Founding Experience and Tech-Based Ventures’ Innovation: The Mediating Role of Absorptive Capacity

Drawing on insights from the knowledge-based view of the firm, we introduce a path that links founders’ founding experience to organizational design choices in tech-based ventures that instill absorptive capacity, which, in turn, allows them to produce innovation output at scale. We hypothesize that founders’ recognition of the importance of knowledge management, and their acquisition of skills to implement knowledge management systems effectively, underlie this venture-building path. We also suggest that this path is stronger when experienced founders have been exposed to venture capital investors in their prior ventures. We test our theoretical predictions with a longitudinal sample of 1,560 U.S. tech-based ventures.