The roles of innovation strategy and founding team diversity in new venture growth

Using fsQCA, this study explores how venture strategy, as well as founding team knowledge diversity and demographic diversity interact to explain revenue growth of new ventures. Based on a longitudinal dataset containing 210 new ventures, we find that the effects of team diversity are complex such that different diversity conditions explain short-term (i.e. one year) compared to sustained growth (i.e. over three years) and that their role is contingent on the venture’s strategy. We identify three recipes that explain revenue growth in the short-term and four recipes that explain revenue growth in the longer-term. One recipe is the same for both time periods pointing towards the potential role of imprinting of certain team diversity conditions in combination with an innovation strategy. Our findings provide a nuanced and in-depth picture of the relative relevance of an innovation strategy, knowledge diversity, and demographic diversity at distinct stages of venture founding.