Exploring the sources of knowledge diversity in founding teams and its impact on new firms’ innovation

Abstract

This paper studies the relationship between founding team knowledge diversity and firms’ innovative performance. We posit that knowledge diversity entails two dimensions: a team dimension and an individual dimension. In particular, we argue that founding team knowledge diversity can derive both from the presence of founders with different knowledge backgrounds, and from the presence of similar jack-of-all-trades (JOTs). We suggest that knowledge diversity is positively associated with innovation, especially when diversity comes from founders with different knowledge backgrounds, instead of coming from many JOTs. Furthermore, it matters more for firms whose knowledge base is oriented towards technical and scientific applications, as opposed to firms with a generalist, business-oriented knowledge base. We provide support to these propositions relying on a study of 1,800 newly established firms in Europe.