Shared and Shared Alike? Founders’ Prior Shared Experience and Performance of Newly Founded Banks

Pre-entry industry experience is a central construct in the founding team literature. Research on prior shared experience (PSE) emphasizes that founding teams face challenges integrating and acting on independent experiences, so PSE should be beneficial for new venture performance. Existing studies, however, typically study PSE in blunt terms, expecting that more is better. Instrumental variable analyses of a unique sample of 344 commercial banks founded in four U.S. states between 1996 and 2006 showed that industry-specific PSE may be more or less beneficial, depending on several founding team characteristics. Our findings provide nuance and caution to the narrative that PSE is always beneficial. Under some circumstances, firms with founding team PSE may be no better off than those without founding team PSE, suggesting more research is necessary to understand when and why founding team experience matters to new firms.