By Martin Murmann
Identifying, recruiting and retaining the right employees are among the most important tasks in the formative stages of a new business—and among the most challenging. But what kind of hires help ensure a start-up’s success?
In a joint paper with Bettina Müller, we aim to better understand the relationship between new ventures’ innovation success and the human capital of their employees. We analyze how the skills of employees relate to young firms’ likelihood of introducing new-to-the-market products or services and how that relationship varies depending on the skills of the founders.
We concentrate on two types of skills that are frequently referred to as the most important ones for the innovation success of a young firm: business skills and technical skills.
Our empirical analyses show that companies that are equipped with both business and technical skills are disproportionately more likely to introduce new-to-the-market innovations than firms that have only one of these skills. Firms profit disproportionately from a mix of business and technical skills when the founder has technical knowledge and employs additional business experts. By contrast, we find no evidence of complementarity either when business and technical skills are balanced within a founding team, or when a founder with business skills hires employees with technical skills.
We suspect the costs of skill diversity are higher within the founding team, which has to agree on a joint strategy, than between founders and employees.
One theory for why technical skills seem to matter more for a founder is simply that the average technical founder has better business skills than the average business-trained founder has technical skills.
Our study confirms the view that the founder’s choice of employees is crucial for the success of a new venture. With respect to innovation, it seems desirable for technically trained founders to augment their firms’ knowledge bases by hiring employees who are trained in business.
Martin Murmann is a researcher at the Center for European Research Mannheim, the Institute for Employment Research Nuremberg and the University of Zurich.
1 comment
Mr Murman & Ms Müller: No examples = no credibility.