The purpose of this paper is to explore direct and indirect effects of pre-venture managerial experience (PVME) on new venture innovation. Using opportunity-costs framework, the following questions are explored: does the entrepreneur's PVME directly affect the extent of innovation in the new venture? What is the role of expectation for high returns in the relationship between PVME and innovation? What is the role of expectation for high returns in the relationship between PVME and innovation? Is there a relationship between abilities and expectancies and does it affect innovation?
Data were obtained from the Panel Study of Entrepreneurial Dynamics II, which is a national database of individuals in various stages of starting a business. Overall sample consisted of 982 nascent entrepreneurs. Statistical methods explored a multiple serial mediation model using OLS regressions supplemented by analyses based on bootstrapping for assessment of indirect effects.
PVME effect on innovation is associated with abilities and financial motives, supporting a partial serial multiple mediation model in which PVME affects innovation indirectly through abilities and where abilities affect innovation directly as well as indirectly through expectations. Results also suggest a suppression effect and a possible negative effect of PVME.
Abilities facilitate innovation, which has implications for policy makers who aim to enhance innovations, for investors in assessing potential of innovations, and for entrepreneurs who aim at improving innovation. Shedding light on the mechanism by which prior experience affects innovation, including the role of financial expectations and how abilities possibly negate negative effects associated with experience improve the understanding of and ability to enhance innovation and improve new venture competitive stand.
BarNir, A. (2014), "Pre-venture managerial experience and new venture innovation : An opportunity costs perspective", Management Decision, Vol. 52 No. 10, pp. 1981-2001. https://doi.org/10.1108/MD-03-2014-0158
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