Academic journal article Academy of Entrepreneurship Journal

The Choice of New Venture Partner: The Role of Trust and Familiarity

Academic journal article Academy of Entrepreneurship Journal

The Choice of New Venture Partner: The Role of Trust and Familiarity

Article excerpt


Ever since Reich (1987) shifted attention from the individual entrepreneur to entrepreneurial teams, research on entrepreneurial teams has received growing interest, and studies have clearly provided evidence of entrepreneurial team significance (e.g. Kamm, Shuman, Seeger, & Nurick, 1990; Cooper & Bruno, 1977; Obermayer, 1980; Teach, Tarpley & Swartz, 1986; Chandler, Honig & Wiklund, 2005). Notably, two seminal works have provided explanations for new venture team formation. A decision making process for stages of team formation was outlined in the work of Kamm and Nurick (1993) which suggested that team additions are made to fill resource gaps within the organization. This argument was challenged by Ruef, Aldrich, & Carter (2003), who suggested that sometimes the resource needs of the founder are neglected when choosing team members, and that ascribed or achieved similarities of a potential team member drive the process. But while the explanations of these scholars for team formation appear to conflict, both explanations converge on one point - that trust and familiarity are important in forming new venture teams. For example, Kamm and Nurick (1993) mentioned that founding teams are built on familiarity and trust. Ruef et al. (2003) noted that trust and familiarity appear to be major concerns for founders in the early stages of firm organizing. However, although these studies suggest an important role for trust and familiarity in the process of new venture organizing, this theory has not yet been empirically tested. The current study fills this gap by examining the decision policies of new venture founders.

We make a number of contributions to the literature. First, this research delves into the under-researched area of new venture formation and provides support for the importance of trust and familiarity in a new venture partner choice, and offers a unique context in which to understand trust. Second, this study also reveals the relative importance of the factors of trustworthiness (i.e. ability, benevolence, integrity) in the decision policies of firm founders . In particular, this study demonstrates that in new venture partner decisions, the ability of the potential partner is not always of primary salience. This finding challenges the theory that founders are primarily interested in the abilities of new venture partners and provides a basis for future research in this area. Third, this research shows that a founder's propensity to trust and gender can have moderating influences on the founder's decision policies. Finally, this study makes a methodological contribution. It is one of the first in the entrepreneurship domain to capture trust related decision policies of new venture founders using conjoint analysis. Using this methodology, we were able to capture respondents "in use policies" rather than retrospective accounts of decision policies which could be distorted with recall bias. Also, the use of CPAs makes it possible to design away much of the noise that would otherwise confound empirical research because: (1) the research respondents will have similar types of education and work experience and (2) respondents are all faced with the same decision, wi thin the same industry, and within the same profession.

This paper proceeds as follows: in the next section we discuss the relevant literature on trust and team formation, and we develop our hypotheses. Next, we present the research methodology for this study, followed by a discussion of the results of our data analysis. Finally, we summarize the findings and outline the limitations, future research, and the theoretical and practical implications of our study.



While research on trust has garnered significant interest in organizational studies as a topic of empirical research, this area of inquiry has been characterized as challenging, primarily due to the lack of agreement on the definition of the trust concept. …

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