Founder Inventors and their Investors: Implications for Firm Survival and Growth

Elisabeth Mueller, German Graduate School of Management and Law

Many new firms are created by founders who possess sophisticated technical skills. As a firm progresses along its life cycle, the founders’ responsibilities may change and their focus may shift. Adopting a competence-based perspective, we contend that the involvement of founders in research and development provides a unique technical competence that is idiosyncratic to a firm and critical for the firm’s performance. We further propose that this relationship is investor-specific. To test our hypotheses, we used panel data drawn from 1,467 firms. We found that founder involvement in R&D increases survival rates and that the impact of founder involvement on growth is positive and contingent on the type of investor. More specifically, venture capitalists are particularly adept at leveraging the founders’ engagement in inventive activity, which increases a firm’s success. Furthermore, firms that are financed by venture capitalists tend to expand their top management team, which further supports the positive effect that founder involvement in R&D has on firm growth. This moderating effect is much lower in magnitude among firms financed by other types of equity investors.

About the speaker
Elisabeth Mueller is professor for entrepreneurship and family firms at the German Graduate School of Management & Law in Heilbronn, Germany. She is adjunct professor at the Centre for Transformative Innovation at Swinburne University, Melbourne, Australia and research associate at the Centre for European Economic Research (ZEW) in Mannheim, Germany. Currently, she is also a board member of the Asia-Pacific Innovation Network. Elisabeth obtained her PhD from the London School of Economics, UK and worked as post-doc at ZEW before joining Frankfurt School of Finance & Management as professor of innovation management. Her research focuses on innovation in China, organization of R&D in young firms, the management of intellectual property, and the financing of innovative firms. She presented her research in international organizations, such as the OECD and WIPO. Throughout a two-year period, she served as vice-president of the European-wide research network “Science and Technology Research in a Knowledge-based Economy (STRIKE)”. Her research has been published in international journals, such as Research Policy, Review of Finance, Journal of Economics & Management Strategy, and Industrial and Corporate Change. She has been visiting researcher at the University of Melbourne, Australia and Boston University, USA.

Venue: Conference room (room 0.16 & 0.17)

Date: 23 February 2016

Time: 12:30 - 13:30