Beyond the startup stage: The founding team's human capital, new venture's stage of life, founder-CEO duality, and breakthrough innovation

Using a unique longitudinal study of U.S. biotechnology ventures, we advance extant research by showing that a founding team's educational heterogeneity and prior founding experience have a positive and significant effect on the likelihood of a firm's creating breakthrough innovation. However,we demonstrate that these relationships depend on the firm's stage of life and decision-making structure as reflected in its founder-CEO duality. Specifically, we show that the positive effect of a founding team's human capital is stronger in the growth stage than the early stages of a startup. While founder-CEO duality increases the positive effect of the founding team's human capital in the startup stage, during the growth stage, such a structure reduces the impact of the founding team's human capital. Therefore, to fully appreciate the effect of human capital on a venture's success in breakthrough innovation, we must consider both the firm's stage of life and its decision-making structure. As such, our theory provides a meeting ground for economists and organizational theorists on issues associated with human capital, founder's power, the life cycle of new ventures, and technological entrepreneurship.