Movers or thinkers: the effect of new venture teams’ regulatory mode on innovation

Continual innovation is essential for new ventures’ growth and survival. New ventures must combine their capacity to keep exploiting their current lines of business while exploring the products and markets that will constitute their future. The allocation of time and resources to innovation alternatives is a strategic decision between short-term and long-term performance. Since the new venture team (NVT) dictates new ventures’ strategic decisions, understanding an NVT’s configuration and individual characteristics can shed light on the type of innovation a new venture pursues. Drawing from regulatory mode theory and the upper-echelons perspective, we propose that organizations with NVTs with a predominantly single regulatory mode (either assessment or locomotion) show higher degrees of exploitation but lower degrees of exploration. However, NVTs with members who have a combined orientation toward both dimensions produce higher levels of exploration than NVTs conformed to a predominant single regulatory mode. Moreover, we theorize that environmental dynamism adds an important boundary condition to the relationship between NVTs’ regulatory modes and new ventures’ innovative activities. Theoretical implications and directions for future research are discussed.