Week 5 (Chapter 9)

Question 1

Liability of Newness

Answer 1

New ventures have a high propensity to fail because of the people involved don’t yet have relevant: experience, skills or network or/and can’t learn and adjust fast enough to their new roles.

Question 2

New-venture team

Answer 2

A group of founders, key employees and advisers that move a new venture from an idea to a fully functioning firm.

Question 3

Accelerators (also incubator programs)

Answer 3

A mentor-based program that provides guidance, support, and limited funding in exchange for equity.

> > Long-term goals are: help the business it supports to grow and become profitably quickly.

Question 4

Advantages of a team

Answer 4

• Bring more talent, resources, and ideas to a new-venture
• Bring a broader and deeper network of social and professional contacts to a new business
• The psychological support that cofounders of a business can offer one another

Question 5

Disadvantages of a team

Answer 5

• If two or more people start a firm as “equals”, conflicts can arise when the firm needs to establish a formal structure and designate one person as the CEO
• If the founders have similar areas of expertise, they may duplicate rather than complement one another
• Team members can easily disagree in terms of work habits, tolerances for risk, ideas over how the business should run, etc.

Question 6

Qualities for succes (+)

Answer 6

1. Higher education
2. Prior entrepreneurial experience
3. Relevant industry experience
4. Broad sociaal and professional network

Question 7

Higher education

Answer 7

Research suggest that important entrepreneurial skills are enhanced through higher education

Question 8

Prior entrepreneurial experience

Answer 8

Founders familiar with the entrepreneurial process are more likely to avoid costly mistakes than founders without similar experience

Question 9

Relevant industry experience

Answer 9

Founders with relevant industry experience are more likely to have:
- better established and professional networks
- more applicable marketing and management skills

Question 10

Homogeneous

Answer 10

The new-venture team consists of people who are very similar in their ares of expertise

Question 11

Heterogeneous

Answer 11

The new-venture team consists of diverse people in terms of their abilities and experiences

Question 12

Is a homogeneous or heterogeneous new-venture team more desirable?

Answer 12

Preference = heterogeneous group; different povs about technology, hiring decisions, competitive tactics, and other important activities will lead to an generated debate and constructive conflict among the founders, reducing the likelihood that decisions will be made in haste or without the airing of alternative povs.

Question 13

The three powers of diversity on performance

Answer 13

1. Diversity of opinions
2. Diversity of expertise
3. Diversity of power

Question 14

Diversity of opinions

Answer 14

Refers to differences among team members in attitudes, values or beliefs about the new venture’s mission, goals and processes.

= positive; stimulates debate and reflection UNTIL it becomes increasingly difficult or time consuming to reach and agree upon decisions

Question 15

Diversity of expertise

Answer 15

Maximum diversity reflects a wide range of expertise among entrepreneurial team members.

= positive; reflects and ability to solve complex problems, be innovative, broaden the search for opportunities and resources.

Question 16

Diversity of power

Answer 16

Reflects the concentration or distribution of power and resources (decision-power, status) in the hands of team members. Maximum diversity of power reflects concentration of power in one member.

= negative; when power is concentrated and not distributed. As this reduces the motivation to contribute equally, leads to reduced information sharing and cooperation, as power and prestige influences behaviors towards more individual than collective actions.

Question 17

Board of directors

Answer 17

A panel of individuals who are elected by a corporation’s share-holders to oversee the management of the firm.

Has: legal responsibility, proceed expert (binding) guidance, lend legitimacy.

Question 18

The formal responsibilities of the Board of directors

Answer 18

1. Appoint the firm’s officers (the key managers)
2. Declare dividend
3. Oversee the affairs of the corporation

Question 19

Advisory board

Answer 19

A panel of experts who are asked by a firm’s managers to provide counsel and advice on an ongoing basis.

Has: NO legal responsibility, NONbinding advice, but can lend legitimacy.

Question 20

Freelancer

Answer 20

A person who is in business for themselves, works on their own time with their own tools and equipment, and performs services for a number of different clients.

Question 21

Virtual assistant

Answer 21

A person who provides administrative, technical, or creative assistance to clients remotely from a home office.

Question 22

Consultant

Answer 22

An individual who gives professional or expert advice.