Promoting Gains or Preventing Losses? The Effect of Regulatory Focus on Actualizing Creative Business Ideas in New Venture Teams

ABSTRACT

Successfully implementing creative ideas is critical for the establishment of new ventures. While highly creative ideas hold great promise for new ventures’ success, more creative ideas are also harder to implement, and are often met with failure. Drawing on regulatory focus theory, we examine how the regulatory focus of new venture teams impacts collective strategic behaviors that can facilitate or hinder the successful implementation of creative ideas, affecting early new venture performance. Using a field experiment involving entrepreneurial teams in an educational setting and an observational study of entrepreneurial teams from TechCrunch, we consistently find that teams with a promotion focus are better able to capitalize on the creativity of their business ideas, leading to improved venture performance. Conversely, results pertaining to prevention focus in teams yielded less consistent results. This research offers timely insights on the role of creativity in new venture success.