The coevolution of technology firms and founders

Abstract

Prior research cannot explain the surprising fact that some technology firms attain spectacular growth with seemingly inexperienced founders at the helm. Informed by a cognitivist perspective, prior research in entrepreneurship explores founders' epistemology, such as knowledge and skills, and investigates their interaction with firms to explain their influence on firm growth. This framing misses the reciprocal influence between firm growth and founder development. In contrast, informed by a sociocultural perspective, my research investigates the founder’s ontology and the mutual constitution of the founder and the firm. My research draws on practice theory and uses habitus as a sensitizing concept. I build a theory that explains how the dispositional toolkit of a founder evolves with, and contributes to, firm growth. Based on three in-depth case studies of technology companies, I show how technology firms and their founders coevolved. These firms influenced the development of their founders when they used founders as resources in different aspects of business and placed them in changing relationships with others. In turn, tech founders influenced the growth trajectory of their firms when they performed day-to-day practices of business. My grounded theory suggests that founders and firms coevolve in a mutually constitutive relationship. Firm growth changes the conditions under which business practices occur. The founder develops by becoming the resource the changing contexts demand. Furthermore, a growing firm deposits new dispositions in the founder. In practice, situational cues activate a specific disposition, regulating how the founder improvises. The founder’s improvisation in turn influences firm growth. My study advances entrepreneurship research, accounting for structural influences as well as human agency, thus contributing to a previously missing understanding of the coevolution of founders and firms. My study also contributes to practice by producing insights into founder development and firm growth that are relevant for entrepreneurs, board members, and educators.

Keywords: entrepreneurial learning, entrepreneurship, firm growth, founder development, habitus, high technology venture, leadership, leadership development, organizational development, practice theory, startup.