; (2) create a core team and an extended team; (3) outsource tasks and define team-external contributions; and (4) keep members on the team only for specific project phases.     

Start-Ups and External Equity: The Role of Entrepreneurial Experience

Interest in entrepreneurship has increased dramatically over the last two decades. Because of the role that entrepreneurship plays in economic development, an understanding of the financing of business start-ups is essential. A long-standing problem for many business start-ups is acquiring external equity during the first year of operations. This paper analyzes the determinants of obtaining external equity. Special consideration is given to the role of entrepreneurial experience. The results suggest that entrepreneurial experience impacts a start-up's ability to obtain external equity.     

A double-edged sword? Founder Teams' Prior International Experience and INV International Scale-up

We examine the effect of international new ventures’ (INVs) congenital knowledge inherited from their founding teams vs. their experiential knowledge gained through learning by doing on the initiation vs. continuation of their international growth. Data from 144 technology INVs show that the effect of congenital knowledge fades as experiential knowledge accrues over time and fuels sustained international growth. The relationships are moderated by whether founder teams’ work experience is in the same or a different industry as the INV as well as the level of external funding received by the INV. Our study and results contribute to the literature on INVs’ post-entry internationalization.     

Top management teams and corporate success in an emerging industry

This longitudinal study investigates changes in top management teams of a cohort of firms established in an emerging, high growth industry-the minicomputer industry. Given the turbulent conditions that organizations in this industry must contend with, top management teams do not remain stagnant. Most firms in the industry require a new set of executives to bring forth the organizational changes necessary to cope with major shifts in the environment.Little consensus exists in the literature on the impact of new executives on organizational performance. Studies have found that executive succession may be either positively, negatively, or unrelated to subsequent organizational effectiveness. The authors argue that a weakness of the existing research stream is a failure by scholars to adequately consider either the characteristics and skills of newly appointed executives or the patterns of change in management characteristics over time. The authors propose that organizational performance implications of executive succession events can be clarified by examining who the newly recruited executives are.When executive replacements are made, new successors often have characteristics which widely deviate from those of their predecessors. Such deviations in top management characterisics are shown to be pronounced where top management changes are made in response to crisis. In crises, successors are apparently recruited in an attempt to compensate for the shortcomings of their predecessors. However, while both high and low performing organizations make executive replacements as they evolve, the types of top management revisions they make differ. This study provides evidence that the types of senior management team changes made and the characterisics of newly recruited top management are related to organizational performance. High performing firms recruit new top management with new skills that are appropriate to the evolving environment. Lower performing firms somehow replace executives in response to crises, but seem to make the wrong executive recruitment decisions, apparently because the successors in the lower performing organizations do not match the changing competitive conditions in the industry. Low performing firms appear to recruit executives that entirely lack the types of top executive expertise are necessary for new environmental conditions.Although the majority of minicomputer firms required sizable changes in their executive teams over time, a small but significant subgroup of exceptional firms were identified that defy conventional wisdom. These extraordinary organizations were led by visionary CEOs—capable of maintaining management team stability as they successfully repositioned their firms' strategies to cope with continual environmental change. Among the conventional theories that these exceptional managers defy are: 1. Firms in high growth industries can be highly successful even if they retain their CEO/ Founders well beyond the embryonic stage. 2. Firms in high growth industries can retain a significant proportion of management ownership and still grow exponentially without financial crises. 3. Firms in high growth industries can maintain a high level of insider recruitment and still not become inbred.There appear to be two entirely distinct patterns of CEO/executive team success:Pattern 1 involves firms with no CEO change. This visionary CEO tends to be a founder who appears to be able to systematically recruit a limited number of external recruits in the top management team, selecting recruits who fit a changing environment yet also making maximum use of the existing team's longstanding experience and relationships. To maintain the necessary external perspective and avoid an inbred mindset, these firms a) tend not to allow the CEO to also be chairman, b) encourage a modest level of external ownership.Pattern 2 involves firms in which there is extensive turnover in both CEO and senior management teams, once again bringing in the kind of skills needed to match the changing environment. The CEO tends also to be chairman, and the external perspective is provided by having many external recruits plus low level of management ownership.     

Using International Virtual Teams in the Business Classroom

Abstract

Given the growing use of virtual interaction in international business activities, business schools must provide students with experiential learning opportunities that prepare them to work in virtual organizations. This paper uses multiple case study methodology with analysis at the transaction level to analyze the dynamics of the virtual teams, and to compare international and domestic virtual team behavior. The paper also identifies the challenges of implementing international virtual teams for teaching international business and provides practical advice for faculty.