This project will explore the impact of the number of owner-managers in a business and its ambition, measured in a variety of ways, including growth expectations, export propensity and intensity, and innovativeness. It also looks at the impact of owner-manager education level and business complexity on this relationship.

The project will commence with a meta-analysis of studies linking team size to business performance. The project will then employ the combined 2004 to 2015 UK Global Entrepreneurship Monitor (GEM) database to test hypotheses that link ambition and team size.

Previous work has tended to treat team size as a control variable (a constant throughout the course of the investigation), but research on cognitive and affective conflict within teams generates different hypotheses on the effects of team size on performance. This issue has not been satisfactorily tested empirically, with most studies being conducted in the US and on high technology firms.

We would expect the complexity of the business to affect the relationship between team size and ambition. Ambitious businesses in complex environments are more likely to need larger team sizes to address these complexity issues, and more highly educated owner-managers. The UK GEM database is large enough to test such hypotheses for both early-stage entrepreneurs and established entrepreneurs.

Stakeholder meeting

An initial stakeholder meeting was held to discuss this project on 16th May 2016. A brief presentation from Jonathan Levie began the session providing an overview of the main focus of the study, a description of the data to be used and highlighting some of the potential contingencies which might be anticipated. Surprisingly little prior work has been done on team size and success. The study would be in two parts: an initial meta-analysis of prior work and then an empirical element.

Discussion centred on the measures of ‘success’ and ‘ambition’ available in the GEM data to be used for the study. It was also recognised that the sectoral context would be very important in determining optimal team size, as would the stage of development of the business. Older firms in more complex industries might need a larger team size. Other factors such as diversity would also be difficult to separate empirically from team size.

View the Stakeholder meeting presentation. May 16th 2016 here

Project Seminar – December  2016

The ERC held a project day on 13th December 2016 at the WBS offices in The Shard. The day was split into two sessions. In the morning we discussed the findings relating to the projects we have coming to a close in our current core research programme. The event was attended by over 40 stakeholders, and generated interesting discussion and useful feedback to help inform the research.

Project 5  – Team size and entrepreneurial ambition in the UK presented their findings.

In the first stage of this project we provide a clear summary of the effect of top managerial teams (TMT) size and diversity on the performance of new ventures and SMEs with a meta-analysis of the previous empirical studies conducted on this topic. Despite the wide range of previous results, meta-analysis techniques can help to generalise from diverse samples and studies, identifying possible factors driving the heterogeneity in the results of empirical studies, and present key findings that are statistically robust.

We start by providing the results of an up-to-date literature search for studies of new ventures and SMEs that include measures of TMT size and/or diversity and firm performance published between 1990 and 2016. Second, we examine how different definitions of TMT size and diversity affect outcomes on several measures of firms’ performance, using meta-analysis techniques to conduct statistical tests on these relationships. Third, we explore why point estimates vary, including reasons such as different sample sizes, control variables, moderating effects, research focus and estimation techniques used in these studies. Finally, we conduct several robustness tests in order to check the statistical consistency of our analysis.

The second stage of the project seeks to understand the role of team size in the performance outcomes of both early-stage and established businesses in the UK using data from the UK Global Entrepreneurship Monitor (GEM). Team size is defined as the number of individuals who both own and manage the business and whilst this is used as the main predictor of performance, the effects of the complexity of the business and education level of the owners are also considered as important moderators of the relationship. The performance outcomes are measured in a number of ways to include growth expectation, export propensity, export intensity and product/market innovation.

The main findings are that more educated founders with larger teams in knowledge-based sectors are more likely to innovate in early-stage ventures and more likely to export in established ventures. The former findings are consistent with the results of the meta-analysis for new ventures and high tech firms. The latter is also supported through the meta-analysis which suggests a link between several different types of team diversity (ethnic, gender, functional) and internationalization of SMEs; team diversity expected to rise as team size increases. From a policy perspective the results suggest that encouraging larger, diverse teams with different backgrounds and experience may boost innovation, firm growth and internationalization and generate higher returns to the economy.

Click her to view Project 5 final presentation

CompletionNovember 2016
KeywordsTeams, leadership, ambition, SME, growth
Project Lead Jonathan Levie

We are always happy to receive feedback from stakeholders on our research. If you would like to submit a comment, or  you would like to be involved in future ERC research events, please email Dr Vicki Belt, Deputy Director – impact and Engagement.