Abstract: Social identity theory argues that identities of team members have great impact on their cognitions and behaviors. Therefore, team conflict occurs not simply because team members have different views, but as they have different identities internally. Existing studies, however, do not provide a clear answer on how founders' identity heterogeneity affects team conflicts. By studying four start-up teams, this study analyzes the team interaction process among cofounders with diversified identities. It is found that identity heterogeneity among cofounders would generate faultlines within a team, which can be classified into balanced type and unbalanced type by subgroups' relative size. Start-up teams with balanced faultlines trend to have more cooperative conflicts, which would enhance team cohesion and decrease the probability of member exit. Teams with unbalanced faultlines trend to have more concessive conflicts, which increase the probability of member exit. This study broadens the researches of team heterogeneity and faultlines, and provides an explanation on how identity heterogeneity among cofounders affects team conflicts and outcomes in an entrepreneurial context.

Key words: founders' identity, team heterogeneity, faultlines, team conflicts