The Importance of Vertical and Shared Leadership within New Venture Top Management Teams: Implications for the Performance of Startups
Posted: 11 Nov 2009
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
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