Top management team tenure and technological inventions at post-IPO biotechnology firms Kun Liu a, ⁎, Jun Li b, 1 , William Hesterly c, 2 , Albert Cannella Jr. d, 3 a Department of Management and Information Systems, Wayne State University, Detroit, MI 48202, United States b Department of Management, University of New Hampshire, Durham, NH 03824, United States c Department of Management, University of Utah, 1645E Campus Ctr. Dr. Salt Lake City, UT84112, United States d Goldring-Woldenberg Hall, 7 McAlister Drive, Tulane University, New Orleans, LA 70118, United States abstract article info Article history: Received 1 August 2010 Accepted 25 September 2011 Available online 19 October 2011 Keywords: TMT Organization life cycle Technological invention Entrepreneurship We examine how top management teams (TMTs) facilitate invention performance. We test our hypotheses with a sample of 185 biotech firms that issued initial public offerings (IPOs) between 1980 and 1997. We predict that the percentage of founders on TMT has an inverted U-shaped relationship with invention performance. Average intrafirm tenure will be negatively associated with invention performance and average TMT member experiences from competitors or outside the industry will be positively associated with invention performance. Finally, contextual factors such as firm size and firm age moderate the impact of TMT experiences on invention performance. © 2011 Elsevier Inc. All rights reserved. 1. Introduction Top management teams have attracted research attention as an antecedent of organizational outcomes. Researchers using the upper echelons perspective (Hambrick & Mason, 1984) have shown top managers have a significant impact on a variety of organizational outcomes, such as strategic change (Barker & Barr, 2002; Musteen, Barker, & Baeten, 2006), firm growth (Kor, 2003; Stam & Elfring, 2008), search (Papenhausen, 2010), acquisition performance (Walters, Kroll, & Wright, 2007), and innovation (Alexiev, Jansen, Van Den Bosch, & Volberda, 2010; Elenkov, Judge, & Wright, 2005; Smith & Tushman, 2005; Vaccaro, Jansen, Van Den Bosch, and Volberda, forthcoming; Wu, Levitas, & Priem, 2005). While much research has focused on established public firms, less research has examined the unique context of a newly public firm. The initial public offering (IPO) is an important milestone in an entrepre- neurial firm's life cycle (Carpenter, Pollock, & Leary, 2003; Filatotchev & Piesse, 2009). The post-IPO firm is unique because it has already laid foundations for further development, unlike the early-stage firm that prioritizes on survival amid high uncertainties. At the same time, its legitimacy is lacking and its technological and market base are yet to grow (Filatotchev & Piesse, 2009). The post-IPO firm faces transitional challenges such as liability of adolescence (Hannan, 1998). The post-IPO TMT is in a unique position relative to their peers at either an early-stage firm or a well-established public firm. The TMT often continues to be influenced by a sizable presence of founders, rarely seen in a mature public firm; it has also included external managers who established their career paths elsewhere to enrich the experiences of the TMT, which does not happen to the early-stage firm that primarily relies on founders. The TMT in the post-IPO firm becomes the locus where external and internal managerial experiences are brought together, with far-reaching implications. We examine the role of TMT using an organizational life cycle per- spective (Kazanjian, 1988; Smith & Miner, 1983). We focus on multi- ple aspects of top managers' experiences such as founder percentage, intrafirm tenure, competitor tenure and outside industry tenure that may better respond to the stage-specific organizational challenges. First, we propose founders' presence has an inverted U-shaped relation- ship with the firm's patented inventions. Second, we predict that shorter intrafirm tenure, more experiences at competitors (i.e., other firms in the same industry), and more experiences from outside the industry would enhance invention performance. Finally, we highlight organizational contexts and predict that firm age and firm size mod- erate the relationship between external experiences and invention performance. We test our hypotheses with a sample of 185 biotech- nology firms that undertook IPOs between 1980 and 1995. We con- clude the paper by discussing the implications of our results. 2. Theoretical background and research hypotheses The upper echelons research suggests that top managers' personal characteristics have an important impact on firm performance Journal of Business Research 65 (2012) 1349–1356 ⁎ Corresponding author. Tel.:+1 313 577 4495. E-mail addresses: k.liu@wayne.edu (K. Liu), Jun.li@unh.edu (J. Li), Bill.hesterly@utah.edu (W. Hesterly), acannell@tulane.edu (A. Cannella). 1 Tel.: +1 603 862 3365. 2 Tel.: +1 801 581 6378. 3 Tel.: +1 504 247 1288. 0148-2963/$ – see front matter © 2011 Elsevier Inc. All rights reserved. doi:10.1016/j.jbusres.2011.09.024 Contents lists available at SciVerse ScienceDirect Journal of Business Research