The contingent effects of top management teams on venture performance: Aligning founding team composition with innovation strategy and commercialization environment

How does the relationship between founding team composition and venture performance depend on the venture's strategy and business environment? Using data from a novel survey of 2,067 firms, we show that while diverse founding teams tend to exhibit higher performance, this is not universally true. We find that founding teams that are diverse are likely to achieve high performance in a competitive commercialization environment. On the other hand, technically focused founding teams are aligned with a cooperative commercialization environment and when the enterprise pursues an innovation strategy. These results are robust to corrections for endogenous team formation concerns. The findings suggest that ventures cannot ignore founding team composition and expect to later professionalize their top management teams to align with their strategy and environment. Copyright © 2013 John Wiley & Sons, Ltd.     

Leveraging ties: the contingent value of entrepreneurial teams' external advice networks on Indian software venture performance

This study investigates the impact of entrepreneurial teams' external networks on their ventures' performance. We first argue that ventures whose entrepreneurial teams span many structural holes in their external advice networks experience higher performance. We then propose that network ties are not uniform in their effect, but rather are contingent on two distinct features of entrepreneurial teams: (i) their strategic consensus—extent of agreement on key goals and strategies within the team—and (ii) internal cohesion—extent of interpersonal friendships within the team. Finally, we propose that team demographics and team networks complement (rather than substitute) each other. Data from Indian software ventures provide support for these arguments. We extend entrepreneurship research by highlighting how venture teams' internal processes and external networks jointly shape performance outcomes. We also add to the literature on team networks by drawing attention to the role of strategic consensus as a distinct pathway through which teams can leverage their external networks.     

On the effects of authority on peer motivation: Learning from Wikipedia

Research Summary: We investigate the conditions under which authority can be deployed without reducing subordinate motivation. We show that lateral authority, the legitimacy to resolve task‐specific problems, is welcomed by members of an organization in the resolution of coordination conflicts, the more so (a) the fiercer the conflict to be resolved, (b) the higher the competence‐based status of the authority, (c) the lower the tenure of, and (d) the more focused the organizational members are. Analyzing the discussion behavior of members of Wikipedia between 2002 and 2014, we corroborate our allegations empirically by analyzing 642,916 article–discussion pages. Our findings, obtained for a modern collective production community, provide learning opportunities for how traditional organizations may want to govern activities of their idiosyncratically motivated staff. Managerial Summary: When managers use their (legitimate) power to take decisions on behalf of their staff, they risk setting back employees and making them detach from the firm. This danger is particularly salient whenever highly motivated teams of staff autonomously work on corporate problems and are used to governing themselves. Examples range from skunkwork initiatives within traditional firms to entire team‐based organizations, such as Valve or Zappos. When and how managers can add value by resolving conflicts within and across these teams once their self‐organization fails is what we study in this article. Inspired by data from Wikipedia, we suggest that managers should not intervene prematurely, benefit from visible competence, and are respected most for their actions by specialized peers who recently joined the organization.     

Which ties matter when? the contingent effects of interorganizational partnerships on IPO success

This paper investigates the contingent value of interorganizational relationships at the time of a young firm's initial public offering (IPO). We compare the signaling value to young firms of having ties with two types of interorganizational partnerships: endorsement relationships such as those with venture capital firms and investment banks, and strategic alliance partnerships. We propose that, under different equity market conditions, potential investors in an issuing firm attend to different types of uncertainty; attention to these different types of uncertainty affects investors' perceptions of the relative value of a young firm's different kinds of endorsements and partnerships and, hence, IPO success. Results from a sample of young biotechnology firms show that ties to prominent venture capital firms are particularly beneficial to IPO success during cold markets, while ties to prominent investment banks are particularly beneficial to IPO success during hot markets; a firm's strategic alliances with major pharmaceutical/health care firms did not have such contingent effects. Implications for understanding the contingent value of interorganizational ties are discussed. Copyright © 2003 John Wiley & Sons, Ltd.     

Cooperative goals and team performance: Examining the effects of advice network

Based on the theory of cooperation and competition, this study examines the relationships between cooperative goals, advice network, and team performance, and their boundary conditions. Based on multi-source data from 189 teams in a military organization, results indicate that cooperative goals positively influence team performance via advice network density. Moreover, advice network centralization moderates the relationship between advice network density and team performance. In addition, advice network centralization moderates the indirect effect of cooperative goals on team performance via advice network density.     

Network effects and preference heterogeneity in the case of mobile telecommunications markets

This paper demonstrates how revealed- and stated-preference analyses can be used for modeling network effects in the field of mobile telecommunications. The aim of this study was to verify if network effects may still play a role in the Polish mobile telecommunications market, measure their strength, identify their sources and variability across consumers by accounting for consumers' observable and unobservable preference heterogeneity, evaluate their monetary value to consumers, and finally, to verify if the marginal utility associated with network effects is constant. The analysis of consumers' revealed choices (currently used mobile telephone operator) allowed the identification of major differences between customer bases of incumbent and new entrant operators, and insight into the business strategies adopted in the presence of asymmetric regulation of mobile termination rates. The second part of the study—the analysis of the consumers' stated choices (made in carefully prepared and designed hypothetical choice situations, known as the choice experiments) made it possible to directly model consumers' utility functions and, in this way, investigate the nature of network effects in mobile telecommunications markets. From the results, the presence of strong network effects, which are related to the ratio of consumers' social network group using the same operator, and to the magnitude of on-net price discounts, is confirmed. These network effects can be disaggregated to pecuniary and non-pecuniary effects. Through the utilization of the random parameters multinomial logit model, consumers' observable and unobservable preference heterogeneity can be accounted for, which proved a scientifically revealing and potentially policy-relevant approach. The results might be of a particular interest to other researchers aiming at modeling consumers' preferences as well as to mobile telephone operators and regulatory authorities—it is shown that capacity for vigorous price competition between mobile operators is limited by non-price factors, which affect subscriber's choices, especially in the presence of asymmetric mobile termination rates.     

Erratic strategic decisions: when and why managers are inconsistent in strategic decision making

While decision makers in organizations frequently make good decisions rooted in stable and consistent preferences, such consistency in outcomes is not always the case. In this study, we adopt a psychological perspective of judgment to investigate managers' erratic strategic decisions, which we define as a manager's inconsistent judgments that can shape the direction of the firm. In a study of 2,048 decisions made by 64 CEOs of technology firms, we examine how both metacognitive experience and perceptions of the external environment (hostility and dynamism) could affect the extent to which managers make erratic strategic decisions. The results indicate that managers with greater metacognitive experience make less erratic strategic decisions. The results also indicate that in hostile environments managers make more erratic strategic decisions. But contrary to our expectations, in dynamic environments managers make less erratic strategic decisions. Similarly, hostility and dynamism interact in their effect on erratic strategic decisions in that the positive relationship between environmental hostility and erratic strategic decisions will be less positive for managers experiencing high environmental dynamism than those experiencing low environmental dynamism. These results have important implications for strategic decision‐making research. Copyright © 2010 John Wiley & Sons, Ltd.     

The effects of industry growth and strategic breadth on new venture performance and strategy content

A sample of 123 independent new ventures was classified into four industry growthlstrategic breadth categories. High growth industry environments were found to provide a favorable environment for new ventures to achieve sales growth; however, the highest sales growth rates were exhibited by new ventures pursuing broad breadth strategies in high growth industries. One-way ANOVA and contrast tests were also used to identify whether specific strategic variables varied across the four industry growth/strategic breadth combinations. New ventures in high growth industries chose to enter on a larger, more aggressive scale and placed more emphasis on new product development than those entering low growth industries. Broad breadth strategy ventures had higher levels of advertising and promotion expenses and placed greater emphasis on the dominance of marketing expertise in their top management team, developing new channels of distribution, and on brand name recognition. Ventures pursuing focus strategies emphasized specialty products and were less cost conscious.     

Managerial ties and firm performance in an emerging economy: Tests of the mediating and moderating effects

Although the literature documents the direct effects of managerial ties on firm performance, the empirical results are divergent and inconclusive. To explain these disparities, this study (1) develops and tests a model that establishes the role of external resource acquisition as a salient mediating mechanism through which managers’ business and political ties influence firm performance; and (2) examines the moderating role of environmental turbulence that further explains the impact of managerial ties on resource acquisition (the mediator). Results from a survey of 253 firms in China indicate that resource acquisition plays a partial mediating role in the relationships between the two sub-dimensions of managerial ties and firm performance. Environmental turbulence shows a curvilinear (i.e., inverted U-shaped) moderating effect on the business ties–resource acquisition relationship, whereas it dampens the positive effect of political ties on resource acquisition. Theoretical and managerial implications are discussed.     

先验知识对创业机会识别的影响研究——风险感知的调节作用

本文首先界定了先验知识、创业机会识别和风险感知的内涵,然后,基于创业相关理论、情绪相关理论及激励理论,提出先验知识与创业机会识别正相关及风险感知对二者的关系具有负向调节作用的研究假设,并从浙江、天津、山东等几个省市进行抽样调查,采用多元线性回归分析方法对获得的216份有效问卷进行统计分析,实证分析结果支持了文章的研究假设。     

Pirates and Samaritans: A decade of measurements on peer production and their implications for net neutrality and copyright

This study traces the evolution of commons-based peer production by a measurement-based analysis of case studies and discusses the impact of peer production on net neutrality and copyright law. The measurements include websites such as suprnova.org, youtube.com, and facebook.com, and the Peer-to-Peer (P2P) systems Kazaa, Bittorrent, and Tribler. The measurements show the two sides of peer production, the pirate side with free availability of Hollywood movies on these P2P systems and the Samaritan side exhibited by the quick joining of 400,000+ people in a community to organize protests against events in Burma. The telecommunications and content industry are disrupted by this way of peer production. As a consequence, revenues of both industries are likely to suffer in the coming years. On the other hand, innovative P2P systems could win the battle on merit over classical distribution technologies. As a result, a continuation is expected of both legal actions against P2P and possible blocking actions of P2P traffic, violating net neutrality. It is argued that this hinders innovation and causes a large discrepancy between legal and user perspectives. A reform of copyright laws is clearly needed, otherwise they will be unenforceable around 2010.     

Industry,corporate, and segment effects and business performance: a non‐parametric approach

The literature investigating the degree to which firm performance is associated with industry or corporate factors has recently been subject to criticism on the grounds of both methodological shortcomings and incomplete interpretation of results. Our research goes beyond these critiques to raise more basic issues concerning the assumptions underlying variance decomposition, the methodology dominating the antecedent literature. Performance data and categorizations from a sample consistent with those employed in the recent literature are analyzed via a new non‐parametric methodology. Results here indicate that corporate factors were over an order of magnitude better predictors of business unit profit position than were industry factors—which were found not to have been significant predictors. Further, underlying performance relationships were seen to have shifted over time. A key implication of these results for researchers is that they provide additional evidence that managers can have a strategic influence on business performance. Copyright © 2003 John Wiley & Sons, Ltd.     

The effects of geographic and network ties on exploitative and exploratory product innovation

Addressing the inconsistent findings in the literature, we first distinguish the type of innovation and study the relationship of industrial clusters with exploitative and exploratory product innovation. Furthermore, we study how focal cluster firms' network ties with their suppliers and buyers in their clusters might moderate these relationships. Our empirical study showed that, while cluster membership enhanced firms' exploitative product innovation, it hindered their exploratory product innovation. Moreover, the results showed that focal cluster firms' network ties with their suppliers and buyers in their clusters strengthened the effects of cluster membership on exploitative product innovation. They also showed that focal cluster firms' network ties with their buyers but not suppliers in their clusters reduced the negative effects of cluster membership on exploratory product innovation. Copyright © 2014 John Wiley & Sons, Ltd.     

The genesis of strategy in new ventures: escaping the constraints of founder and team knowledge

Although an entrepreneur's initial strategy choices have a critical effect on a new venture's survival, growth, and long‐term performance, few studies have explored how pre‐founding experience influences these choices. Founders who over rely on their historical industry experiences may simply replicate the strategies of legacy firms. In turn, little is known about how founders can break these experience‐based constraints, if they exist. In an empirical analysis of 120 prospective entrants in air transportation from 1995–2005 we find that a founder's past experience strongly constrains choices, and the effect depends on the form of experience and type of strategy choice. Diversity of experience, at the level of the founder and founding team, lessens these constraints. Our results have valuable implications for research in strategy and entrepreneurship. Copyright © 2011 John Wiley & Sons, Ltd.     

Skew and heavy‐tail effects on firm performance

Research summary : Most strategic management studies adopt an average‐centered view that uses the central tendency to explain between‐group variation in performance (i.e., performance differences between business units, firms, industries, and countries). In this study, we explain within‐group variation using a variance‐centered view that focuses on the peripheral characteristics of performance distributions as defined by skew and heavy tails (i.e., variance and kurtosis). Drawing on performance feedback theory, we hypothesize that successful firms tend to develop a positive skew in their performance distributions, which we call a “positive skew effect” in this study, and that heavy tails moderate this effect. Our analysis of the performance of a group of foreign affiliates provides general support for our hypotheses at both the firm and segment (industry and country) levels. Managerial summary : Managers of multi‐business firms use various approaches to improve the aggregate performance of their business units. Some expand the range of upper performance outliers (exploration) or reduce the range of lower outliers (downsizing); others improve the performance of current business units (exploitation). We find that firms with superior performance tend to have a balanced mix of the three approaches. We also find that segments (countries and industries) with higher mean performances provide environments that facilitate the entry of productive firms and the exit of unproductive firms and provide environments in which incumbents can further improve their performance by learning from others. We observe that successful firms and segments have a positive skew in their performance distributions, which we call a “positive skew effect.” Copyright © 2016 John Wiley & Sons, Ltd.     

Exploration versus exploitation: Emotions and performance as antecedents and consequences of team decisions

We analyze performance and emotions as antecedents and consequences of team strategic decisions to explore a new routine versus exploiting an existing one. In a laboratory study, we examine team decision making over time and draw causal inferences about the relationships among team emotions, team performance, and explore–exploit decisions. We use self‐report data to measure team emotions, and validate results with psychophysiological data. We find that declines in performance increase the likelihood that teams decide to explore new routines rather than exploit existing ones. We also find a marginal positive effect of positive emotions, as measured by both self‐report and psychophysiological data, on team decisions to explore a new routine. Further, teams successful at implementing new routines report increased positive emotions, as measured by the self‐report data. This relationship is fully mediated by performance change. Copyright © 2015 John Wiley & Sons, Ltd.     

Relational configurations with information intermediaries: The effect of firm‐investment bank ties on expected acquisition performance

Recognizing information‐related problems in acquisition transactions, we study how the characteristics of acquiring firms' relationships with information brokers or intermediaries like investment banks affect firms' access to acquisition‐related information, thus influencing expected acquisition performance. We propose that relational configurations that enhance the intermediaries' ability and willingness provide the most beneficial and appropriate information to acquiring firms. We find that acquirers' expected acquisition performance increases with the number of prior transactions with investment banks but decreases when relationships with banks become exclusive. Further, the positive effect of number of prior transactions becomes even stronger for less related acquisitions. Our study provides insights on the beneficial performance implications of competition in multiple but nonexclusive relationships with information intermediaries such as investment banks. Copyright © 2013 John Wiley & Sons, Ltd.     

Stacking the deck: the effects of top management backgrounds on investor decisions

Young firms going public are dependent upon the decisions of investors for a successful public offering. Yet convincing investors to invest is not easy, as young firms have limited track records and, thus, face challenges associated with gaining legitimacy in their respective industries. This paper examines ways in which select information about firms undertaking an initial public offering (IPO) can affect investor decisions. Building upon recent research on upper echelons and signaling theory, we propose that the composition of a firm's top management team can signal organizational legitimacy that in turn affects investor decisions. In the context of young firms undertaking an IPO, such signals are critical, especially when objective measures of firm quality are not easily available. We introduce a typology of signals of organizational legitimacy to elaborate on our hypotheses. Analyses of a comprehensive set of data on the career histories of the top management teams of young biotechnology firms show that investor decisions are affected by the extent to which a firm's top management team has employment affiliations with prominent downstream organizations (e.g., pharmaceutical companies), with a diverse range of organizations, and upon the role experience of one key member of the top management team—the Chief Scientific Officer. We assess and find that these effects are not mediated by the prestige of a firm's lead underwriter. We conclude with a discussion of the implications of our study for strategy research on upper echelons and organizational legitimacy. Copyright © 2006 John Wiley & Sons, Ltd.     

The contingent effects of differentiation and integration on corporate entrepreneurship

This paper develops a contingency view regarding the effects of structural differentiation and integration on levels of corporate entrepreneurship. Integrating notions of benefits and costs resulting from integration with structural contingency theory, we argue that the joint effects of structural differentiation and integration on corporate entrepreneurship levels are moderated by organizational size and environmental dynamism. Our findings from a time‐separated sample demonstrate that in smaller organizations and more dynamic environments, the positive effects of integration on the structural differentiation‐corporate entrepreneurship relationship strongly diminish. As such, with this research we begin to identify contingencies that influence the corporate entrepreneurship levels observed among firms striving to balance the needs for structural differentiation and integration. Copyright © 2014 John Wiley & Sons, Ltd.