Abstract

This study explores how the founders of high potential ventures acquire the managerial talent required to grow their firms. Founders bring entrepreneurial resources to the firm in many forms, but founders will differ in the amounts of managerial expertise they contribute. Managerial capability can be thought of as the binding constraint that limits the rate of the growth of the firm— the so-called “Penrose Effect” (Penrose 1959: 48). For many firms, the transition from the startup to the growth stage is extremely difficult (Kor 2006), and it is in this transition that managerial expertise is vitally important.

This paper explores firm growth as a dynamic process of managerial talent acquisition within the entrepreneurial team. Using qualitative data collection and analysis techniques, we inductively generated new theory as to how founders acquire managerial talent within their organizations to enable rapid growth.

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