Dunton Family Dean of the D’Amore-McKim School of Business Raj Echambadi published research in 2004 on employees who quit their jobs to start their own ventures. 15 years later he revisited his findings culminating in a new study “Jewels in the Crown: Exploring the Motivations and Team Building Processes of Employee Entrepreneurs.”
“What are the motivations?” asks Echambadi. “Why do these people leave their companies?”
Working with two co-authors, Rajshree Agarwal, a professor in entrepreneurship at the University of Maryland, and Sonali K. Shah, an associate professor of business administration at the University of Illinois, the trio went back and interviewed 22 entrepreneurs who had been involved in Echambadi’s original work.
The most recent research found that entrepreneurs aren’t always motivated to leave their jobs for the money.
“It was never the idea that made people move,” Echambadi says of the business leaders he interviewed. “It was the primacy of the people. The ringleader said, ‘I’m going to create something. I need to be an entrepreneur.’”
His 2004 research found that knowledge gained from old businesses led to success for startupcompetitors, referred to as “spinouts” in this study.
Echambadi’s new study classifies leaders of startups in categories such as the “ringleader” who is ambitious and launches the company based on their own personal ambitions. Ringleaders surround themselves with “cofounders” who are less daring and less focused on the ringleader’s aspirations, instead choosing to focus on a possible return to their previous firm in case of failure.
“In any venture, it makes sense to have very focused decision-making,” Echambadi says. With startups, he adds, “there was abundant freedom, but at some point, you had to execute. Somebody had to make that quick decision. And that’s what the ringleaders do.”
Working together, ringleaders and cofounders search for employees with diverse skillsets that complement one another, with the key idea in mind that each newcomer must share some of the same values.
“When all of the team-assembly processes were followed,” says Echambadi, “we found that the long-term performance of the spinout increased.”