Are Entrepreneurs Lone Wolves? An Experimental Analysis of Sorting Into Teams

Despite sizable potential gains from partnerships, the majority of new ventures are founded by solo entrepreneurs. To test whether entrepreneurs’ preferences for individual rather than teamwork may help explain this phenomenon, we conduct a large scale lab-in-the-field experiment studying endogenous team formation among entrepreneurs, managers and employees. In our first treatment, where the team option entails joint production with potential efficiency gains, we find that entrepreneurs are no less likely to join teams than non-entrepreneurs. In a second treatment that also involves a joint asset allocation choice, we find no evidence that entrepreneurs are less inclined to share decision rights than employees or managers. These results call into question the widely held belief that entrepreneurs are ‘lone wolves’ with exceptionally strong preferences for working individually rather than in teams, and suggest that policies facilitating the search for founding partners may be welfare enhancing.