Experience-Based Top Management Team Competence and Sustained Growth

Abstract

This paper develops and tests a model of multilevel experience-based top management team competence and its effects on a firm's capacity of entrepreneurial growth. The model incorporates the individual and additive effects of firm, team, and industry levels of managerial experience and the conflict effects of combining multiple levels of experience. Theoretical arguments are tested in a longitudinal sample of entrepreneurial firms from the medical and surgical instruments industry. The results indicate that founders' participation in the top management team and managers' past experience in the industry contribute to the competence of the team in seizing new growth opportunities. The results also show that, because of conflict effects, the positive effect of founders' participation in the management team on the rate of growth weakens as either the shared team-specific experience or industry-specific managerial experience in the team increases. For practitioners, the most important implication is that for sustained growth, entrepreneurial firms should learn to balance different levels of managerial experience in the top management team. One way to achieve this balance is to retain valuable founder resources in the team while avoiding high levels of shared team-specific experience and industry-specific managerial experience.

Dance with the one that brought you? Venture capital firms and the retention of founder‐CEOs

“…Evidence regarding the performance benefi ts of founder-CEO retention remains quite mixed. Some studies fi nd that replacing a founder-CEO enhances performance outcomes Certo et al, 2001;Hambrick and Crozier, 1985), while others fi nd no signifi cant performance differences (Daily and Dalton, 1992;Willard, et al, 1992), and yet others fi nd benefi ts to founder-CEO retention (Fischer and Pollock, 2004;Forbes, Korsgaard, and Sapienza, Forthcoming;He, 2008;Jayaraman et al, 2000;Kor, 2003;Nelson, 2003).…”

Horizontal and Vertical Firm Networks, Corporate Performance and Product Market Competition

“…From a knowledge based view, firms might acquire scarce and valuable knowledge and experiences through the co-optation of outside directors. This collaboration then improves the competences of the entire board (Grant 1996a, Kor 2003, Grant and Baden-Fuller 2004. Relevant factors can include industry-specific knowledge or experiences regarding new technologies, competition or regulation issues.…”

Sustainability in SMEs: Top Management Teams Behavioral Integration as Source of Innovativeness

“…[54] emphasized the importance of TMTs' past experiences in pursuing sustainability. [55] highlighted the critical role of TMTs' attitude and their broad awareness of their firms' sustainability orientation.…”

“…Following [10], we calculated the average tenure reported by all members of a TMT. Because the experience levels of individuals influence their sustainability orientation [54,82], we controlled for three types of respondent experience [84].…”