Entrepreneurial Capital Dependence and Firm Ownership

As companies scale, their founders often lose control of them, particularly after receiving investments from private equity or selling stock ownership to private investors. This research examines why founders are forced to leave their companies and how they can keep their positions. The study compares four case studies: McDonald’s, Instagram, WeWork, and OpenAI. It analyzes how founders lost their authority or used resources to keep their power through various forms of capital, such as financial, governance, organizational, and social capital. After analyzing and exploring each case study, it is discovered that the most common dependencies for founders are financial and governance capital, depending on how decisions are made in an organization. The study also reveals that founders can counteract dependencies by utilizing capital types such as social capital. As shown in the OpenAI case study where a founder successfully maintains their position, the strongest method to offset founder dependencies is through social capital built from long-term relationships with employees. Founders play crucial roles in the growth of their companies and are at higher risk of being removed as they expand. It is crucial that founders understand how capital functions to avoid being left behind. There are many studies and articles on founder removal, but few focus on how they can remain competitive. This study advances the discussion of how founder influence and responsibility may last by proving that capital is a resource that can be leveraged in order to sustain their company status.