Decision making disagreements and performance in venture capital-backed firms
A recent study suggest that compositional task conflict has a significant positive effect on new venture performance whereas compositional procedural conflict has a significant negative effect.
Illustration photo: Colourbox.no
In a recent study by Truls Erikson (Centre for Entrepreneurship) and Bradley George (Babson College, USA) they explored the effects of various disagreements in managerial decision making. The study departs from the literature on information processing theory and the literature on conflict – emphasizing proportional conflict components. Data from 45 venture capital-backed firms were employed. The findings suggest that compositional task conflict has a significant positive effect on new venture performance whereas compositional procedural conflict has a significant negative effect. Compositional affective conflicts also have significant negative effect on the performance of venture capital-backed new firms.
This means that it is needed to consider context when assessing decision making disagreements in venturing firms. That is, to consider other types of conflicts at work and not look at them in isolation. Implications for high performing venturing teams are that they should facilitate the “good fights”, but be cautious with how they proceed.
Source: The Life Cycle of New Ventures. Emergence, newness and groth (ed. Brush, Kolvereid, Widding and Sørheim)