The negative interaction effect between industry experience and intra-team trust on opportunity recognition

Having investigated the effects of technological experience on the technology-to-market linking problem, I turn next to the available industry experience in entrepreneurial teams and outline four reasons why higher industry experience normally positively influences the opportunity recognition performance. In the present thesis, I refer to these advantages of higher industry experience as the "treasure trove of industry experience."

First, entrepreneurial teams recognize opportunities that reflect their prior knowledge. In the already mentioned study, Shane (2000) shows that, when looking for technology-based business opportunities, entrepreneurs reflect on their prior industry experience. In order to analyze how the industry knowledge corridor of entrepreneurial teams influences the opportunity process, entrepreneurial scholars (e.g., Gruber et al., 2013) sum up the number of different industries in which the entrepreneurial team members have already worked. A high level of industry experience enables entrepre-neurial teams to have a broader search space. Local search is more common in the entrepreneurship field than global

search, as actors typically focus on the fields in which they already have experience (March & Simon, 1958). Conse-quently, an entrepreneurial team with a higher industry experience has a broader field in which it can conduct a local search.

Second, entrepreneurial teams with high industry experience have an information advantage. They are better aware of characteristics of different markets, e.g., the value chain, sales channels, or required capital (von Hippel, 1988), or even pricing, cost structure, market share, revenue, and cost trends (Dimov, 2010). This kind of information is essential for making the right decisions, but is difficult to get for entrepreneurs who are not familiar with a specific market (Dimov, 2010; Shane, 2000). The identified opportunities may differ along many factors, e.g., market size, market growth, competitive environment, or stability. Thus, prior market knowledge is important to recognize business opportunities with a high value (Gruber et al., 2008).

Third, industry experience enables entrepreneurs to better recognize and evaluate opportunities within their industry (Kor et al., 2007; Ronstadt, 1988), as they can better assess the feasibility and potential success (Dimov, 2010). Entre-preneurs that are aware of inter-industry differences, e.g., regarding technology, distribution, marketing, and pricing, develop more innovative opportunities to offer products and services (Kor et al., 2007).

Finally, prior entrepreneurial studies have already shown a positive relationship between prior industry experience and performance in the opportunity process (e.g., Gruber et al., 2013).

In line with the other already described experience dimensions, intra-team trust might lead to team behavior that pre-vents entrepreneurial teams from fully applying their available industry experience. In a last step, I assume that intra-team trust negatively influences the link between industry experience and the quality of the selected opportunity (sec-tion 2.4.5.1), as well as the rela(sec-tionship between industry experience and the selec(sec-tion performance (sec(sec-tion 2.4.5.2).

2.4.5.1 Quality of the selected opportunity

Entrepreneurial teams with prior experience in an industry better understand important market characteristics and thus have an information advantage, as this kind of information is difficult to get (Dimov, 2010; von Hippel, 1988; Shane, 2000). The information advantage is crucial to recognize highly valuable business opportunities (Gruber et al., 2008).

In addition, if entrepreneurs know an industry, it is easier for them to evaluate the feasibility and potential success of opportunities (Dimov, 2010). Consequently, they can normally better recognize opportunities within this industry (Kor et al., 2007; Ronstadt, 1988). When looking for business opportunities, entrepreneurial teams draw on their prior in-dustry knowledge. To put it differently, opportunity recognition happens in knowledge corridors which arise from prior experience in an industry (Shane, 2000). If an entrepreneurial team has a high level of industry experience, the team members taken together have experience in more industries and together reflect a broader industry knowledge corridor

(Gruber et al., 2013). In addition, the awareness of differences between industries enables entrepreneurs with experi-ence in different industries to develop more innovative opportunities to offer products and services (Kor et al., 2007).

Thus, entrepreneurial teams that represent more different industries should be more likely to recognize higher-value opportunities. However, in entrepreneurial teams with high industry experience, high intra-team trust might be a nega-tive condition for opportunity recognition performance. Team members might avoid questioning each other, as chal-lenging the propositions of others could be understood as a lack of trust (Langfred, 2004), especially when they are aware of their teammates' industry-related skills and abilities. As a consequence, the team member whose statements are questioned could reject or even sanction the team member that did not fit into the team dynamic (Langfred, 2004).

Thus, challenging the opinions of teammates could be seen as not acting like a team member should act and not really belonging to the team. To avoid the rejection of the team, individuals might hesitate to contribute their complete knowledge of industries in which they have already worked, if intra-team trust is high. If they were willing to challenge their fellow teammates, they could use their specific industry knowledge to question the proposed solutions, which would be necessary to achieve a higher quality of the selected opportunity. However, they hesitate because they fear rejection by their teammates. Consequently, a greater part of the treasure trove of industry experience of an entrepre-neurial team could be used if they trusted each other less. The higher the trust, the more valuable industry experience goes unused, and the lower the quality of the opportunities.

Consequently, I assume that intra-team trust has a negative moderating effect on the relationship between industry experience and the quality of the selected opportunity. Thus,

Hypothesis 5a: Intra-team trust will moderate the relationship between industry experience and the business value of the selected opportunity, such that entrepreneurial teams with higher intra-team trust will be more likely to select an opportunity with a lower business value than entrepreneurial teams with lower intra-team trust.

2.4.5.2 Selection performance

The treasure trove of industry experience consists of a better understanding of crucial market characteristics and the related information advantage (Dimov, 2010; von Hippel, 1988; Shane, 2000), the ability to better assess the feasibility and potential success of opportunities (Dimov, 2010), and the related skills to better evaluate opportunities within the familiar industries (Kor et al., 2007; Ronstadt, 1988). The extent of the industry knowledge corridor of an entrepreneu-rial team is determined by the sum of industries in which one or more team members have already worked (Gruber et al., 2013; Shane, 2000). Therefore, if entrepreneurial teams have experience in more industries, they should be better able to evaluate and balance different opportunities in different industries and thus achieve a higher selection perfor-mance. However, in entrepreneurial teams with high industry experience, opportunities might be assessed less formally if intra-team trust is high. A less formal assessment is often due to a lack of objectivity and overconfidence, leading to

a less accurate assessment (Zahra et al., 2006). While overemphasizing intangibles, assessments tend to overestimate potential advantages and underestimate potential disadvantages. Consequently, when making a decision, different op-tions are less challenged (Zahra et al., 2006). In addition, highly trusting teams tend to make conforming decisions, which do not carry the risk of hurting the feelings of one or several team members (Langfred, 2004), as team members are more likely to feel forced to conform to the team opinion when intra-team trust is high (Baron et al., 1996). Conse-quently, higher intra-team trust can prevent entrepreneurial teams from benefiting from their treasure trove of industry experience, whereas entrepreneurial teams with a lower intra-team trust level can better use their industry experience.

These arguments provide the theoretical basis for my last hypothesis. Thus,

Hypothesis 5b: Intra-team trust will moderate the relationship between industry experience and the difference between the business value of the selected opportunity and the average business value of all their recognized opportunities, such that the difference between the business value of the selected opportunity and the average business value of all the recognized opportunities is more likely to be smaller for entrepreneurial teams with higher intra-team trust than for entrepreneurial teams with lower intra-team trust.