The Liability of Newness Revisited : Joiner Equity as an Early-Stage Advantage

Baguley, Richard (2027) The Liability of Newness Revisited : Joiner Equity as an Early-Stage Advantage. In: Beyond the Numbers : Micro and Small Enterprises in an Evolving Economy. Routledge, London. (In Press)

Abstract

This chapter introduces ‘joiner equity’, a novel construct describing the latitude granted by early-stage hires (or ‘joiners’) to start-up founders, such as tolerance of founder idiosyncrasy, role ambiguity and process immaturity, that would be far less acceptable in more mature organisations. This chapter theorises that joiner equity arises from the interplay of team psychology, efficacy beliefs and founder constraints in the context of new venture creation and the birth of organisations. Drawing on Stinchcombe’s (1965) liability of newness, it argues that the very conditions that make start-ups fragile, like thin routines, resource scarcity and improvisational governance, also generate a unique motivational climate. Joiners are attracted by the identity work of building something from scratch (Aldrich & Ruef, 2006; Gartner, 1985), the perceived growth trajectory, and proximity to decision-making, which together cultivate heightened self- and collective-efficacy (Bandura, 1997; Gully et al., 2002) and a psychological safety sufficient for risk acceptance despite structural deficits (Edmondson, 1999). Mechanistically, joiner equity is enabled by (1) bricolage under resource constraints (Baker & Nelson, 2005), which legitimises experimentation and reframes mistakes as learning; (2) effectual logic (Sarasvathy, 2001), which normalises iterative commitments and role boundary fluidity; and (3) nascent venture identity formation, whereby joiners internalise the venture’s narrative and view founder fallibility as part of a collective struggle (Aldrich & Ruef, 2006). The chapter proposes a dynamic model in which joiner equity is highest during start-up and early formation, amplifying team potency and problem-focused coping, and declines as ventures professionalise, with the shift to formal structures, role specialisation and compliance protocols narrowing discretion, reducing identity salience and perceived impact, often precipitating disenchantment and attrition among original joiners (Davidsson & Honig, 2003; Edmondson, 1999). Empirically, it outlines a mixed-method approach combining longitudinal team surveys (efficacy, psychological safety, role clarity), founder constraint diagnostics (resource availability, governance maturity), and retention outcomes across growth phases. The chapter anticipates curvilinear effects: joiner equity positively moderates performance during early growth but becomes maladaptive, as organisations professionalise, producing co-ordination losses, demotivation and burnout. The chapter contributes to literature on team psychology by specifying phase-contingent tolerance norms, to entrepreneurship theory by integrating effectuation and bricolage into the social psychology of venture teams, and to organisational birth research by illuminating how early social contracts evolve (and unravel) across scaling thresholds.