The importance of the transition from initial entrepreneurial management to more bureaucratic modes of leadership has long been examined in scholarly literature (e.g., Gray & Ariss, 1985; Sexton & Bowman, 1986; Smith & Miner, 1983). As new ventures age, many founders are replaced by more experienced CEOs (Boeker & Karichalil, 2002). Building on the premise that a startup’s value can be diminished by founders who control too many business decisions as the venture grows (Wassernan, 2016), we investigate how the process of bricolage influences this phenomenon. Since bricoleurs typically take advantage of local knowledge and local resources such as material, labor, and skills (Desa & Basu, 2013), we posit that their leadership capabilities are likely to diminish as the venture grows. Specifically, we offer a signaling explanation for why investors might offer higher IPO valuations to ventures that have replaced their bricoleur founders.
Creek, Steven A. and Warnick, Benjamin J.
"FROM HUMBLE BEGINNINGS: HOW BRICOLEUR FOUNDERS IMPACT VENTURE CAPITAL FINANCING AND IPO PERFORMANCE (INTERACTIVE PAPER),"
Frontiers of Entrepreneurship Research: Vol. 37
, Article 13.
Available at: https://digitalknowledge.babson.edu/fer/vol37/iss16/13