New ventures: how team motivation affects financial outcomes

This paper contributes to understanding the impact of entrepreneurial team composition on new venture performance. Different types of entrepreneurship motivation among founding team members are defined. Using a relatively recent theory as a framework (i.e., Self-Determination Theory), the authors group these motives into two categories: autonomous and controlled motivation. The business impact of the level of each type of motivation within the team, as well as the impact of having team members with different motivational drivers is examined. New venture performance is modelled in two different ways: financial performance (i.e., ROA) and innovation performance. The analyses are based on 66 founding teams active in diverse activity sectors. The teams represent a total of 142 business founders. Data was collected through structured interviews, a company questionnaire, and a secondary data source (i.e., certified financial statements). Results confirm that the level of autonomous motivation within the team contributes to start-up financial performance whereas the level of controlled motivation hampers innovation performance. No direct effects of diversity of team member motivation on start-up performance were discovered. This is one of the first papers to study multiple firm performance effects of the composition of entrepreneurial founding teams in terms of motivation.