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Effort Provision in Entrepreneurial Teams: Effects of Team Size, Free-Riding and Peer Pressure

Author

Listed:
  • 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)

Abstract

This paper analyzes whether effort provision in entrepreneurial teams depends on the size of the team, assuming that size determines the strength of free-riding and peer pressure effects in entrepreneurial teams. We provide a theoretical model and empirical analyses to explain the joint effect of free-riding and peer pressure on effort in start-up teams. We begin with an economic model by Kandel and Lazear (1992) and enrich it using insights from entrepreneurship research. Based on our model, we first hypothesize that with increasing team size in entrepreneurial teams, the efforts of the individual team founders should follow an inverted U-shaped pattern. Second, we argue that the peer pressure effect is stronger if team members have stronger social ties, and thus we expect the effort-maximizing team size to be larger in teams with stronger social ties. Using a data set from 214 German start-up teams, we find that our hypotheses are supported by the data.

Suggested Citation

  • Uschi Backes-Gellner & Arndt Werner & Alwine Mohnen, 2005. "Effort Provision in Entrepreneurial Teams: Effects of Team Size, Free-Riding and Peer Pressure," Working Papers 0054, University of Zurich, Institute for Strategy and Business Economics (ISU), revised Sep 2014.
    • Handle: RePEc:iso:wpaper:0054
    as

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    File URL: http://repec.business.uzh.ch/RePEc/iso/ISU_WPS/54_ISU_full.pdf
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    References listed on IDEAS

    as
    1. Rupert Sausgruber, 2005. "Testing for Team Spirit - An Experimental Study," Experimental 0508001, University Library of Munich, Germany.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Kristensen, Soren Rud & Bech, Mickael & Lauridsen, Jørgen T, 2013. "Who to pay for performance? The choice of organisational level for hospital performance incentives," DaCHE discussion papers 2013:5, University of Southern Denmark, Dache - Danish Centre for Health Economics.
    2. Alwine Mohnen & Kathrin Pokorny & Dirk Sliwka, 2008. "Transparency, Inequity Aversion, and the Dynamics of Peer Pressure in Teams: Theory and Evidence," Journal of Labor Economics, University of Chicago Press, vol. 26(4), pages 693-720, October.

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    More about this item

    Keywords

    Peer Pressure; Free-Riding; Entrepreneurial Teams; Team Size;
    All these keywords.

    JEL classification:

    • M5 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups
    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics

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