Entrepreneurial organizing activities and nascent venture performance

This research provides an improved understanding of how ventures successfully organize via resource allocations. Conceptually, we apply elements of action theory to account for resource trade-offs that occur as entrepreneurs make decisions about adding staff members to boundary spanning, technical core, and management functions. We then model how these allocation decisions differentially impact nascent venture performance. Empirically, we test our model with a sample of 2484 entrepreneurs captured in the Kauffman Firm Survey, a longitudinal dataset that tracks a random sample of US startups over an 8-year period. Results from dynamic panel estimation reveal evidence of both performance penalties and performance boosts as the result of entrepreneurs adding staff to specific areas, revealing optimality in specific configurations of entrepreneurial organizing elements. Plain English Summary A key implication of this study is that, in nascent ventures, resource allocation trade-offs must be made and how these are managed, via entrepreneur organizing decisions, is influential for venture performance. Specifically, we find that entrepreneurs should place a high priority on adding sales and production unit employees as these additions have a positive effect on performance. At the same time, they may place a lower priority on hiring non-owner management employees because such additions have a negative effect on performance.