A Cyclical Model of Passion and Performance in New Venture Teams: Cross-Level Interactions With a Lead Entrepreneur’s Passion and Passion Diversity

Recent studies indicate that a team with entrepreneurial passion performs positively. To understand the dynamics of new venture teams (NVTs), however, more research is needed on cross-level interactions and the cyclical relationship between passion and performance. We hypothesize that the perception of a lead entrepreneur’s passion and entrepreneurial passion diversity are team-level constructs that influence the relationship between entrepreneurial passion and performance. Furthermore, utilizing the input-mediator-output-input (IMOI) model, we investigate whether the performance of NVTs affects members’ pre- and post-entrepreneurial passions while developing their businesses. We collected and analyzed multi-wave data from 160 individuals nested in 53 NVTs. The results indicate that entrepreneurial passion predicts perceptions of performance in general. However, the focal relationship is moderated by how NVT members perceive the lead entrepreneur’s passion. Our findings also suggest that entrepreneurial passion diversity directly hinders performance perception, although it does not influence the passion-performance link. Moreover, this study reveals that the perception of NVT performance mediates the effect of prior passion on subsequent passion, supporting the cyclic nature of the passion-performance relationship in NVTs. The theoretical and practical implications of this study are discussed.