Entrepreneurship: Successfully Launching New Ventures, 5e (Barringer/Ireland)
Chapter 9 Building a New-Venture Team
1) The fact that companies often falter because the people who start the firms can't adjust quickly
enough to their new roles and because the firm lacks a "track record" with outside buyers and
sellers, is referred to as the ________
!) liability of preparedness
) liability of newness
#) burden of no$elty
%) burden of freshness
&) millstone of inno$ation
!nswer 
%iff (
age *ef (+
-. +1 &/plain the concept called liability of newness
!!#0 *efl7.3ecti$e Thinking
() 0a$anna #ombs opened a clothing boutique two years ago nfortunately, the boutique failed
after 12 months 0a$anna attributes the failure of her boutique to the facts that her employees
couldn't adjust quickly enough to their new roles and that her boutique lacked a "track record"
with outside buyers and sellers, which made it difficult to form partnerships and make sales
0a$anna suffered from what research calls the ________
!) burden of no$elty
) millstone of inno$ation
#) liability of newness
%) liability of preparedness
&) burden of newness
!nswer #
%iff (
age *ef (+3
-. +1 &/plain the concept called liability of newness
!!#0 *eflecti$e Thinking
4) The high failure rate among new $entures is due, in part, to the liability of newness, which
refers to the fact that new companies often falter because ________
!) they are underfunded and the founders of the firms don't mo$e quickly enough to put together
boards of directors and boards of ad$isors that can pro$ide them direction and ad$ice
) the founders of the firms underestimate the comple/ities in$ol$ed with starting a new
business and the firms lack a "track record" with outside buyers and sellers
#) the people who start the firms can't adjust quickly enough to their new roles and the firms
lack a "track record" with outside buyers and sellers
%) the people who start the firms can't adjust quickly enough to their new roles and they are
underfunded
&) the founders of the firms underestimate the comple/ities in$ol$ed with starting a new
business and they don't mo$e quickly enough to establish business partnerships
!nswer #
%iff (
age *ef (+3
-. +1 &/plain the concept called liability of newness
!!#0 *eflecti$e Thinking
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8) The artnering for 0uccess feature in #hapter + focuses on a technique that entrepreneurs use
to o$ercome the liabilities of newness The suggestion made by the feature is to o$ercome the
liabilities of newness by considering ________
!) inter$iewing a minimum of (6 startup founders to get a sense of what made them successful
) working in the new product de$elopment or corporate inno$ation di$ision of a major
corporation
#) working for a startup for a minimum of two years before starting one
%) earning an 9!
&) joining a startup accelerator
!nswer &
%iff 4
age *ef (+2
-. +1 &/plain the concept called liability of newness
!!#0 !nalytical Thinking
:) The term "liability of newness" refers to the fact that companies often falter because the
people who start the firms can't adjust quickly enough to their new roles and because the firms
lack "track records" with outside buyers and suppliers
!nswer T*&
%iff (
age *ef (+
-. +1 &/plain the concept called liability of newness
!!#0 *eflecti$e Thinking
) %escribe the term "liability of newness" and suggest se$eral ways that a new $enture can
o$ercome this handicap
!nswer The term "liability of newness" refers to the fact that companies often falter because
the people who start them aren't able to adjust quickly enough to their new roles and because the
firms lack "track records" with outside buyers and suppliers !ssembling a talented and
e/perienced new $enture team is one path firms can take to o$ercome these limitations 7n
addition, firms able to persuade high;quality indi$iduals to join them as directors or ad$isers
quickly gain legitimacy with a $ariety of indi$iduals, such as some of those working inside the
$enture as well as some people outside the $enture <eg, suppliers, customers, and in$estors) 7n
turn, legitimacy opens doors that otherwise would be closed
%iff (
age *ef (+3
-. +1 &/plain the concept called liability of newness
!!#0 *eflecti$e Thinking
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3) =e/t ig 0ound, the company profiled in the opening feature of #hapter +, is a music
analytics company >hich of the following statements in incorrect regarding =e/t ig 0ound's
co;founders, its personnel policies or the company itself?
!) =e/t ig 0ound has three co;founders
) The co;founders ha$e healthy debates, but are able to come to consensus and get along and
trust one another
#) ecause the co;founders could not agree who would be the company's #&., the three share
the title of co;#&.s
%) The idea for =e/t ig 0ound was created at a 0tartup >eekend e$ent in 0an @rancisco
&) The firm is in located in =ew Aork, =ew Aork
!nswer %
%iff (
age *ef (+
-. +( %escribe a new;$enture team and discuss the primary elements that form such a team
!!#0 *eflecti$e Thinking
2) ! ________ is the group of founders, key employees, and ad$isers that mo$e a new $enture
from an idea to a fully functioning firm
!) new $enture panel
) startup team
#) new $enture team
%)
new project
&) startup
cadreteam
!nswer #
%iff (
age *ef (+
-. +( %escribe a new;$enture team and discuss the primary elements that form such a team
!!#0 *eflecti$e Thinking
+) Bathy %en$er is preparing to launch a home security firm The team of people that will launch
Bathy's firm are as follows Bathy <#&.), Tre$or <C;@inance), 0helia <C;0ales), a four;
person oard of %irectors, a fi$e;person oard of !d$isors, and Bathy's primary in$estor, who
will assume an ad$isory role The group of people that will launch Bathy's firm is called its
________
!) startup squad
)
#) new
new $enture
$enture panel
team
%) startup cadre
&) startup troop
!nswer #
%iff 1
age *ef (+
-. +( %escribe a new;$enture team and discuss the primary elements that form such a team
!!#0 *eflecti$e Thinking
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16) >hich of the following was not identified in the te/tbook as an element of a new $enture
team?
!) oard of ad$isors
) 0uppliers and $endors
#) Bey employees
%) -enders and in$estors
&) 9anagement team
!nswer 
%iff (
age *ef (+3
-. +( %escribe a new;$enture team and discuss the primary elements that form such a team
!!#0 *eflecti$e Thinking
11) !ccording to the te/tbook, studies show that more than one indi$idual starts ________
percent of all new firms
!) (6 to (:
) :6 to 36
#) : to 1:
%) 46 to 86
&) 3: to +6
!nswer 
%iff 4
age *ef 466
-. +( %escribe a new;$enture team and discuss the primary elements that form such a team
!!#0 *eflecti$e Thinking
1() >hich of the following statements is untrue regarding founding teams?
!) The members of heterogeneous teams are di$erse in terms of their abilities and e/periences
) The members of homogenous teams are $ery similar in terms of their abilities and
e/periences
#) Teams that ha$e worked together before ha$e an edge
%) 0tudies show that more than one indi$idual starts :6 to 36 percent of all new firms
&) 7t is generally belie$ed that new $entures started by an indi$idual ha$e an ad$antage o$er new
$entures started by a team
!nswer &
%iff
( %escribe
age *efa 466
-. +(
new;$enture team and discuss the primary elements that form such a team
!!#0 *eflecti$e Thinking
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