Founder’s Human Capital and Vision as influencing Factors for the Choice of Leadership Style and Employees in New Ventures

University essay from Högskolan i Jönköping/Internationella Handelshögskolan; Högskolan i Jönköping/Internationella Handelshögskolan

Abstract: Background: New ventures face manifold challenges. Literature has already examined many of the challenges that founders of new firms might encounter during the start-up phase. Studies have been investigating traits of the founders as well as traits of the organizations, and linked them to success or failure of the firm. The areas of founder’s human capital and vision and the firm’s employee selection criteria and leadership style have often been taken into consideration. Nevertheless, there is no framework connecting all these areas with a focus on how they influence each other, leaving criteria as success or failure beside.Purpose: This study aims for creating a framework connecting the areas of start-up-founder’s human capital and vision and the venture’s employee selection criteria and leadership style. It seeks to provide answers to the following research questions: (1) “How does start-up founder’s human capital influence the creation of a vision, the choice of leadership style and the selection of employees?” and (2) “How does start-up founder’s vision influence the choice of leadership style and the selection of employees?”Method: To answer the research questions, a multiple-case study was conducted. We created a topic guide and gathered qualitative data through conducting in-depth interviews. The respondents were mainly operating their new venture in the area of Jönköping. After coding and contextualizing our data, we analyzed it.Conclusion: Human capital was influencing all other areas through either active avoidance or repetition of behaviors already employed in the past. We found major differences of the visions of new ventures. Therefore, we started differentiating between a “business-vision” and a “mission-vision”. “Mission-vision” start-ups choose their employees according to personality and give them a voice in the firm, therefore fostering a transformational leadership style. “Business-vision” start-ups on the other side hire applicants based on skills, to fulfil very defined tasks based on deadlines and therefore performing a transactional approach.

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