Understanding Entrepreneurial Teams and Governance Effects on Growth Strategy Adopted by Privately-Owned Chinese Startups

Abstract

This paper addresses how entrepreneurial teams and governance influence the choice of a risky growth strategy—hypercompetitive strategy—adopted by privately-owned Chinese startups. Two specific entrepreneurial teams are analyzed: the nested entrepreneurial team and the emergent entrepreneurial team. In the context of Chinese privately-owned startups, the nested entrepreneurial team structure is more likely to support the choice of hypercompetitive growth strategy than the emergent structure. Two governance mechanisms are examined: ownership structure of the nested entrepreneurial team and board structure. The lead entrepreneur of the nested team has an incentive to acquire a dominant ownership stake in the team, which strengthens the relationship between the nested team structure and the choice of hypercompetitive growth strategy. Meanwhile, an independent board structure is likely to weaken this relationship.