[Journal:] The Journal of Entrepreneurial Finance (JEF) [ISSN:] 1551-9570 [Volume:] 18 [Year:] 2016 [Issue:] 2 [Pages:] 1-46
This paper examines how organizations protect themselves from the negative social and economic consequences associated with the loss of a key member and their social capital. Drawing on the social capital and upper echelons literatures, the author(s) hypothesize that social capital can be institutionalized. The corresponding hypotheses are tested on a sample of 125 venture-backed software firms and the results demonstrate that the institutionalization of a founder-CEO's social capital leads to better performance for a firm. The results provide a basis for understanding how social mechanisms influence economic organization as well as succession and compensation in a new venture context.
founder-ceo transitions venture capital startups social capital & entrepreneurial leadership