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Article
Resource Contribution and the Distribution of Equity in Startups
Academy of Management Proceedings: 2006, Atlanta
  • Reddi KOTHA, Singapore Management University
  • Gerard GEORGE, Singapore Management University
Publication Type
Conference Proceeding Article
Publication Date
8-2006
Abstract

Entrepreneurs parse out the equity in their new venture to those individuals who contribute resources toward the formation of the nascent firm. Since the value of non-financial resources is not immediately apparent, the entrepreneur faces the dilemma of equity distribution, to distribute equity evenly to all helpers or unevenly to select members, and its implications for resource mobilization from these members. We find that the entrepreneur's ability to mobilize resources is influenced by interactions between the focal entrepreneur's specific human capital and strength of social relationships with resource providers. Also, the pattern of equity distribution significantly influences the total resources secured by the entrepreneur.

Keywords
  • Equity stake,
  • entrepreneurship,
  • social interaction
Identifier
10.5465/AMBPP.2006.22898143
Publisher
Academy of Management
City or Country
Briarcliff Manor, NY
Additional URL
https://doi.org/10.5465/AMBPP.2006.22898143
Citation Information
Reddi KOTHA and Gerard GEORGE. "Resource Contribution and the Distribution of Equity in Startups" Academy of Management Proceedings: 2006, Atlanta (2006) p. D1 - D6
Available at: http://works.bepress.com/gerard-george/78/