Resource Contribution and the Distribution of Equity in Startups
Conference Proceeding Article
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.
Equity stake, entrepreneurship, social interaction
Entrepreneurial and Small Business Operations | Strategic Management Policy
Strategy and Organisation
Academy of Management Proceedings: 2006, Atlanta
Academy of Management
City or Country
Briarcliff Manor, NY
KOTHA, Reddi and GEORGE, Gerard.
Resource Contribution and the Distribution of Equity in Startups. (2006). Academy of Management Proceedings: 2006, Atlanta. D1-D6. Research Collection Lee Kong Chian School Of Business.
Available at: http://ink.library.smu.edu.sg/lkcsb_research/227