December 14, 2005
Entrepreneurial Teams
Posted by Gordon Smith

GoogleteamLast week INSITE sponsored a talk by Mary Zellmer-Bruhn, who is an Assistant Professor in the Strategic Management and Organization Department of the Carlson School of Management at the University of Minnesota. She is working with colleagues there on issues relating to the formation of entrepreneurial teams. For example, they have written a paper entitled "Entrepreneurial Team Formation: An Exploration of New Member Addition" that examines various theories about new member addition. They ask: why do entrepreneurial teams choose particular new members? Perhaps because they seek to assemble certain resources (e.g., human or social capital) that will increase the likelihood of team success. Perhaps because of interpersonal attraction or the desire to make a social connection. Or perhaps some combination of motivations. Zellmer-Bruhn and her colleagues have been interviewing entrepreneurs in search of answers, but retrospective accounts are pretty muddled. Their current work attempts to identify entrepreneurs at an earlier stage, thus enabling prospective work.

Understanding teams is a burgeoning area of entrepreneurship research, inspired by the recognition that the "heroic entrepreneur" is largely mythical. Practically speaking, all successful entrepreneurs work in teams. It seems to me that this fact holds some potential interest for legal scholars. The structure of an entrepreneurial team must be influenced by available legal forms. Consider this:

Henry Ford has an idea for a car. The Dodge brothers have a machine shop. They want to form a relationship. What are the options?

Notice that your answer to that question likely involves a list of legal relationships: partners; employer-employee; principal-independent contractor; shareholders; joint venturers; etc. We could abolish all of these forms and allow people to create relationships from scratch, but it wouldn't take long before patterns started to emerge. At some point, we would give names to the patterns, and voila! We would have legal forms again. As a result, I assume that law must have something interesting to say about the composition and structure of entrepreneurial teams. (Or not. Maybe law just reduces the transaction costs of contracting and doesn't affect the shape of teams at all.)

I wonder: does the menu of legal forms vary enough from one country to the next that we might think of some countries as being superior to others in their ability to encourage entrepreneurial team formation?

UPDATE: Extra credit for the person who can identify all three people in the photo above. Click the photo for a bigger view. (By the way, are they a team?)

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