Birds of a Feather Get Lost Together? Homogeneity and New Venture Persistence and Performance

This paper makes two types of contributions to research on new venture teams. First, we examine previously neglected aspects of team composition, such as homogeneity and heterogeneity in terms of resource provision and prior start-up experience. Second, we attempt to reconcile conflicting evidence on the relationship between team composition and performance by putting forward the hypotheses that team homogeneity is positively related to short term outcomes whereas team heterogeneity is more effective in the longer term. Using structural event analysis and poisson regression, we examine the demographic and functional homogeneity characteristics of a five year panel study of 410 new venture teams and their relationship to new venture performance (being operational and being profitable) at six and seventy-five months. We find that new venture teams tend to be homogeneous in terms of ascribed characteristics (sex and age). We also find new venture teams homogeneous with respect to start-up experience, which contrasts with earlier findings that new venture teams are heterogeneous in terms of human capital characteristics. We found no evidence that homogeneous teams have improved short-term performance. In line with our hypotheses, teams with heterogeneous work and start-up experience have improved long-term performance. However, teams with homogeneous access to resources are more likely to achieve long-term performance. Interestingly, higher average start-up experience decreased long-term performed. Taken together, the results imply having all team members with start-up experience is the worst combination for long-term performance.