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New Venture Teams and the Quality of Business Opportunities Identified: Faultlines between Subgroups of Founders and Investors

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  • JoAnne Yong–Kwan Lim
  • Lowell W. Busenitz
  • Laku Chidambaram

Abstract

New venture teams (NVT) often comprise idea–conceiving founders and equity–based investors. These subgroups represent a faultline whose magnitude influences the quality of business opportunities. We propose that the faultline strength formed between founders and investors is influenced by structural factors (ownership equity, membership change, preexisting tie strength) and cognitive factor (mental models of the venture). Finally, we address how the faultline strength impacts interaction processes (relationship conflict, task conflict, knowledge exchange) and their subsequent impact on the quality of entrepreneurial opportunities. Our theoretical model provides insight into how informational resources inherent in new venture teams can be more effectively leveraged.

Suggested Citation

  • JoAnne Yong–Kwan Lim & Lowell W. Busenitz & Laku Chidambaram, 2013. "New Venture Teams and the Quality of Business Opportunities Identified: Faultlines between Subgroups of Founders and Investors," Entrepreneurship Theory and Practice, , vol. 37(1), pages 47-67, January.
    • Handle: RePEc:sae:entthe:v:37:y:2013:i:1:p:47-67
    DOI: 10.1111/j.1540-6520.2012.00550.x
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    2. Cyrine Ben-Hafaïedh & Alessandra Micozzi & Pierpaolo Pattitoni, 2018. "Academic spin-offs’ entrepreneurial teams and performance: a subgroups approach," The Journal of Technology Transfer, Springer, vol. 43(3), pages 714-733, June.
    3. Ma, Hongjia & Xiao, Bin & Guo, Hai & Tang, Sisi & Singh, Deeksha, 2022. "Modeling entrepreneurial team faultlines: Collectivism, knowledge hiding, and team stability," Journal of Business Research, Elsevier, vol. 141(C), pages 726-736.
    4. Lefebvre, Vincent & Certhoux, Gilles & Radu-Lefebvre, Miruna, 2022. "Sustaining trust to cross the Valley of Death: A retrospective study of business angels’ investment and reinvestment decisions," Technovation, Elsevier, vol. 109(C).
    5. Breugst, Nicola & Patzelt, Holger & Rathgeber, Philipp, 2015. "How should we divide the pie? Equity distribution and its impact on entrepreneurial teams," Journal of Business Venturing, Elsevier, vol. 30(1), pages 66-94.
    6. Veroniek Collewaert & Harry J. Sapienza, 2016. "How Does Angel Investor–Entrepreneur Conflict Affect Venture Innovation? It Depends," Entrepreneurship Theory and Practice, , vol. 40(3), pages 573-597, May.
    7. Holger Patzelt & Rebecca Preller & Nicola Breugst, 2021. "Understanding the Life Cycles of Entrepreneurial Teams and Their Ventures: An Agenda for Future Research," Entrepreneurship Theory and Practice, , vol. 45(5), pages 1119-1153, September.
    8. Raushan Gross, 2018. "Connecting the Links Between Leadership Styles and Virtual Team Effectiveness," Journal of Enterprising Culture (JEC), World Scientific Publishing Co. Pte. Ltd., vol. 26(02), pages 185-205, June.
    9. Xie, Xiao-Yun & Feng, Wen & Hu, Qiongjing, 2020. "Does new venture team power hierarchy enhance or impair new venture performance? A contingency perspective," Journal of Business Venturing, Elsevier, vol. 35(6).
    10. Leon Schjoedt & Erik Monsen & Allison Pearson & Tim Barnett & James J. Chrisman, 2013. "New Venture and Family Business Teams: Understanding Team Formation, Composition, Behaviors, and Performance," Entrepreneurship Theory and Practice, , vol. 37(1), pages 1-15, January.
    11. Jana Drechsler & Jan-Thomas Bachmann & Andreas Engelen, 2019. "The effect of immigrants in the founding team on the international attention of new ventures," Journal of International Entrepreneurship, Springer, vol. 17(3), pages 305-333, September.
    12. Gregori, Patrick & Ukobitz, Desiree V. & Parastuty, Zulaicha, 2018. "A Conceptual Framework on Entrepreneurial Team Member Exits: A Starting Point for Further Research," 6th International OFEL Conference on Governance, Management and Entrepreneurship. New Business Models and Institutional Entrepreneurs: Leading Disruptive Change (Dubrovnik, 2018), in: 6th International OFEL Conference on Governance, Management and Entrepreneurship. New Business Models and Institutional Entrepreneurs: Leading Disrupt, pages 453-474, Governance Research and Development Centre (CIRU), Zagreb.
    13. Patrick Gregori & Zulaicha Parastuty, 2021. "Investigating the process of entrepreneurial team member exits: a systematic review and future research directions," Review of Managerial Science, Springer, vol. 15(4), pages 847-878, May.
    14. Vandebeek, Alana & Voordeckers, Wim & Lambrechts, Frank & Huybrechts, Jolien, 2016. "Board role performance and faultlines in family firms: The moderating role of formal board evaluation," Journal of Family Business Strategy, Elsevier, vol. 7(4), pages 249-259.
    15. Jingchen Ma & Xu Huang, 2023. "Knowledge-Based Faultlines and Corporate Social Irresponsibility: Evidence from Chinese High-Polluting Companies," Sustainability, MDPI, vol. 15(17), pages 1-18, September.
    16. Giulio Cainelli & Donato Iacobucci & Alessandra Micozzi, 2015. "Determinants of territorial differences in entrepreneurial rates. An empirical analysis of Italian local systems," Working Papers 1502, c.MET-05 - Centro Interuniversitario di Economia Applicata alle Politiche per L'industria, lo Sviluppo locale e l'Internazionalizzazione, revised Feb 2015.

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