Team Size and Effort in Start-Up-Teams – Another Consequence of Free-Riding and Peer Pressure in Partnerships

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Team Size and Effort in Start-Up-Teams – Another Consequence of Free-Riding and Peer Pressure in Partnerships

Author Info

Uschi Backes-Gellner () (Institute for Strategy and Business Economics, University of Zurich)
Arndt Werner () (Institut für Mittelstandsforschung Bonn (IfM Bonn), (Institute for Small and Medium Size Enterprises, Bonn))
Alwine Mohnen (University of Cologne)

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Uschi Backes-Gellner

Abstract

Start-up-teams are almost always small and very often consist of no more than three members. We present an explanation based on free-riding and peer pressure. Founders choose the size of their start-up-team in order to economize on effort costs of teams. Given the particular business situation of start-ups we show that there should be an optimal team size with regard to effort. We test our implications based on a large start-up data set. Individual effort first rises and then declines with team size; on average maximum effort occurs with three team members.

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Paper provided by University of Zurich, Institute for Strategy and Business Economics (ISU) in its series Working Papers with number 0054.

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Length: 20 pages
Date of creation: Mar 2004
Date of revision: Mar 2004
Handle: RePEc:iso:wpaper:0054

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Find related papers by JEL classification:
M5 - Business Administration and Business Economics; Marketing; Accounting - - Personnel Economics
M13 - Business Administration and Business Economics; Marketing; Accounting - - Business Administration - - - New Firms; Startups
M21 - Business Administration and Business Economics; Marketing; Accounting - - Business Economics - - - Business Economics

References listed on IDEAS
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Rupert Sausgruber, 2005. "Testing for Team Spirit - An Experimental Study," Experimental 0508001, EconWPA. [Downloadable!]

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Mohnen, Alwine & Pokorny, Kathrin & Sliwka, Dirk, 2008. "Transparency, Inequity Aversion, and the Dynamics of Peer Pressure in Teams: Theory and Evidence," IZA Discussion Papers 3281, Institute for the Study of Labor (IZA). [Downloadable!]

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