New venture evolution and managerial capabilities

This study examines factors influencing changes in the top management of start-up firms. Whereas a significant amount of research has examined top management transitions in established firms, we know much less about the factors influencing the evolution of top management capabilities in a new firm. Our research examines these issues in a sample of new ventures founded from 1983 through 1995, examining each firm for seven years after its founding to evaluate the conditions that influence a firm's changes in top management. Results indicate that top management team changes occur in cases of very low or very high firm growth, but are mitigated by a functionally diverse top management team. Power and control of inside and outside constituencies also affect changes in top management, with venture capital ownership and board representation increasing changes in top management, and managerial ownership decreasing changes.