TYPE OF ENTREPRENEUR, NEW VENTURE STRATEGY AND
THE PERFORMANCE OF SOFTWARE STARTUPS
Madhushree Nanda Agarwal
INDIAN INSTITUTE OF MANAGEMENT CALCUTTA
January 2004
Abstract
Entrepreneurship and the study of new ventures is an emerging research area. The
phenomenon of “liability of newness”, or the greater propensity to fail of new ventures,
combined with the fact that some new ventures are outstanding successes, generates
both academic as well as practitioners interest in the correlates of new venture
performance. While both anecdotal and intuitive knowledge suggests that the
entrepreneur would influence the performance of the new venture, a review of the
literature in the area reveals that associations between entrepreneurial characteristics
and new venture performance have not been found to be significant. Moreover,
entrepreneurs are not a homogeneous set who can be distinguished from non-
entrepreneurs on the basis of personality characteristics. Researchers now consider it
more meaningful to study differences within entrepreneurs, based on certain
commonalities. This leads to a trend towards “typology” research. However, literature
also reveals inconsistencies in operationalizing the entrepreneur as an empirical
construct. The lack of theoretical grounding in the choice of variables used in
categorization, as well as definitional and sample selection issues have hampered the
process of theory building in the area.
It was proposed in this study that the measurement of entrepreneurial skills would
capture the effect of the knowledge and abilities acquired by founders through their
education, training and work experience. Entrepreneurial skills, in combination with the
motivations of the entrepreneur, i.e., their reasons for starting a business, would define
different “types” of entrepreneurs. This typology was expected to have significant
association with the strategic direction the business would take, as well as its
performance. Moreover, this resea