Experience-Based Top Management Team Competence and Sustained Growth

Abstract

This paper develops and tests a model of multilevel experience-based top management team competence and its effects on a firm's capacity of entrepreneurial growth. The model incorporates the individual and additive effects of firm, team, and industry levels of managerial experience and the conflict effects of combining multiple levels of experience. Theoretical arguments are tested in a longitudinal sample of entrepreneurial firms from the medical and surgical instruments industry. The results indicate that founders' participation in the top management team and managers' past experience in the industry contribute to the competence of the team in seizing new growth opportunities. The results also show that, because of conflict effects, the positive effect of founders' participation in the management team on the rate of growth weakens as either the shared team-specific experience or industry-specific managerial experience in the team increases. For practitioners, the most important implication is that for sustained growth, entrepreneurial firms should learn to balance different levels of managerial experience in the top management team. One way to achieve this balance is to retain valuable founder resources in the team while avoiding high levels of shared team-specific experience and industry-specific managerial experience.