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Beyond the Startup Stage: The Founding Team’s Human Capital, New Venture’s Stage of Life, Founder–CEO Duality, and Breakthrough Innovation

Author

Listed:
  • Daniel Tzabbar

    (LeBow College of Business, Drexel University, Philadelphia, Pennsylvania 19104)

  • Jaclyn Margolis

    (Graziadio School of Business and Management, Pepperdine University, Los Angeles, California 90045)

Abstract
Using a unique longitudinal study of U.S. biotechnology ventures, we advance extant research by showing that a founding team’s educational heterogeneity and prior founding experience have a positive and significant effect on the likelihood of a firm’s creating breakthrough innovation. However, we demonstrate that these relationships depend on the firm’s stage of life and decision-making structure as reflected in its founder–CEO duality. Specifically, we show that the positive effect of a founding team’s human capital is stronger in the growth stage than the early stages of a startup. While founder–CEO duality increases the positive effect of the founding team’s human capital in the startup stage, during the growth stage, such a structure reduces the impact of the founding team’s human capital. Therefore, to fully appreciate the effect of human capital on a venture’s success in breakthrough innovation, we must consider both the firm’s stage of life and its decision-making structure. As such, our theory provides a meeting ground for economists and organizational theorists on issues associated with human capital, founder’s power, the life cycle of new ventures, and technological entrepreneurship.

Suggested Citation

  • Daniel Tzabbar & Jaclyn Margolis, 2017. "Beyond the Startup Stage: The Founding Team’s Human Capital, New Venture’s Stage of Life, Founder–CEO Duality, and Breakthrough Innovation," Organization Science, INFORMS, vol. 28(5), pages 857-872, October.
    • Handle: RePEc:inm:ororsc:v:28:y:2017:i:5:p:857-872
    DOI: 10.1287/orsc.2017.1152
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    References listed on IDEAS

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