Abstract

Effectively identifying and recruiting valuable team members are very important decisions that a founder makes when starting a new venture. The time consuming nature of this process encourages the use of cognitive shortcuts rather than extensive research to reach a conclusion concerning how valuable potential team members will be to the venture. Though cognitive shortcuts have been examined in the literature, we still know very little concerning the contextual factors which encourage such behavior and the impact that the use of cognitive shortcuts has on team formation and startup success. We argue that environmental uncertainty, market feedback, and industry competitiveness promote the use of cognitive shortcuts when selecting a new venture team and adversely influence assessments of co-founder value. We outline the factors which encourage the lead founder to make decisions based on the social attractiveness of potential team members rather than objective skill based criteria. In addition, we develop theory explaining when these shortcuts will be most impactful on the venture’s future success.

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