Antecedents, Moderators, and Performance Consequences of Membership Change in New Venture Teams

TLDR: In this paper, the authors examined whether environmental and internal team factors influence the stability of emerging venture teams, as well as whether team stability has an impact on firm performance, and found that turnover rates are the result of both external environmental and team composition factors.

Abstract: This study examines whether environmental and internal team factors influence the stability of emerging venture teams, as well as whether team stability (or instability) has an impact on firm performance.Another purpose is to determine whether the effects of adding or dropping team members depend on environmental dynamism and the firm's development stage. The first several hypotheses suggest that firms with large, heterogeneous initial teams are more likely to experience additions and departures, as are firms in a later stage of development and faced with industry dynamism.While team departures are expected to impair performance and additions are expected to improve it, the relationship between turnover and performance is expected to be moderated by task environment dynamism and the organizational development stage.Data from a longitudinal study of 408 emerging firms in Sweden and from a cross-sectional study examining the first five years of 124 new enterprises in the Rocky Mountain Region of the United States are used to test these hypotheses. The results are largely supportive of the hypotheses and lead to the conclusion that new firms benefit from large initial teams.Findings also suggest that turnover rates are the result of both external environmental and team composition factors. (SAA)