The Importance of Vertical and Shared Leadership within New Venture Top Management Teams: Implications for the Performance of Startups

Posted: 11 Nov 2009

See all articles by Michael D. Ensley

Michael D. Ensley

Rensselaer Polytechnic Institute (RPI) - Lally School of Management & Technology

Keith M. Hmieleski

Texas Christian University

Craig Pearce

Claremont Colleges - Claremont Graduate University

Date Written: 2006

Abstract

Teams and team leadership have become importantareas of research. This study examines both shared and vertical leadership inthe top management teams of new ventures; in such a context, the effects ofshared and vertical leadership on firm performance are likely to be easily seenbecause of the linkage between entrepreneurship and leadership, and leadershipis likely to have a particularly strong impact on firm performance. The twotypes of leadership are distinguished and merits of each described. The study was based on two sample sets: one of 168 managers from 66 firmsdrawn from the annual Inc. 500 list of fastest growing U.S. startups; the otherof 417 executives from 154 firms drawn from the Dun & Bradstreet MarketIdentifiers database. Measures of leadership behavior and growth weredevised. The hypotheses consideredwhether more traditional vertical leadershipby the firm's top executive is related to the firm's growth rate, or whethershared leadership among the members of the top management team is related tothe firm's performance. The hypothesis that vertical leadership, in whichthe more directive, transactional, transformational, and empowering the firm'stop leader is, the higher the firm growth rate will be, is only partlysupported. That shared, dispersedleadershipwill result infirm growth is supported. The hypothesis was also supported which posits that shared leadership in newventure top management teams will account for a significant amount of variancein new venture performance above and beyond what is accounted for by thevertical leadership of the new venture top management leader. Althoughboth sources of leadership were important predictors of new ventureperformance, shared leadership was found to be an especially effectivepredictor. Thus, the study demonstrates the value of shared leadership in a newcontext. (TNM)

Keywords: Firm growth, Leadership styles, Startups, Firm management, Management techniques, Management teams, Firm performance

Suggested Citation

Ensley, Michael D. and Hmieleski, Keith M. and Pearce, Craig, The Importance of Vertical and Shared Leadership within New Venture Top Management Teams: Implications for the Performance of Startups (2006). University of Illinois at Urbana-Champaign's Academy for Entrepreneurial Leadership Historical Research Reference in Entrepreneurship, Available at SSRN: https://ssrn.com/abstract=1503852

Michael D. Ensley

Rensselaer Polytechnic Institute (RPI) - Lally School of Management & Technology ( email )

110 8th St
Troy, NY 12180
United States

Keith M. Hmieleski

Texas Christian University ( email )

Fort Worth, TX 76129
United States

Craig Pearce

Claremont Colleges - Claremont Graduate University ( email )

150 E. Tenth Street
Claremont, CA 91711
United States

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