Reasons for teamformation insmall firms

555

Management Research NewsVol. 32 No. 6, 2009

pp. 555-566# Emerald Group Publishing Limited

0140-9174DOI 10.1108/01409170910962984

Entrepreneurial teams vsmanagement teams

Reasons for team formation in small firms

Sanna Tihula and Jari HuovinenDepartment of Business and Management, University of Kuopio, Kuopio,

Finland, and

Matthias FinkDepartment of Small Business Management and Entrepreneurship,

Vienna University of Economics and Business Administration,Vienna, Austria

Abstract

Purpose – The purpose of this paper is to answer whether or not entrepreneurial teams andmanagement teams are a common phenomenon in small firms and to identify differences in thereasons for the formation of these different kinds of joint management. Additionally the impact ofjoint management on the performance of small businesses is tested.Design/methodology/approach – To answer the research question a questionnaire survey(n ¼ 119, response rate ¼ 48 per cent) of small firms (20-49 employees) in Eastern Finland wassupplemented by a secondary data collection on financial issues.Findings – The results show that in nearly four-fifths of the firms a team was involved in themanagement. The logistic regression model revealed statistically significant differences betweenfirms with entrepreneurial teams and such with management teams regarding the formation motivesturnover, liability distribution and efficiency. Even though secondary data suggested that the firmsmanaged by management teams were bigger, more profitable and faster growing, the differences werenot statistically significant.Research limitations/implications – This study suggests that teams are common in themanagement of small firms, and that the future research in this field should focus more on the smallfirm context.Practical implications – The importance of teams in the management of small firms has to berealized by entrepreneurs, their employees, the consultants as well as by those who create the legaland institutional condition for the creation and development of businesses.Originality/value – Although the impact of management teams and entrepreneurial teams has beenwidely studied in large-firm settings, the studies in the field of small business are rare. With its multi-perspective approach and its focus on small firms this study breaks new ground in this research field.

Keywords Teams, Entrepreneurialism, Managers, Small enterprises, Finland

Paper type Research paper

IntroductionThis study provides a comparative analysis of entrepreneurial teams and managementteams and focuses on the differences of these two kinds of joint management in smallfirms. It also examines the reasons for team formation and their effects on businessperformance. Here, the term joint management is used as an umbrella term comprisingentrepreneurial teams and management teams. Hence, we speak of joint management ifmanagement tasks are fulfilled by a collection of individuals who are interdependent intheir tasks but who share the responsibility of the outcomes, who see themselves and whoare seen by others as an intact social entity embedded in a larger social entity – the firm.

The importance of teams has been largely recognized in recent management andentrepreneurship research (e.g. Van der Vegt and Bunderson, 2005; Ucbasaran et al.,

The current issue and full text archive of this journal is available atwww.emeraldinsight.com/0140-9174.htm

MRN32,6

556

2003). Several studies have suggested that firms founded and managed by teams areon average more successful than firms founded and managed by single persons(Lechler, 2001; Rosa and Scott, 1999; Vyakarnam et al., 1999; Kamm and Shuman, 1990;Roure and Madique, 1986). Firms with a diverse range of management skills andcompetencies, i.e. management functions covered by individuals in the team, have asignificantly greater propensity to survive (Westhead et al., 1995). Although the impactof teams involved in management has been widely studied in large-firm settings, thestudies in the field of small business are rare. As Welsh and White (1981) put it, ‘‘asmall business is not a little big business’’, and findings cannot be generalized overfirm size. The few empirical studies on management teams and entrepreneurial teamsin small and medium-sized enterprises (SMEs) (e.g. van Gils, 2005; Weinzimmer, 1997;Nicholson and Cannon, 2000; Reuber and Fischer, 1997) have revealed that jointmanagement is more common than earlier believed (van Gils, 2005; Lechler, 2001;Kamm et al., 1990). For example, on the basis of the few empirical studies of theprevalence of teams, about two thirds of SMEs have a management team or anentrepreneurial team (Cooper et al., 1990). Also in this study nearly 80 per cent of allsmall firms were team managed.

Obviously, joint management is most common in large firms, where the size of thefirm requires several managers, and where the firm’s performance demands multipleskills and experiences of its managers. Joint management has, however, become animportant strategic option also in smaller firms, where management teams are evenmore often at the centre of survival, growth and development. In this study, the focus ison small firms, because little is known about joint management in this type of firms.

The aim of this study is twofold: firstly, it examines the commonality of entrepreneurialteams and management teams in small firms (Research question 1). Secondly, it identifiesand compares the reasons for the formation of entrepreneurial teams and managementteams in small firms. Thus, we determine team formation reasons, or antecedents, inentrepreneurial teams and management teams (Research question 2).

The paper is organized as follows: after delimitating the term ‘‘team’’ from itssuperordinate term ‘‘group’’ and defining the terms ‘‘entrepreneurial team’’ and‘‘management team’’, we set out to discuss reasons for team formation against thebackground of relevant literature. Subsequently, we present the design and the resultsof a large-scale empirical study. The logistic regression analysis shows that there arefewer differences in the motives for forming entrepreneurial teams and managementteams than expected. The paper closes with a discussion, directions of further researchand limitations of the study.

Entrepreneurial teams and management teamsKatzenbach and Smith (1993) describe a team as a small number of people withcomplementary skills who are committed to a common purpose, performance goalsand approach for which they hold themselves mutually accountable. Teams are specialtypes of groups, but they rely more than a group on discussion, debate and decision,sharing information and best-practice performance standards. Teams produce discretework products through the joint contributions of their members, being a special formof a group that has highly defined tasks and roles. They also demonstrate high groupcommitment (Katzenbach and Smith, 1993; Tosi et al., 2000, p. 223; Levi, 2001).

The term ‘‘team’’ has largely replaced the term ‘‘group’’ in the literature, but still theword ‘‘group’’ predominates in some studies, because they use ‘‘group’’ as their rootword (e.g. group dynamics, inter-group relations etc.) (Guzzo and Dickson, 1996).

Reasons for teamformation insmall firms

557

Sometimes teams and groups have been separated by the definition and purpose;sometimes they are used interchangeably in the group dynamics literature out ofconvenience. However, not all groups can be considered teams. Katzenbach and Smith(1993) believe that the concept of a team should be limited to a fairly small number ofpeople with complementary skills who interact directly. This helps to distinguishteams from work groups, whose members jointly do the same tasks but who do notrequire integration and coordination to perform the tasks. The most critical element inthis separation seems to be the interdependence (Levi, 2001), which exists when anindividual cannot perform a given task or a set of responsibilities without theassistance of others.

We follow the definition put forward by Cohen and Bailey (1997), who define a teamas a collection of individuals who are interdependent in their tasks, who share theresponsibility of the outcomes, who see themselves and who are seen by others as anintact social entity embedded in one or more larger social systems (e.g. the firm), andwho manage their relationships across organizational boundaries.

A management team is a small group of managers, including the managing directorand the managers from different functional areas and other key persons, who give afirm its general direction and who specialize in running the business. In a managementteam, the managers with complementary skills are at the same organizational level,report to the same person, hold leadership position in the firm, and share informationthat helps them perform their individual jobs more effectively (McIntyre, 1998;Finkelstein, 1992; Keck and Tushman, 1993). Thus, the team members are not onlyresponsible for their own functions, but also ‘‘wear another hat’’ in the firm leadership(Nadler, 1992). The team members meet regularly to make CEO-conducted keydecisions that affect the entire organization or department, and to help the firm toachieve its goals (McIntyre, 1998; Nadler, 1997; Nadler and Spencer, 1997). Althoughthose who are involved in the management of a small firm often hold some equity in thefirm (i.e. a small ownership position), this is not always the case (Stumpf et al., 2002). Inthis study a management team is defined as a team which participates in the firmmanagement, but not in the working groups operating on lower levels or consultants. Itconsists of a minimum of three members, of which at least one operates as anappointed manager (hired outside the firm) without ownership. Teams that have thedescribed characteristics, but only consist of members, who hold a financial stake inthe firm, are referred to as entrepreneurial teams.

An entrepreneurial team is often characterized as two or more individuals withfinancial interest jointly launching, actively participating and developing a business(Kamm et al., 1990; Watson et al., 1995; Cooney, 2005). Team members are involved inpre-start-up activities and they establish and share ownership of the new organization.Watson et al. (1995) argue and add that in an entrepreneurial team individuals jointlyfound a business and are involved in operating it jointly. According to Ucbasaran et al.(2003), members of an entrepreneurial founding team are individuals with an equitystake in the business who have a key role in the strategic decision making of theventure at the time of founding.

Thus, a main difference between a management team and an entrepreneurial teamis shared entrepreneurial risk. In fact, there are differences in the positions of themembers in entrepreneurial teams and management teams: entrepreneurial teammembers hold ownership and control positions, whereas in management teams theywork in leadership positions. Moreover, entrepreneurial team members have a sharedcommitment to each other and to the venture’s future. According to Ucbasaran et al.

MRN32,6

558

(2003), entrepreneurial team members may have a clearer incentive to leverage theirhuman capital to enhance organizational performance.

Reasons for teamworkThe motivation to form teams has been analyzed from a functional perspective(suggesting that people join groups because groups are able to accomplish things thatindividuals cannot accomplish working alone) and an interpersonal perspective(suggesting that working in teams fulfils the social needs of people) (Stewart et al.,1999). For testing whether or not there are different reasons for the formation ofentrepreneurial teams and management teams, we focus on a selection of reasonsbased on a multi-perspective approach.

Environmental factorsThe functional theory of the formation posits that groups and teams are the only wayto survive the demands of the environment (Stewart et al., 1999). External demands,such as more complex organizations, a turbulent environment and succession politics,have accelerated the shift from a single leader to joint management (e.g. Nadler, 1992;Cohen and Bailey, 1997; Levi, 2001, p. 296). As jobs become more complex due totechnology or other factors, teams become a good way to handle the complexity (Levi,2001). Moreover, joint management has a strong ability to attract capital beyond thefounder’s or owner’s resources from private and venture capital backers (Timmons,1999). Some financiers or even the shareholders require an active team in themanagement of the firm in return for the financing.

Poor performance, crisis and survivalThe urge to try something new and to change the course of action increases when theperformance is low (Boone et al., 2004). Literature on organizational decline andturnaround strategies and organizational change has pointed out that poorperformance, troubles and even crises in the firm have been seen as a reason forteamwork in the management of firms (e.g. Spillan and Hough, 2003; Pearson and Clair,1998).

These teams are responsible for planning for the crises before they occur, butsometimes joint management is formed as a reaction to crises (Spillan and Hough,2003). An effective team is seen as one of the few general success factors in SMEs(Ghosh et al., 2001). It is generally recognized that a firm’s joint management takes onparticular importance during periods of declining performance (Lohrke et al., 2004).Boone et al. (2004) expect poor performance to stimulate hiring more dissimilarmanagers, or prevent dissimilar managers from leaving a team. The resulting teamdiversity is assumed to be associated with willingness and openness to change(Finkelstein and Hambrick, 1996). Nonetheless, only a few studies have investigatedthe importance of joint management in turnaround situations (e.g. Lohrke et al., 2004;Mueller and Barker, 1997; Barker et al., 2001).

GrowthThe importance of a team responsible for the management in SMEs has beensuggested to be crucial especially in growth firms (e.g. Wiklund, 1998; Brush andVanderwerf, 1992). An entrepreneur’s ability to build a strong and effective team isseen as one of the key issues of growth (Eisenhardt and Schoohoven, 1990; Vyakarnamet al., 1999) as a small business owner may not have the sufficient knowledge and skills

Reasons for teamformation insmall firms

559

to ensure significant organizational growth (Weinzimmer, 1997). When the firm sizeincreases, more people are needed for effective management (Weltman, 2001). Storey(1994) claims that building a strong team for the management of the SME is seen asone of the four most important key elements of growth and survival.

Profitability and better firm performanceThe benefits of teamwork in management relate to both work and firm performance(e.g. Hunsaker, 2001; Eisenstat and Cohen, 1990). Since the manager’s perceptions arelimited and the job of managing a large or complex organization overburdens a singleindividual, a joint management can significantly improve the managementperformance and this way influence the firm’s performance and success (Vyakarnamet al., 1999; Eisenstat and Cohen, 1990). Thus, an important way of improving thestrategic capacity is through a diverse composition of the team (Jarzabkowski andSearle, 2004). The variety of experience, knowledge and expertise among teammembers provides a synergic effect, which can be applied to the increasingly complexproblems of firms (Eisenstat and Cohen, 1990). However, team diversity may alsoincrease the frequency and intensity of conflicts, which may influence the decisionmaking process and the firm’s performance negatively.

Social issuesAnother set of reasons for teamwork in management includes social issues,companionship, support and status. Companionship can help in problem solving andto diminish demanding working conditions as support arises among the teammembers (Hunsaker, 2001). They allow people to care for each other, provide socialsupport for individuals in times of stress and make the efforts more efficient and thushelp to improve the quality of life and to complete common tasks more quickly (Stewartet al., 1999).

A team responsible for the management of a firm has also a symbolic role. By beinga member of such a team, the individual’s status and esteem is heightened, and themembers are likely to identify with the groups or organizations that enhance their self-esteem (Lester et al., 2006; Li et al., 2002). From an interpersonal perspective, people areseen as having a need for affiliation with others and they join groups to providethemselves with the opportunity to fulfill their needs (e.g. exercising power over others)(Stewart et al., 1999). People may support joining a team, because it gives them theopportunity to receive more than by working alone (Stewart et al., 1999).

Team members are more likely to be committed to the decisions made and theirimplementation because the members are likely to understand and support decisionsthey had a part in determining (Tosi et al., 1999; Eisenstat and Cohen, 1990). Whenpeople are given responsibility, they act in a much more responsible way (Haynes,1997). And a team’s decision is more likely to represent the wide range of interests thatexists in organization. Generally, employees frequently report higher job satisfactionwhen they work in teams rather than independently as individuals (Stewart et al.,1999), which improves staff morale and decreases its turnover. However, it is worthconsidering that not everybody has a need for affiliation with others.

Finally, learning, communication and coordination are factors for shifting from asingle leader to joint management. When many people work on an organizationalproblem, more organization members will see the need for change. Team settingdevelops the skills of the team members and promotes both formal and informallearning in the organization because of their diverse knowledge and skills (Hunsaker,

MRN32,6

560

2001). Common activities, communication and coordination among the major parts ofthe organization would improve if there is teamwork at the top (Eisenstat and Cohen,1990).

MethodologyFor this study small firms with 20 to 49 employees operating in the regions of NorthernSavo, Southern Savo and Northern Karelia were chosen as the relevant population fromthe Salesleads-register maintained by Blue Book TDC Index which is a nationalregister that summarizes information gathered from various sources such as BusinessRegister of Statistics Finland, Suomen Asiakastieto Oy and Finnish TaxAdministration. Firms with less than 20 employees were excluded, as they might nothave an organizational structure that allows for the identification of teams involved inmanagement processes. Firms with over 50 employees were also excluded as theprevalence of management teams automatically increases with the rising formality ofthe teamwork at the top level of management. In firms with 20 to 49 employees teamformation is current in regard of the firm’s life cycle, and multiplicity of different teamsoccurs.

In the Salesleads-register, there were 287 firms. As we were interested inindependently managed firms without direct external influences on their management,some industries like electricity, gas and water supply firms owned by municipalities orcentral-corporation-led retail trades, and subsidiaries of large corporations wereexcluded from the study. These characteristics also made the firms studied morecomparable to each other. The final sampling size was 245 firms. The personsresponsible in the firms participated in the study either by mail or online. After thesecond wave of questionnaires, 119 cases could be included in the statistical analysis,which represents a response rate of over 48 per cent. In addition to the subjective datagathered in the questionnaire survey, also objective information from financialstatements was taken from the Inoa database, which is a public database of Finnishfirms.

Logistic regression analysis was the primary methodological approach (Ben-Akivaand Lerman, 1985). Logistic regression provides a multidimensional picture of thevariables explaining the prevalence of the teams, their connections and interaction tothe examined phenomenon. In the analysis the dependent variable divided the firmsinto the two categories: firms with a management team (0 ¼ management team) andfirms with entrepreneurial teams (1 ¼ entrepreneurial team). The goal was to createone model that avoids an oversimplification of the research object (Vyakarnam andHandelberg, 2005) and in which the characteristics of the firms as well as the reasonsbehind the team formation could be considered as broadly as possible. At the sametime, special attention was paid not to choose irrelevant independent variables (basedon the phenomenon of interest) or not to increase the number of the independentvariables compared to the number of the observations. The independent variableschosen for the logistic regression analysis are featured in Table I.

FindingsThe research revealed the prevalence of teams in the management of the firmsemploying 20-49 persons. 79.8 per cent of the 119 firms participating in the study wereteam managed. 45.3 per cent of these firms had a management team, and 54.7 per centan entrepreneurial team.

Reasons for teamformation insmall firms

561

The logistic regression model explains the researched phenomenon reasonably well, as79.5 per cent of all observations were classified correctly (management teams 62.5 percent, entrepreneurial teams 90.2 per cent). Also the �2-test quantity suggested thereliability of the model was good. As a result of the analysis the variables turnover,liability distribution and efficiency may be seen as statistically significant. Table IIshows the results of the logistic regression analysis.

Firm size as an explaining factor for teamsThe financial statements gathered in this study suggested that the firms managed bymanagement teams were bigger and more profitable than other firms. In addition, theturnover of these firms had been growing more quickly than that of others. The

Table I.Logistic regression

analysis (dependentvariable: managementteams vs other teams)

Independent variables Description of variables

Background characteristicsVocational education 0 ¼ at most college degree/1 ¼ at least polytechnic

0 ¼ Service/1 ¼ Manufacturing0 ¼ No/1 ¼ Yes0 ¼ 5 Meur or under/1 ¼ over 5 Meur

IndustryFamily businessTurnover

Reasons for team formationFirm growth Three-level scale: 1 ¼ Not at all, 3 ¼ Very stronglyControlling the businessa

Liability distributionPoor performanceEfficiencyExpectations of financiers

Note: aA team has been seen important in the firm management

Table II.Logistic regression

analysis (dependentvariable: management

teams vs entrepreneurialteams)

Variables B SE Sig.

Background characteristicsVocational education 0.656 0.573 0.253Industry 0.466 0.532 0.381Family business 0.721 0.575 0.210Turnover 0.986 0.582 0.091*

Reasons for team formationFirm growth –0.429 0.458 0.349Controlling the business 0.286 0.501 0.569Liability distribution –1.191 0.525 0.023**Poor performance 0.754 0.537 0.160Efficiency 1.148 0.570 0.044**Expectations of financiers 0.006 0.583 0.992Constant –1.671 2.297 0.467�2¼ 0.037df ¼ 10, n ¼ 83

Notes: *p < 0.10; **p < 0.05

MRN32,6

562

differences were, however, not statistically significant with any variable, and all firmsparticipating in this study may be considered very profitable (Table III).

Turnover was made a dichotomous variable for the logistic regression model inorder to clarify the tendency towards management teams and towards entrepreneurialteams in firms of different sizes. In the logistic model, the turnover emerged as astatistically significant variable that separated firms from each other. Regarding theturnover in smaller sized firms, management teams were clearly less common thanentrepreneurial teams. In the firms with a turnover of a maximum of 5 million eurosless than one third of the teams were management teams (30.0 per cent), whereas inbigger firms management teams were nearly as frequent as entrepreneurial teams (45.7per cent). This may be considered rather natural, as with the increase in firm size alsothe probability of a more formal management system and activities usually increasesas well (e.g. Lubatkin, 2006) and the owners are likely to hire outside managersresulting in a shift in responsibilities for the firm from the owners (entrepreneurialteam) to a team consisting of professional managers (management team). Often thedevelopment of a firm requires different kinds of skills than the founding of one (Forbs,2005), and for example substantial knowledge of the industry as such is not sufficient,but business skills and visions are required in addition. If the owner does not have thenecessary skills, compensation by hiring knowledge from outside or by shifting theresponsibility to skilled employees is necessary.

Reasons for team formationThe liability distribution was more significantly emphasized as a reason for teamformation behind management teams than behind entrepreneurial teams. Instead,efficiency objectives were significantly more often reasons for the formation ofentrepreneurial teams (Table II). The liability distribution behind the formation ofmanagement teams may tell about the natural growth of the firms and the resultingneed to define the various operations more clearly. In practice this means that theresponsibility for the operations is more clearly decentralized to different personsresponsible for sales, financial administration or production and services. This result issupported by the above-mentioned observations of the prevalence of managementteams in firms with a higher turnover. The liability distribution as a reason for teamformation may thus mean that the operations are developed into a more professionaldirection, in which some key operations and managers responsible for them can clearlybe recognized. However, statistically significant differences between the growth rateand the profitability of the firms could not be observed (Table III).

Formation of entrepreneurial teams because of efficiency objectives are difficult tointerpret. The result may be understood in at least two principal ways: On one hand, itmay be a question of firm financial problems and whose solution requiresstrengthening the operations and the forming of entrepreneurial teams. If those whoare involved in managing the firm also have a stake in the firm, they might rather work

Table III.Means and frequenciesof surveyed firms

Management teams Entrepreneurial teamsn Mean SD n Mean SD

Turnover (1,000 e) 33 6,349.03 6,038.07 41 5,587.83 7,462.53Growth (%) 29 23.29 44.07 39 13.40 21.10Profit (1,000 e) 34 345.68 511.84 42 201.02 418.93

Reasons for teamformation insmall firms

563

together with others in order to secure the value of their investment. Also, thesuggestion that poor performance was considered a more significant reason for theteam formation in the firms managed by entrepreneurial teams than in the firmsmanaged by a management team may refer to this (Table I). However, the differencewas not statistically significant. The objective data did not suggest that the firmswould be financially unprofitable, either (Table III). On the other hand, it may also be aquestion of a much more positive situation, where the firm operates for example in thefield of high technology, and where from the beginning diverse knowledge and team-like methods are required for success. It may also be a question of sharing theownership between several persons, in which case the share of the firm may be amotivating factor and contribute to the achievement of the efficiency objectives.

DiscussionThe results support the conception that joint management is more common in biggerfirms, where managing the operations requires a clear definition of responsibilities andmore formal managing methods. The reasons for the formation of management teamsand entrepreneurial teams were slightly different. The main reason for the formation ofa management team was the sharing of responsibility, whereas the formation ofentrepreneurial teams was influenced by efficiency objectives. According to the results,the formation of management teams is explained by the natural growth of the firmsthan by poor performance or the requirements of the financiers. Entrepreneurial teamsseem to be common in situations where the operations require diverse knowledge fromthe beginning. A poor financial situation did not have a significant role in teamformation, either based on the subjective or the objective data. At the same time, theresults support the previous observations about the positive influence of teams on thesuccess of firms.

This study suggests that teams are common also in the management of small firms,and that the future research in this field should focus more on the small firm context.So far, the formation of management teams and entrepreneurial teams has been seensolely as a decision made by the entrepreneurs (e.g. Nadler and Spencer, 1997;Finkelstein and Hambrick, 1996; Edmondson et al., 2002). However, the formation ofmanagement teams may also be observed through entrepreneurship. In such cases, anentrepreneur-like employee in a small firm may through his/her actions create theprerequisites for growth, and through that for his/her ascending.

We acknowledged the challenges concerning the definitions of management teamsand entrepreneurial teams. However, comparative studies like this are justified,because they may allow a better understanding of the subject at hand. We alsoacknowledged that the examination of the reasons for team formation cannot beinclusive. Moreover, since the study was explorative in its nature, answers to allquestions were in the theoretical discussion could not be determined through theseinitial empirical findings. This limitation also provides opportunities for futureresearch. Issues raised in this study should be examined in more detail from aqualitative point of view. In addition, since the study was restricted to firms in EasternFinland, the results cannot necessarily be generalized across other geographical areas.The firms and especially the entrepreneurs in Eastern Finland, and for example in thecapital of Finland, differ from each other to some extent (e.g. average age ofentrepreneurs). This may have the effect that the results in some other region may bedifferent.

MRN32,6

564

References

Barker III, V.L., Patterson, P.W. and Mueller, G.C. (2001), ‘‘Organizational causes and strategicconsequences of the extent of top management team replacement during turnaroundattempts’’, Journal of Management Studies, Vol. 38 No. 2, pp. 235-69.

Boone, C., van Olffen, W., van Witteloostuijn, A. and De Brabander, B. (2004), ‘‘The genesis of topmanagement team diversity: selective turnover among top management teams in Dutchnewspaper publishing, 1970-1994’’, Academy of Management Journal, Vol. 47 No. 5,pp. 633-56.

Brush, C. and Vanderwerf, P. (1992), ‘‘A comparison of methods and sources of obtainingestimates of new venture performance’’, Journal of Business Venturing, Vol. 7, pp. 157-70.

Cohen, S.G. and Bailey, D.E. (1997), ‘‘What makes teams work: group effectiveness research fromthe shop floor to the executive suite’’, Journal of Management, Vol. 23 No. 3, pp. 239-90.

Cooper, A.C., Dunkelberg, W.C., Woo, C.Y. and Dennis, W.J. (1990), ‘‘New business in America: thefirms and their owners’’, National Foundation of Independent Businesses, Washington, DC.

Eisenhardt, K.M. and Schoonhoven, C.B. (1990), ‘‘Organizational growth: linking founding team,strategy, environment, and growth among US semiconductor ventures (1978-1988)’’,Administrative Science Quarterly, Vol. 35 No. 3, pp. 504-29.

Eisenstat, R. and Cohen, S. (1990), ‘‘Top management groups’’, in Hackman, J.R. (Ed.), Groups thatWork (and Those That Don’t): Creating Conditions for Effective Teamwork, Jossey-BassPublications, San Francisco, CA, pp. 78-86.

Finkelstein, S. (1992), ‘‘Power in top management teams: dimensions, measurement, andvalidation’’, Academy of Management Journal, Vol. 35 No. 3, pp. 505-38.

Finkelstein, S. and Hambrick, D.C. (1996), Strategic Leadership: Top Executives and Their Effectson Organizations, West Publishing, St Paul, MN.

Forbs, D. (2005), ‘‘Are some entrepreneurs more overconfident than others?’’ Journal of BusinessVenturing, Vol. 20 No. 5, pp. 623-40.

Ghosh, B.C., Liang, T.W., Meng, T.T. and Chen, B. (2001), ‘‘The key success factors, distinctivecapabilities, and strategic thrusts of top SMEs in Singapore’’, Journal of Business Research,Vol. 51, pp. 209-21.

Guzzo, R.A. and Dickson, M.W. (1996), ‘‘Teams in organizations: recent research on performanceand effectiveness’’, Annual Reviews Psychology, Vol. 47, pp. 307-38.

Haynes, N. (1997), Essential Business Psychology: Successful Team Management, 1st ed.,International Thomson Business Press, London.

Hunsaker, P.L. (2001), Training in Management Skills, Prentice-Hall, Englewood Cliffs, NJ.

Jarzabkowski, P. and Searle, R. (2004), ‘‘Harnessing diversity and collective action in the topmanagement team’’, Long Range Planning, Vol. 37, pp. 399-419.

Kamm, J.B. and Shuman, J.C. (1990), ‘‘Entrepreneurial teams in new venture creation: a researchagenda’’, Entrepreneurship Theory and Practice, Vol. 14 No. 4, pp. 7-17.

Kamm, J.B., Shuman, J.C., Seeger, J.A. and Nurick, A.J. (1990), ‘‘Entrepreneurial teams in newventure creation: a research agenda’’, Entrepreneurship Theory and Practice, Vol. 14 No. 4,pp. 7-17

Katzenbach, J.R. and Smith, D.K. (1993), The Wisdom of Teams. Creating the High-performanceOrganization, Harvard Business School Press, Bosten, MA.

Keck, S.L. and Tushman, M. (1993), ‘‘Environmental and organizational context and executiveteam structure’’, Academy of Management Journal, Vol. 36 No. 6, pp. 1314-44.

Lechler, T. (2001), ‘‘Social interaction: a determinant of entrepreneurial team venture success’’,Small Business Economics, Vol. 16 No. 4, pp. 263-78.

Reasons for teamformation insmall firms

565

Lester, R.H., Certo, S.T., Dalton, C.M., Dalton, D.R. and Cannella, Jr., A.A. (2006), ‘‘Initial publicoffering investor valuations: an examination of top management team prestige andenvironmental uncertainty’’, Journal of Small Business Management, Vol. 44 No. 1, pp. 1-26.

Levi, D. (2001), Group Dynamics for Teams, Sage Publications, Thousand Oaks, CA.

Li, J., Xin, K. and Pillutla, M. (2002), ‘‘Multi-cultural leadership team and organizationalidentification in international joint ventures’’, International Journal of Human ResourceManagement, Vol. 13 No. 2, pp. 320-37.

Lohrke, F.T., Bedeian, A.G. and Palmer, T.B. (2004), ‘‘The role of top management teams informulating and implementing turnaround strategies: a review and research agenda’’,International Journal of Management Reviews, Vols. 5-6, No. 2, pp. 63-90.

McIntyre, M.G. (1998), The Management Team Handbook. Five Key Strategies for MaximizingGroup Performance, Jossey-Bass Publishing, SF.

Mueller, G.C. and Barker III, V.L. (1997), ‘‘Upper echelons and board characteristics of turnaroundand nonturnaround declining firms’’, Journal of Business Research, Vol. 39, pp. 119-34.

Nadler, D.A. (1992), ‘‘High performance executive teams’’, Corporate Board, Vol. 13 No. 75,pp. 20-25.

Nadler, D.A. (Ed.) (1997), Executive Teams, Jossey-Bass, San Francisco, CA.

Nadler, D.A. and Spencer, L.J. (Eds) (1997), Executive Teams, Jossey-Bass, San Francisco, CA.

Nicholson, N. and Cannon, D. (2000), ‘‘Two views from the bridge: how CFOs and SME leadersperceive top team dynamics’’, European Management Journal, Vol. 18 No. 4, pp. 367-76.

Pearson, C.M. and Clair, J.A. (1998), ‘‘Reframing crisis management’’, Academy of ManagementReview, Vol. 23 No. 1, pp. 59-76.

Reuber, A.R. and Fischer, E. (1997), ‘‘The influence of the management team’s experience on theinternationalization behaviors of SMEs’’, Journal of International Business Studies, Vol. 28No. 4, pp. 807-25.

Rosa, P. and Scott, M. (1999), ‘‘The prevalence of multiple owners and directors in the SME sector:implications for our understanding of start-up and growth’’, Entrepreneurship andRegional Development, Vol. 11 No. 1, pp. 21-37.

Roure, J.B. and Madique, M.A. (1986), ‘‘Linking pre-funding factors and high-technology venturesuccess: an exploratory study’’, Journal of Business Venturing, Vol. 1 No. 3, pp. 295-306.

Spillan, J. and Hough, M. (2003), ‘‘Crisis planning in small businesses: importance, impetus andindifference’’, European Management Journal, Vol. 32 No. 3, pp. 398-407.

Stewart, A., Manz, C.C. and Sims, H.P. (1999), Team Work and Group Dynamics, John Wiley &Sons Inc., New York, NY.

Storey, D.J. (1994), Understanding the Small Business Sector, Routledge, London.

Stumpf, S.A., Doh, J.P. and Clark, K.D. (2002), ‘‘Professional services firms in transition:challenges and opportunities for improving performance’’, Organizational Dynamics,Vol. 31 No. 3, pp. 259-79.

Sutcliffe, K.M. (1994), ‘‘What executives notice: accurate perceptions in top management teams’’,Academy of Management Journal, Vol. 37 No. 5, pp. 1360-75.

Timmons, J.A. (1999), New Venture Creation: Entrepreneurship for the 21st Century, McGraw-Hill,Boston, MA.

Tosi, H.L., Mero, N.P. and Rizzo, J.R. (2000), Managing Organizational Behaviour, 4th ed.,Blackwell Business, Oxford.

Ucbasaran, D., Lockett, A., Wright, M. and Westhead, P. (2003), ‘‘Entrepreneurial founder teams:Factors associated with member entry and exit’’, Entrepreneurship Theory and Practice,Vol. 28 No. 2, pp. 107-27.

MRN32,6

566

Van der Vegt, G.S. and Bunderson, J.S. (2005), Learning and performance in multidisciplinaryteams: the importance of collective team identification’’, Academy of Management Journal,Vol. 48 No. 3, pp. 532-47.

van Gils, A. (2005), ‘‘Management and governance in Dutch SMEs’’, European ManagementJournal, Vol. 23 No. 5, pp. 583-9.

Vyakarnam, S. and Handelberg, J. (2005), ‘‘Four themes of the impact of management teams onorganizational performance: implication for future research of entrepreneurial teams’’,International Small Business Journal, Vol. 23 No. 3, pp. 236-56.

Vyakarnam, S., Jacobs, R. and Handelberg, J. (1999), ‘‘Exploring the formation of entrepreneurialteams: the key to rapid growth business?’’, Journal of Small Business and EnterpriseDevelopment, Vol. 6 No. 2, pp. 153-65.

Weinzimmer, L.G. (1997), ‘‘Top management team correlates of organizational growth in a smallbusiness context: a comparative study’’, Journal of Small Business Management, Vol. 35No. 3, pp. 1-9.

Welsh, J.A., and White, J.F. (1981), ‘‘A small business is not a little big business’’, HarvardBusiness Review, Vol. 59 No. 4, pp. 18-32.

Weltman, B. (2001), J.K. Lasser’s Finance and Tax for Your Family Business, Wiley & Sons,New York, NY.

Wiklund, J. (1998), Small Firm Growth and Performance: Entrepreneurship and Beyond, ArkTryckaren, Jonkoping.

About the authorsSanna Tihula is a Researcher and a Lecturer of Management of SMEs at the University of Kuopio,Department of Business and Management. Ms Tihula holds a Master’s degree in Business andManagement and she is a PhD student. Her main research interests are management teams,management in SMEs, entrepreneurship and family business. Sanna Tihula is the correspondingauthor and can be contacted at: sanna.tihula@uku.fi

Jari Huovinen holds a PhD and Master’s degrees in Entrepreneurship from the University ofKuopio, Department of Business and Management. He has published several journal articles andconference papers concerning entrepreneurship and SME management. His main researchinterests are habitual entrepreneurship, effects of entrepreneurial experience, entrepreneuriallearning and academic entrepreneurship. Currently, he is working at the Confederation ofFinnish Industries EK as an advisor of SME affairs.

Matthias Fink is Assistant Professor at the Department for Small Business Management andEntrepreneurship of the Vienna University of Economics and Business Administration, Austria,where he also received his university degrees in Economics and International Management and aPhD in SME Management and Entrepreneurship. He holds a triannual scholarship (APART –Austrian Program for Advanced Research and Technology) granted by the Austrian Academy ofSciences. Furthermore, he is Senior Researcher at the Research Institute for Co-operation andCo-operatives (RiCC).

To purchase reprints of this article please e-mail: reprints@emeraldinsight.comOr visit our web site for further details: www.emeraldinsight.com/reprints