Startups with Stable Leadership Teams More Likely To Grow
Some startups bet everything on a single visionary founder. But new research from the University of Maryland's Robert H. Smith School of Business suggests shared leadership is a better option — if top management teams can work together without all the drama that sometimes triggers high-profile departures.
"Top management teams that waste energy on power struggles, political coalition building and scapegoating drag their organizations down," says Rajshree Agarwal, co-author of the study with Maryland Smith colleague Serguey Braguinsky and Atsushi Ohyama at Japan’s Hitotsubashi University. "Leaders who learn to share power and resolve conflicts in healthy ways lift their organizations up."
Startups that achieve stable shared leadership are most likely to survive the launch phase and emerge as "centers of gravity" within their industries, the authors write in Strategic Management Journal. "The collaborative approach gives fledgling organizations their best chance to grow and achieve industry dominance," says Agarwal, the Rudolph P. Lamone Chair and Professor in Entrepreneurship.
Founders who keep all the power for themselves avoid the risks of infighting. But even if they are superbly talented, they fall prey to growing pains when their organizations get too big to manage alone.
"There are just not enough hours in a day," Agarwal says. "Our research shows organizations with single leadership are inevitably outrun by organizations that foster stable shared leadership."
To study the processes of firm growth, the authors analyzed the Japanese cotton spinning industry from 1883 to 1914. They combined strategy and historical perspectives, relying on quantitative firm‐level data and detailed business histories.
"Rich firm and industry historical accounts documented at the time of occurrence enable triangulation of qualitative and quantitative data over entire firm and industry lifecycles," the authors write.
Learn more: Centers of gravity: The effect of stable shared leadership in top management teams on firm growth and industry evolution is featured in Strategic Management Journal.