Abstract: By adopting a dynamic perspective, this study explores the influence of equity allocation design on entrepreneurial team psychological ownership in entrepreneurial firms. We use an exploratory case method, apply theoretical sampling to select two Chinese listed private high-tech firms on GEM, and track them for over a year. We triangulate our data collection methods and analyze data using temporal bracketing. We find that equity allocation design affects entrepreneurial team psychological ownership through an internal mechanism. Specifically, equity allocation design influences team power structure and team knowledge structure, which leads to different levels of team member exchange and consequently leads to change of entrepreneurial team psychological ownership. Our findings contribute to the literature and provide implications to entrepreneurial firms.

Key words: entrepreneurial team, equity allocation design, psychological ownership, team member exchange, exploratory case study, qualitative study