Academic Spinoffs New Venture Teams and Performance: Insights from Faultline Theory

Academic spin-offs (ASOs) are particular new technology-based firms (NTBFs) originating from public or university-based research institutions. One of their major challenges is to integrate scientific knowledge with the commercial knowledge in the entrepreneurial team (ET). The effect of ET composition on ASO performance has generally been examined through human capital theory or upper echelons theory. These traditional approaches have their merits and generally conclude to the necessity to add surrogate (external) entrepreneurs to the core team of academics. However, this would create a faultline, i.e. a divide between these two subgroups that negatively impacts team processes, and might explain why these artificially created ETs are not as successful as expected. We argue that a combination of these different lenses on ET composition and its relationship with performance may lead to a better understanding. Drawing on the human capital and upper echelons theories on the one hand and on the faultline theory on the other, we develop interaction hypotheses to test for their combined effect on a sample of 172 Italian ASOs. Our results permit to reveal the significant impact on performance of subtle compositional dimensions of the core academic ET that would have otherwise gone unnoticed. They also allow us to stress the importance of cognitive distance optimizers and show how they contribute not only to prevent the negative effects of diversity but also to create the preconditions for the positive effects. Theoretical and practical implications are drawn and future avenues of research suggested.