Moderating and mediating effects of shared leadership on the relationship between entrepreneurial team diversity and performance

In entrepreneurship research there is growing interest in the diversity and complexity of entrepreneurial teams because of their potential to shape new business growth (Wright and Vanaelst, 2009). However, a significant research gap exists regarding how entrepreneurial teams form and how team composition relates to entrepreneurial team performance. A review of the entrepreneurial team literature indicates three specific research needs. First, research on the relationship between entrepreneurial team informational diversity and performance remains inconsistent and inconclusive, and requires more empirical research. Moreover, while studies have examined the link between informational team diversity and entrepreneurial team performance and found inconsistent results, researchers have failed to investigate the conditions under which such diversity might benefit performance. Second, a need exists for research on the relationship between personality diversity and entrepreneurial team performance. Third, while some studies have found relationships between different types of diversity and performance, researchers have failed to investigate the fundamental intervening processes. Therefore the specific mechanisms through which team heterogeneity may influence entrepreneurial team performance remain unexplored.;This study aimed to address these research needs. One of its purposes is to examine the effect of informational diversity on entrepreneurial team performance. Informational diversity, consisting of differences in knowledge bases and perspectives that members bring to an entrepreneurial team, was hypothesized to positively relate to entrepreneurial team performance. Another purpose of this study was to assess the relationship between personality diversity and entrepreneurial team performance. Halfhill et al. (2005) differentiated task oriented personality traits (conscientiousness and openness to experience) from relationship oriented ones (agreeableness, extraversion, and emotional stability). The present hypotheses suggested that diversity on task oriented personality traits negatively relate to entrepreneurial team performance while diversity on relationship oriented personality traits relate positively. The third purpose of this study is to test the moderation and mediation effects of shared leadership in the relationship between entrepreneurial team diversity and team performance. As a process variable, shared leadership across multiple team members could determine how team diversity affects entrepreneurial team performance.;The sample consisted of 200 entrepreneurial teams in a technology incubator founded in 2009 by the local government of Hangzhou, Zhejiang province of China. This study used a cross-sectional questionnaire design. Four dimensions measured informational diversity: functional specialty, educational specialty, educational level, and managerial skills. Team members's Big-5 personality traits were measured by the Chinese Version of NEO-Five Factor Inventory (NEO-FFI) (Costa and McCrae, 1992). Personality diversity consisted of the variance of scores on each personality trait in each team. Entrepreneurial team performance was assessed by a 16-item scale developed by Pearce and Sims (2002). Team leadership density, measured by Carson et al.'s (2007) scale, assessed shared leadership. Hypotheses were tested with hierarchical linear modeling.;Three major findings emerged from this study. First, functional specialty diversity can improve entrepreneurial team performance. This skill diversity can improve entrepreneurial team performance only when leadership is shared among team members. Second, team members' personalities matter; the effects of personality on entrepreneurial team diversity differ across the Big-5 personality traits. Mean scores on openness to experience, conscientiousness, and extraversion positively relate to entrepreneurial team performance. However, mean score on agreeableness is negatively associated to entrepreneurial team performance. Diversity on conscientiousness relates negatively to entrepreneurial team performance, while diversity on agreeableness and diversity on emotional stability appear positively related to entrepreneurial team performance. Third, shared leadership mediates the conscientious diversity and performance link as well as the extraversion diversity and performance link.;These findings advance research in entrepreneurship, groups and teams, and shared leadership. While further analysis is required to base knowledge on more empirical evidence, the present study also provides practical implications for entrepreneurs regarding team composition.