Title

Resource Contribution and the Distribution of Equity in Startups

Publication Type

Conference Proceeding Article

Publication Date

8-2006

Abstract

Entrepreneurs parse out the equity in their new venture to those individuals who contribute resources toward the formation of the nascent firm. Since the value of non-financial resources is not immediately apparent, the entrepreneur faces the dilemma of equity distribution, to distribute equity evenly to all helpers or unevenly to select members, and its implications for resource mobilization from these members. We find that the entrepreneur's ability to mobilize resources is influenced by interactions between the focal entrepreneur's specific human capital and strength of social relationships with resource providers. Also, the pattern of equity distribution significantly influences the total resources secured by the entrepreneur.

Keywords

Equity stake, entrepreneurship, social interaction

Discipline

Entrepreneurial and Small Business Operations | Strategic Management Policy

Research Areas

Strategy and Organisation

Publication

Academy of Management Proceedings: 2006, Atlanta

First Page

D1

Last Page

D6

Identifier

10.5465/AMBPP.2006.22898143

Publisher

Academy of Management

City or Country

Briarcliff Manor, NY

Additional URL

http://dx.doi.org/10.5465/AMBPP.2006.22898143