Two’s Company: Composition, Structure and Performance of Entrepreneurial Pairs

Abstract

We explore the effects of diverse team composition on the survival and growth of new ventures using the Danish Linked Employer-Employee database. To get cleaner measures of diverse team composition, we focus on entrepreneurial dyads, and also investigate the asymmetric hierarchical effects of team composition by distinguishing between the ‘primary’ and the ‘secondary’ member. We complement existing work by showing that heterogeneity in team composition is moderated by the asymmetric hierarchical structure within the team, and that a unidimensional diversity indicator (which is usually applied) fails to capture a number of performance effects of heterogeneous team composition. Pairs of younger individuals have lower survival chances but higher employment growth. Pairs led by a male tend toward ‘jobless growth’ in the sense that they have higher growth of profits and sales but not employment. Family firms have lower employment growth, especially when formed with one’s mother.