How entrepreneurial team informational and social category faultlines affect new venture performance: A conservation of resources perspective

Abstract

The topic of entrepreneurial team faultlines has been gaining ground in entrepreneurship research, as it provides novel insights into the entrepreneurial team composition. However, our understanding of how entrepreneurial team faultlines affect new venture performance remains underdeveloped, especially concerning the different effects between informational and social category faultlines. Drawing on the challenge-hindrance stress framework and conservation of resources theory, we develop and test a model to explore the mechanisms underlying the effects of the two types of faultlines on new venture performance. On the one hand, informational faultlines, serving as initial resource gains, are positively associated with team-shared challenge stress, which in turn increases new venture performance in a sort of gain spiral. On the other hand, social category faultlines, serving as initial resource losses, are positively associated with team-shared hindrance stress, which in turn decreases new venture performance in a loss spiral. The results from 102 Chinese entrepreneurial teams comprising 399 members support our hypotheses. By clarifying the contrasting impacts of informational and social category faultlines within entrepreneurial teams and by revealing the mediating effects of team-shared stress, this study contributes to a better understanding of how entrepreneurial team composition and stress influence new venture performance.