Past research shows that a variety of founding team characteristics, such as team size, average age, years of experience, etc. are positively correlated with new venture performance (Cooper and Bruno, 1977; Eisenhardt and Schoonhoven, 1990). However, these previous studies do not explain why teams with similar experience, age, etc. produce dramatically different results, and they do not explain how founding team characteristics impact new venture performance.

This study examines the impact of founding team on new service venture performance by applying upper echelons theory (Hambrick and Mason, 1984) from a resource-based perspective. From literature and our empirical grounding case studies, we identified three founding team capabilities – marketing capability, market-linking capability and design capability – as the key sources, and we also indentified two positional advantages - scalability and protectability - that a new service venture needs to create to achieve superior performance. We conducted an empirical study to test the theoretical model.