Date of this version


Document Type



Performance, Legitimacy, Complexity, Consultants, New banks, Regulatory change


While the business advisory role of informal players such as family and friends and more formal players such as board members and federal, state or local governments have been well documented, little attention has been paid to the contributions of industry consultants in startup firms. These overlooked intermediaries play an important role in the successful launch of a new firm. This study examines when and why such advisors might create value for new firms. Analysis suggests complexity and regulatory change are factors in a founder’s decision to hire a consultant. Consultants have a positive impact on firm financial performance but not on a composite multifactor measure of performance. Additional analyses suggest the effectiveness of consulting assistance hinges on specific attributes of the consulting firm, but cumulative consulting experience is not one of these attributes.

Published in

Management Research Review

Citation/Other Information

40(11), 1142-1162