Secondary Results

Previous research has indicated that certain individual characteristics can have a positive effect on the growth of startups (Brandstätter, 2011; Groves, Vance & Choi, 2008; Zhao and Seibert, 2006). In our research, we used measures of motivation, interests, personality traits, and thinking style and correlated each sub-factor with the success, measured through the change in the number of employees.

The following factors showed a significant correlation in our sample:

• Professional interests: Helping (negative, standardized regression coefficient¹ β = - 0.15, significance level p<.001) and Leading (positive, β = 0.14, p<.01),
• Personality traits: Willingness to Compromise (negative, β = - 0.15, p<.01),
• Motivation: Achievement (positive, β = 0.23, p<.01) and insignificant effects of Thinking style indicators

Achievement motivation, which translates to behaviors like setting high expectations and challenging goals, motivation to work in a competitive environment, taking responsibility for your own success and failure, was found to be a positive indicator of startup success.

Similarly, an interest in leading others, telling others what to do and how to do it, persuading them, are connected to higher company success. In contrast to that, readiness to help others, to teach them, to be involved in social activities, was shown to be a negative indicator of success. Here we must note that the founder group scored significantly higher in Helping/Supporting than the control group; however, as the results show, being overly supportive to others can have a negative effect on business success.

The personal trait "Willingness to compromise" (tendency to resolve arguments in a mutually acceptable way, cooperativeness) was negatively correlated with success. Perseverance in one's own attitudes and readiness to be involved in conflicts in order to defend one's own ideas actually leads to faster progress and development of the company. On the other hand, cooperation was shown to foster the growth of startups during the first year.

Finally, it is important to emphasize that the effect of individual characteristics in predicting future success was quite weak and the percentage of explained variance of start-up success was between 3% and 9%.

The importance of individual characteristics when it comes to predicting company success changes over time, depending on the current startup stage.

Different individual characteristics are important for startup success at different development stages.

Companies are divided into 3 groups, according to their age:

• Formation - less than a year, N=57, Men=30, Women =27,
• Transition - between one and three years, N=76, Men=49, Women =27 and
• Growth – more than 3 years, N=91, Men=71, Women =20.

Table 4: Success indicators for startups of different age (β – standardized regression coefficient, p – observed significance level, I – Interest, M – Motivation, P – Personality trait)

In the graphic, we can see that at different development stages of startups, different individual characteristics are of predictive value for the growth of startups.

Startups whose founders perceive and classify themselves as IT/Software companies make up the majority of startups in the sample (43%). As previously mentioned, the rest of the companies - even though they still used or heavily relied on IT – perceived themselves as more related to specific industries (Healthcare, Media and Communication, Finance, etc), i.e. as non-IT companies. If we compare these self-declared IT/Software companies with self-declared non-IT startups in the sample, the results show that companies that view themselves as IT/Software startups showed greater employee growth.

The reason for this might be that startups that perceive themselves as IT tend to reach out to a wider range of customers from various industries, offering more generalized IT services; whereas, on the other hand, startups that perceive themselves as non-IT aim to cater to one specific industry, servicing only a segment of customers and narrowing down their target group, thus also narrowing down their chances of growth.

Startups that perceive themselves as IT/Software industry grow their headcount faster than companies that don’t perceive themselves as IT startups.

Before we draw conclusions about changes in roles within teams, it is important to note that the causality of the effects cannot be clearly determined, not even on the basis of the scientific literature. We cannot be sure whether team roles change because companies (and their teams) grow, or companies/teams grow faster because team roles are changing.

Flexibility and change in team roles have proven to correlate with the success of startups. Companies that are more flexible and adaptable and whose members change their roles in accordance with the current internal and external needs and demands grow faster.
Examining the Team Role change variable independently can explain the 12% variance of the venture success, as measured by the change in headcount. Startups in which their employees changed their roles displayed a 1.35 greater headcount increase compared to companies in which employees do not change their roles. If we compare slower- and faster-growing teams, in faster-growing teams team members change their roles more often compared to members of slower-growing (68% members from a faster-growing team changed their roles compared with 39% members from slower-growing).

It’s interesting to note that entrepreneurs take on more than one role at the same time: on average they take on 2.8 different roles within their team and this number does not change while the company is growing.

Analyzing the individual roles separately shows us that slower-growing teams start with the Resource Investigator team role more often than faster-growing (38% slower- vs 15% faster-growing teams exercised this role at the beginning, χ2(1)=7.72, p<.05). The Resource Investigator is a person who “thrives on the excitement of novelty” (Belbin, 2019) and seeks new excitement too fast, without going deeper into the details. While seeking novelty and new excitement, they can neglect their clients, which can have a negative effect on the development of the company.
In faster-growing teams, there is a greater shift towards the Co-ordinator role during the startup development (79% in high- vs 46% slower-growing teams the Co-ordinator role is currently present, χ2(1)=5.06, p<.05).

“Coordinators are responsible for pulling the group together towards a shared objective. In a team with diverse skills and behaviours, Co-ordinators are able to identify and use the talents of each individual to best effect, delegating work accordingly and encouraging each person to give their best for the team.”
(Belbin, 2019).

Finally, in slower-growing startups, the roles of Completer-Finisher (31% slower- vs 5% faster-growing teams hold this role currently, χ2(1)=6.91, p<.05) are present more often. Completers-Finishers are persons who can spend a great deal of their time focusing on details, which might be problematic when working towards the bigger picture is required.

There are significant gender differences in the prevalence of female and male founders- on average, 2.15 men for every woman, which is completely in line with our sample: 2 men vs 1 woman entrepreneur
(Austrian Startup Monitor, 2018).

A significant finding of our research is that male founders increased their headcount faster between the first and third year, compared to female founders. In order to interpret this difference and draw well-founded conclusions from the results, influencing factors must first be examined. Using socio-economic insights from our study provides several factors that are shown to moderate the effect of gender on the growth of startups.

The analysis shows that women are in a worse starting position compared to men.

• Women (36%) have less previous startup experience, compared to men (50%);
• Men (85%) have more previous working experience (74% of women have 5 or more years of working experience);
• Women are less likely to work in IT-startups (Women 31% vs Men 49%);
• For male founders their startup is more often the primary source of income than for female founders (Women 67% vs Men 82%) - Due to our partnership with “Female Founders” the female participants within the present study are younger than the male participants (within the range of 25-34 yrs. women have a prevalence of 54% compared to men with a prevalence of 41%, within the range of 45-54 yrs. (Women 6% vs men 15%);
• Experience and age are positively correlated factors that serve as a reasonable explanation for the women in our sample due to their age being less experienced and therefore finding themselves in a worse starting position.

The IT industry is still traditionally a male-dominated field, which explains why women have fewer opportunities, influence, and impact on the IT cultural environment in this specific segment especially within the startup business.

Bird and Brush (2002) have documented how entrepreneurial activities have been historically described as masculine, and how entrepreneurship, in general, has been perceived as a “man’s” domain. Since previous research supports the following supposition, we can act on the assumption that the current business environment promotes more stereotypical masculine characteristics.
Eagly and Karau suggest within the “Role congruity theory” that being a man or a woman means taking on a general role as a function of one’s sex (ebd.). They claim that “a potential for prejudice exists when social perceivers hold a stereotype about a social group (i.e., women) that is incongruent with the attributes that are thought to be required for success in certain classes of social roles (i.e., entrepreneurs)” (Eagly, 2002, p. 574).

Existing and common stereotypes of women include the following traits: being affectionate, emotional, friendly, mild, pleasant, sensitive and whiny, compared to men which are seen as dominant, achievement-oriented, ambitious, forceful, rational and unemotional characters (Schneider, 2005). Hence, women are put in a worse starting position by society. Given that, traditional female attributes do not coincide with the qualities that are commonly associated with leadership roles. The characteristics associated with men, however, align perfectly with the qualities that are accredited to a typical CEO (Merchant, 2012). Those gender stereotypes portray women as lacking the qualities to succeed in being an effective leader, thus creating a false perception that women don’t measure up to men when it comes to top-level management positions (Welbourne, 2005). Unfortunately, sex-based stereotyping remains a social reality.

According to the “Role congruity theory”, especially the feminine character emerges as a result of the socialization onto the female role. Women acquire sex role learning early in their lives, which can lead to an attitude of mind that creates difficulties later during their working lives, known as the “culture trap”, according to M.T. Claes (1999). This trap is caused by a subconscious female mindset which leads them to behave exactly the way they are expected to by society within their work context. Subsequently, women unconsciously align appropriately with the stereotypical traits and behaviors set by society (Merchant, 2012). This leads to the association of a status characteristic with gender in which men are seen as superior to women. Those circumstances create a hierarchical structure of opportunities in the workplace that is biased towards men and put women at a disadvantage in enhancing their careers.

Nonetheless, differences are not necessarily negative. Even though these differences between women and men are still existent, due to socialization and engagement in role congruent behavior, they offer different success opportunities for both, women and men. Accordingly, the results of our study have been able to show that certain qualities that emerge out of sex stereotypes serve as different success factors within different stages.
For instance, the results showed that women are more emotional than men. Emotionality is positively correlated with a startup’s success after 3 years of its existence. Accordingly, female founders possess an advantage when it comes to their emotional competencies.
Men, however, achieved higher values within their resilience, which provides them with an advantage regarding their startup’s success between year 1 and 3.
Hence, it becomes apparent that certain differences between men and women, regarding their personal characteristics, do exist but that they provide each with different advantages.

Apart from sex stereotypes, there are further barriers for women that are hindering them from advancing their careers properly. For instance, common ventures lack female mentors and role models for female leaders, which are necessary for women to be assertive about performance and ambitions (Merchant, 2012).

Within our study we obtained the following gender differences: