When shared leadership backfires in new venture teams: the roles of power struggles and functional background diversity

While a substantial body of research on shared leadership demonstrates its benefits for new venture teams (NVTs), many real-world business cases suggest that it may raise the problem of power struggles. A few recent studies have challenged the long-standing assumption in the shared leadership literature that team members maintain interpersonal harmony during leadership transitions. However, the mechanisms through which shared leadership shapes power dynamics in NVTs, particularly in terms of competition over power among team members, remain insufficiently understood. Therefore, this study aims to investigate whether and when shared leadership leads to power struggles within NVTs, and whether such power struggles subsequently harm NVT performance. Drawing on the legitimacy of status hierarchy theory, we propose that the effect of shared leadership depends on the level of team functional background diversity. Specifically, we posit that shared leadership causes more power struggles when team functional background diversity is lower, which then leads to worse NVT performance. Results from a field survey with a sample of 72 NVTs from information technology incubators support our hypotheses. This study contributes to the research on shared leadership in the context of entrepreneurship and carries strong implications for the management of NVTs.