How a Sense of Calling Fuels a Founder Advantage and Drives Innovation 

by , , | Nov 14, 2024 | Management Insights

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Many of the world’s most innovative companies have one key attribute in common: longstanding leadership by a founder serving as the CEO. Pioneering firms like Airbnb, Alibaba, Amazon, Apple, ByteDance, Facebook, Google, Huawei, IKEA, MercadoLibre, Microsoft, Netflix, NVIDIA, Patagonia, Pinterest, Rakuten, Robinhood, Salesforce, Shopify, Spotify, Square, Tencent, Tesla, and Zara have all been guided to market-leadership positions by such individuals. Despite the many examples suggesting the existence of a founder advantage, which only continues to grow in prominence within the media and popular press, research findings on this phenomenon have remained mixed. While existing research has compared the effectiveness of founder and non-founder CEOs, the reasons why founder CEOs sometimes achieve exceptionally high levels of innovation has remained unclear, leaving a degree of mystery surrounding what enables a “founder advantage”. 

Our recent study, published in the Journal of Management Studies, addresses this gap in understanding by examining the association of CEO founder status with ambidextrous firm strategy and innovation performance. In addition, we explore the role of calling as an enabling factor. Based on data from 200 high-tech SMEs in China, we find that founder status is positively related to innovation performance, mediated by the implementation of ambidextrous firm strategies. However, this effect is significantly stronger when CEOs perceived their work as a calling. In other words, founder status alone doesn’t guarantee superior innovation performance—only those founders with a strong sense of calling demonstrate this advantage. These findings clarify when and how a “founder advantage” manifests in terms of innovation performance. 

The Role of Calling as an Enabling Factor 

People who perceive their work as a calling approach it with deep meaning, personal fulfillment, and intrinsic motivation. This perspective goes beyond passion, reflecting an alignment between identity and work that feels like destiny—believing, “I am doing what I was meant to do.” Our research shows that the founder advantage in innovation is only present when founders have a high sense of calling for their work. When calling is low, there is no significant difference in innovation performance between founder and non-founder CEOs. A strong sense of calling amplifies differences between founder and non-founder roles, such as risk-taking and growth orientation versus operational efficiency and profit maximization. As a result, ambidextrous strategies and innovation performance gains are enhanced for founder CEOs with a high sense of calling for their work. 

Implications for Entrepreneurship Education and Innovation Management  

The findings of our study enhance our current knowledge regarding factors driving the presence of a founder advantage, while also offering a more nuanced perspective on how executive personal values and motivations influence firm innovation performance. These insights carry significant practical implications, particularly for entrepreneurship education, leadership succession and transitions of power from founder to non-founder CEOs, and investment decisions for innovative and high growth ventures. 

  • Entrepreneurship Education. A key finding from our study is the significant advantage founding CEOs with a strong sense of calling. This point suggests that entrepreneurship education programs should integrate this characteristic into their curricula for venture team formation and leader selection. By emphasizing the importance of calling alongside other essential qualities, these programs can better equip aspiring entrepreneurs for success. Additionally, our findings highlight the potential benefits of aligning a founder’s sense of calling with the growth objectives of the founding team. 
  • Leadership Succession. In transitions of power from founder to non-founder CEOs, our findings suggest that non-founders may need to self-regulate their sense of calling, which can lead them toward risk aversion, efficiency, and optimization—characteristics that are typical of a professional CEO. This is especially important when an ambidexterity and innovation-oriented outcomes are desired. Retaining other founders, including the founding CEO in a role such as chairman of the board, may help smooth the transition and preserve a long-term vision for the firm’s success. 
  • Investment Decisions. A founder’s sense of calling may be an important factor for investors to consider, particularly during the due diligence process for high-growth firms. Our findings suggest that calling enables founder CEOs to drive firm innovation through the pursuit of ambidextrous strategies, potentially leading to extraordinary returns for their investor. While external pressures—such as heightened return expectations—can negatively influence decision-making and strategic focus, founder CEOs with a strong sense of calling are uniquely positioned to withstand and even thrive under such pressures. Their calling provides a sense of purpose and meaning that acts as a buffer, allowing them to maintain their strategic vision, commitment to innovation, and long-term orientation despite external demands. Therefore, in addition to traditional investment criteria—such as human capital, intellectual property, market penetration, and economic viability—assessing the degree to which founder CEOs experience a sense of calling for their work could be a valuable consideration for investors. 

Lastly, it is also important to note that while our findings do not show a direct benefit of calling for non-founder CEOs in terms of ambidexterity and innovation performance, this is not to imply that a sense of calling holds no value for them. Specifically, we suggest that calling for non-founder CEO is likely aligned with their typical attributes, such as risk aversiveness, a focus on optimization, and reliance on systematic decision-making processes. Feeling called to apply these attributes in their work may help non-founder CEOs operate with greater efficiency and achieve higher firm profitability—particularly in stable industry conditions where innovation is less critical to maintaining market leadership.  

Authors

  • Jingzhou Pan

    Jingzhou Pan is a professor at College of Management and Economics, Tianjin University, China. His research interests include leadership and team, big data and talent management, employment and career management.

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  • Keith M. Hmieleski

    Keith M. Hmieleski is Professor of Entrepreneurship in the Neeley School of Business at Texas Christian University. His research focuses on psychological and behavioral aspects of entrepreneurship.

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  • Bin Ma

    Bin Ma is an Assistant Professor at IE Business School, IE University. His research interests are leadership, behavioral ethics, and entrepreneurship and innovation.

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