Yerodin Sekou Bermiss's research while affiliated with University of Texas at Austin and other places

About half of all new ventures are team-based, with most teams consisting of only two people and very rarely more than three. Most teams emerge from relations between people who already know one another and thus they are deeply embedded in a broadly shared social environment. We might think that people already familiar with one another would have an easy time forming a venture, but representative studies of emerging ventures in the United States (and elsewhere) have revealed that teams often sub-optimize when it comes to self-organizing. In Howard’s research with Tiantian Yang, using the Panel Study of Entrepreneurial Dynamics (PSED), they have investigated several governance and organizational issues involving teams. Their research, plus Howard’s research on entrepreneurial teams emerging from the maker movement, shows that the founding context heavily affects the dynamics of team formation. First, decisions about managing the new venture are often colored by gender, especially in home-based startups and families with small children. Second, important decisions are often left informal and implicit, with mixed consequences. Formal ownership agreements tend to somewhat mitigate the effects of gender bias and result in larger financial contributions from team members with equity in the business. Without formalized agreements, other team members are very sensitive to the amount of resources contributed to the startup by the lead founder. Formalized agreements, together with other activities that consolidate organizational routines, have a major impact on teams’ survival. Third, financial contributions by team members are consequential for startup survival, but the amount required to make a difference is surprisingly small and there are diminishing returns to additional contributions. Fourth, putting effort into organizing activities goes a long way toward offsetting lower initial investments. Fifth, technology-based startups make expertise and skills more salient as criteria for assembling a team and hiring employees. The great majority of new ventures remain small and looking at them through the lens of small group processes helps us understand why!