Collaboration Inside the Firm

Founding and operating a firm is a collaborative process, but still little is known about the nature of collaboration between entrepreneurs and other members of the new-venture team, particularly key employees. For example, traditional entrepreneurship literature believed that founders always run their start-ups personally, at least in the early years of operation. However, recent empirical studies suggest that a significant share of founders hire CEOs for their start-ups at the time of founding or soon thereafter. This chapter explores what motivates founders to delegate managerial control to a hired agent, how founders choose their managers, and how they govern relationships with their CEOs.