Date of Award

Summer 2013

Document Type

Dissertation

Degree Name

Doctor of Business Administration (DBA)

Department

Business Administration

First Advisor

Bruce Walters

Second Advisor

Son Le

Abstract

In this dissertation, I examine the impact of the characteristics of founding team on firm performance in new business ventures. In addition, this study investigates the moderating effects of the types of opportunities and the types of strategies on the relationships between founding teams' knowledge and firm performance. Although considerable research has examined the effects of founding teams' education and experience on firm performance, findings are inconclusive and disintegrated. Few studies have attempted to investigate the combined effects of these important factors on new ventures' performance and survival. As a result, this study investigates the impact of founding team knowledge acquired through formal education, industry experience, and entrepreneurial experience on firm performance, while considering the moderating effects of different types of opportunities and types of strategies.

New ventures often lack resources, track-records, and reputation. Therefore, entrepreneurial founding teams' knowledge is a critical for survival and growth of new ventures. Human capital includes knowledge, skills, and experience. The knowledge-based view (KBV) explains how an individual's knowledge can be a source of competitive advantage and influence new ventures' growth and survival. Cognition theory explains how individuals' cognitive profile determines how they handle complex information in order to identify and exploit opportunities. An individual's cognitive profile can be shaped by experience.

This study reviews and examines the effects of three dimensions of founding teams' knowledge, such as breadth (founding teams' education, industry experience, and entrepreneurship experience), depth (founding teams' education, industry experience, and entrepreneurship experience), and relatedness (founding teams' education and industry experience) and on firm performance in new ventures. This research, in addition, investigates the moderating effects of the types of opportunities (novelty-centered opportunities and efficiency-centered opportunities) and the types of strategies (differentiation strategies and low-cost leadership strategies) on the relationship between founding teams' knowledge and firm performance.

I used archival data from Hoovers online, Edgar, and S&P Compustat to test the effects of founding teams' knowledge and experience on firm performance. I also tested the moderating effects of the types of opportunities and the types of strategies on the relationships between founding teams' knowledge and firm performance. Empirical results provide some support for the hypotheses. The types of opportunities and the types of strategies somewhat moderate the relationship between founding teams' knowledge and firm performance in young firms. The results also provide support for the tree-way interaction effect of founding teams' knowledge, the types of opportunities, and the types of strategies on firm performance.

This study contributes to the entrepreneurship literature examining the effects of specific dimensions of founding teams' knowledge and experience on firm performance. Specifically, it provides new insight into the interaction effects of the types of opportunities and founding teams' knowledge on performance, highlights moderating effects of types of strategies on the relationships between founding teams' knowledge and performance, and sheds light on the interaction effects of types of opportunities, types of strategies, and founding teams' knowledge on performance. The important implication for organization and management is that founding teams' knowledge and experience and the types of opportunities and the types of strategies should be matched. This research suggests that future research should use different data collection methods to obtain data before IPO to examine these relationships in question at the early stage of new ventures. In addition, future research should examine other types of opportunities and strategies.

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