New study explores how venture team membership dynamics impact innovation

A recent publication in the Strategic Entrepreneurship Journal has revealed that the composition of a new venture’s team plays a significant role in its ability to innovate. This is crucial for new organizations as it allows them to establish a market presence and compete with established firms.

The study indicates that even the act of changing team membership increases the likelihood of innovation, regardless of the experience gained or lost during the transition. Additionally, while the departure of an experienced founding team member can be detrimental, the turnover brings the potential for creative recombination, resulting in a net positive effect.

“When these episodes occur, they inspire the venture to make new connections between existing information and the current situation the firm is in,” explains co-author Brian C. Fox of Bentley University. “This leads to increased innovative outcomes, and this finding was highly robust.”

The research team, which included Zeki Simsek of Clemson University and Ciaran Heavey of University College Dublin, focused on studying the concept of imprinting in new ventures. Imprinting considers the long-term effects of a venture’s early years on its development trajectory.

The researchers specifically wanted to determine if the founding team members, who serve as sources of inspiration, ideas, and resources, have a lasting influence on the firm’s ability to innovate even after they leave.

The team analyzed 440 new ventures over eight years, tracking the movement of team members. The findings showed that when the company remains static, it can leverage the insights of experienced founding members. However, when these individuals leave, there is an unexpected benefit: the venture can stimulate creativity and spur innovation by capitalizing on team processes associated with membership fluidity.

This presents an opportunity for what the researchers refer to as “reflective episodes,” where companies can carefully consider the competencies already present within the team and how they can contribute to each other.

The paper outlines three ways in which new ventures experiencing member changes can boost innovation: adding new team members with relevant experiences, taking advantage of the opportunity to pause and reflect on team processes during membership changes, and mitigating the disruptive effects of change by using best practices to smooth transitions.

Although teams often change substantially as the venture evolves, companies don’t have to wait for turnover to occur before benefiting from a reflective episode.

“You don’t necessarily have to go through a traumatic experience of losing half your team or gaining two more people to gain these benefits,” says Fox. “You can achieve them on a smaller scale through retreats or rotations that shuffle the team composition to gain a fresh perspective.”

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