Can cognitive biases explain venture team homophily?

Research output: Contribution to journalArticle

Abstract

Although venture teams whose founders are dissimilar (heterophilious) tend to outperform teams whose founders are similar (homophilious), most new venture teams are characterized by homophily. I try to explain this puzzle with a learning model in which founders are prone to two cognitive biases: overoptimism and self-serving attributions. Founders choose cofounders with similar beliefs as themselves because they expect this to promote the most effective allocation of effort to the venture. Self-serving bias reinforces and perpetuates these beliefs. In principle, informed outsiders (e.g., practitioners or hands on investors) can improve venture team composition compared with private choices by founders.
Original languageEnglish
Pages (from-to)67-83
Number of pages17
JournalStrategic Entrepreneurship Journal
Volume3
Issue number1
DOIs
Publication statusPublished - Mar 2009

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Cognitive bias
Homophily
Venture
Team composition
Investors
Attribution
New ventures
Learning model
Outsider
Self-serving bias

Cite this

Can cognitive biases explain venture team homophily? / Parker, Simon.

In: Strategic Entrepreneurship Journal, Vol. 3, No. 1, 03.2009, p. 67-83.

Research output: Contribution to journalArticle

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