Upper echelons and portfolio strategies of venture capital firms

In this study we analyze how the composition of the top management team (TMT) influences the portfolio strategy choice in venture capital (VC) organizations. We develop a model of risk perception to investigate how education and experience of TMT members impact whether VC organizations invest with a focus on early stage ventures or not, specialize or diversify across industries, and invest with a broad or narrow geographic scope.Evaluation of data on TMTs and portfolio strategies of 136 European VC firms revealed that VC firms with higher proportions of TMT members with science/engineering education and entrepreneurial experience more likely invest with an early stage focus. Furthermore, TMTs with more management education diversify their portfolios more across industries. Finally, the more international experience TMT members of VC organizations have, the broader the geographic scope of investees. We discuss the implications of our findings for the VC literature.     

Top management team characteristics and firm internationalization: The moderating role of the size of middle managers

This paper examines the influence of the top management teams' (TMTs) characteristics, including tenure and international experience, on the degree of firm internationalization. In addition, this study explores the moderating effect of the size of middle managers (MMs) on the relationship between the TMT characteristics and the degree of firm internationalization. This study use the information-process perspective to emphasize that MMs provide information processing capabilities that assist TMTs as they cope with the high information-processing demands of the strategic decision-making process in international markets. We test the hypotheses using a sample of listed manufacturing firms in the electro-optical and textile industries during the 2006–2010 period. The findings indicate that TMT tenure has an inverted U-shaped relationship with firm internationalization and TMT international experience has a positively affect the firm internationalization. Furthermore, we find that large MM size positively enhances the inverted U-shaped relationship between TMT tenure and firm internationalization.     

Initial Public Offering Investor Valuations: An Examination of Top Management Team Prestige and Environmental Uncertainty

Relying on one of the more notable entrepreneurial settings, an initial public offering (IPO), this article extends prior work on top management team (TMT) characteristics. We examine whether or not prestigious TMTs at the time of an IPO enhance organizational legitimacy and thereby provide a signal to potential investors. Because an IPO represents an entrepreneurial context characterized by high levels of uncertainty, we also consider the impact of environmental uncertainty on the TMT prestige/investor valuation relationship. We find that both an element of TMT prestige and environmental uncertainty influence investor valuations. However, we also find that the influence of prestige does not assuage investors when analyzing IPOs in different environmental conditions.     

Internationalization and entrepreneurial orientation of family SMEs: The influence of the family character

Internationalization is an important entrepreneurial strategy for promoting the long-term growth and survivability of small and medium-sized enterprises (SMEs). Family involvement in top management teams (TMTs) can explain the heterogeneous behaviors of these firms’ international entrepreneurship process. This paper analyzes the moderating effects of the family’s influence on the relationship between entrepreneurial orientation and internationalization with two TMT diversities found only in family firms: the family TMT ratio and generational involvement. An analysis of 191 Spanish family SMEs indicated that entrepreneurial orientation plays a significant role in explaining the degree of internationalization in family firms and that a diversely formed TMT shapes this relationship. A high concentration of family members in managerial positions hinders the international entrepreneurship process. This fact highlights the importance of hiring non-family managers to promote internationalization. The results also reveal that involving multiple generations in decision-making hampers entrepreneurial internationalization, generating control and coordination problems.     

The relationship between venture capital backing and the top management team quality of firms going public and implications for initial public offerings

We make use of hand-collected data on a large sample of entrepreneurial firms going public to analyze the association between venture capital (VC) backing and the top management team (TMT) quality of firms at the time of their initial public offerings (IPOs), and the effect of both VC-backing and TMT quality on the growth in their post-IPO operating performance and IPO firm valuations. We first show that VC-backing is associated with higher TMT quality. We then show that both higher TMT quality and VC-backing lead to higher growth in post-IPO operating performance and higher IPO valuations. We find that the above two variables affect the growth in post-IPO operating performance through an “ability channel,” whereby the TMTs of such firms choose projects with higher equilibrium scale and implement them more ably. Further, TMT quality and VC-backing affect IPO firm valuations not only through the above ability channel, but also through a “certification channel,” whereby higher TMT quality and VC-backing credibly certify intrinsic firm value to the IPO market, thus reducing the extent of asymmetric information facing such firms in the IPO market and yielding these firms higher IPO valuations. Finally, we show that TMT quality and VC-backing act as complements in their effect on IPO firms' growth in post-IPO operating performance.     

Diversity & internationalization: The case of boards and TMT's

Using a mixed US and European sample where both the board and TMT units are analyzed at the same time, we test the variables age, tenure and functional background.We extend the information/decision making perspective (Williams & O’Reilly, 1998) to both TMTs and boards by analyzing them as separate but related entities. In line with our hypotheses we find a positive effect on internationalization for functional background diversity of both boards and TMTs.Contrary to our expectations longer TMT tenure and younger board age also have a positive effect on internationalization.     

TMT Departures and Post‐IPO Outside Director Additions: Implications for Young IPO Firms’ Survival and Performance

We draw on resource‐based logic to argue that relatively stable TMTs and boards are beneficial for young IPO firms because of the need to maintain and develop valuable firm‐specific capabilities and psychological attachment of pre‐IPO TMTs. Using panel data from 272 young IPO firms, we find that pre‐IPO TMT member exits negatively affect young IPO firms’ survival and performance. This negative effect is greater when more post‐IPO outside directors are added. We also find that the above interaction is positively and negatively associated with survival and performance when TMT ownership declines substantially and when firms have a founder CEO, respectively.     

Not Good,Not Bad: The Effect of Family Control on Environmental Performance Disclosure by Business Group Firms

In this study, we examine the influence of senior leadership on firms’ corporate social responsibility (CSR). We integrate upper echelons research that has investigated either the influence of the CEO or the top management team (TMT) on CSR. We contend that functional experience complementarity between CEOs and TMTs in formulating and implementing CSR strategy may underlie differentiated strategies in CSR. We find that when CEOs who have predominant experience in output functions are complemented by TMTs with a lower proportion of members who have experience in output functions, there is a pronounced effect on the community, product, and diversity dimensions of CSR. In turn, when output-oriented CEOs are complemented by output-oriented TMTs, we observe an effect on the employee relations dimension of CSR. Interestingly, we find no influence of CEO-TMT complementarity on the environment dimension of CSR. In general, our empirical results support the relevance of the interaction between CEOs and their TMTs in defining their firms’ CSR profile.     

Strategic alliances and the rate of new product development: An empirical study of entrepreneurial biotechnology firms

A key to success in industries populated by entrepreneurial high-technology firms is the rate at which the firm develops new products. Rapid product development creates significant advantages for entrepreneurial firms, including access to early cash flows, external visibility, legitimacy, and early market share. The higher a firm's rate of new product development, the more likely the firm is to achieve and maintain these first-mover advantages. This is particularly true in industries such as pharmaceuticals, where the effectiveness of patent protections leads to patent races in which a “winner take all” scenario exists. But even in industries where patent protection is weak, the advantages of being first, in terms of market preemption, reputation effects, experience curve effects, etc., can still be of major importance. We argue that one way an entrepreneurial firm can increase its rate of new product development is by entering into strategic alliances with firms that possess complementary assets.The basic proposition advanced is that a firm's rate of new product development is a positive function of the number of strategic alliances that it has entered. However, the relationship between strategic alliances and the rate of new product development may be nonlinear. Specifically, although strategic alliances may initially have positive effects on the rate of new product development, this relationship may exhibit diminishing returns. Moreover, past some point it is possible that negative returns may set in. Thus, the relationship between the number of alliances and the rate of new product development may be an inverted U-shape.Two reasons can be given to support such a relationship. First, not all alliances will make an equal contribution to increasing the rate of new product development. The economic “law” of diminishing returns suggests that the more alliances a firm engages in, the more likely it is to enter some alliances whose marginal contribution is relatively minor. Such a phenomenon on its own is enough to suggest diminishing returns.Second, gaining access to complementary assets through strategic alliances is not without risks. Malperformance may occur when the firm discovers that the complementary assets provided by the partner are a poor match, fail to live up to the promises made by the partner, or a partner may opportunistically exploit an alliance, expropriating the firm's know-how while providing little in return. These problems arise because the effectiveness with which the firm can select and manage alliance partners is likely to be negatively related to the number of alliances the firm is managing. Due to information processing requirements, the quality of partner search and the ability to monitor the partners' actions will decline as the firm increases the number of alliances in which it is involved. This reasoning leads to a prediction that past some point, alliances will be increasingly vulnerable to malperformance. This raises not only the possibility of diminishing returns to the number of alliances, but also negative returns as the number of alliances increases past some critical point.This proposed relationship between alliances and new product development was tested on a sample of 132 biotechnology firms. The results provide strong evidence to support the inverted U-shaped relationship between the number of strategic alliances and the rate of new product development. Therefore, at low levels strategic alliances are positively related to new product development, but as the number of alliances increases, the benefits begin to decrease, and at high levels the costs of an additional alliance actually outweigh the benefits.     

Costly Ties: Social Capital as a Retardant of Network‐Level Entrepreneurial Orientation

Challenging social capital research, we argue that network top management teams (TMTs) established to support entrepreneurship in strategic multipartner networks should be careful in developing ties to outside organizations and networks. We suggest that such ties limit the network TMT's ability to engage in the strategy‐making processes needed to facilitate entrepreneurial orientation on a network level. Based on five‐year panel data from 53 formalized networks of small and medium‐sized enterprises, we demonstrate that homogenous and highly educated network TMTs can compensate the negative effects of TMT ties to other organizations, but not the negative effects of interlocking directorates.     

The role of top management teams in transforming technology-based new ventures' product introductions into growth

The literature highlights the importance of top management teams (TMTs) for technology-based new ventures' success in achieving growth, which is often achieved through product introductions. The human capital theory suggests that TMT members' skills, which are typically derived from their education and experience, can facilitate the transformation of new product introductions into growth. We also propose that multiple products that must be managed and brought to the marketplace smoothly and flexibly benefit from the lower coordination needs and conflicts that are typical of functionally homogeneous teams. Using a unique, multi-source dataset on 374 US technology-based new ventures during the period from 2005 to 2014, we find that new product introductions help technology-based new ventures grow only when the TMT has startup experience and is not functionally diverse. Our findings lead us to echo calls in the TMT literature to move away from simple direct-effect models to more situation-dependent analyses of TMT diversity.     

Individual‐Level Ambidexterity and Entrepreneurial Entry

This study examines the organizational drivers of entrepreneurial entry through the lens of individual‐level ambidexterity. We theorize that employees that both explore and exploit new activities within organizations are more likely to become entrepreneurs outside the organization. Multilevel analysis results from a large sample of Global Entrepreneurship Monitor survey data support this hypothesis. This study contributes to the entrepreneurship literature by highlighting the role of individuals' prior ambidexterity experiences in organizations as foundational building blocks of entrepreneurial entry. The study links entrepreneurship and ambidexterity theories with evidence that an individual's ambidexterity and entrepreneurial activities are related.     

The performance effect of network and managerial capabilities of entrepreneurial firms

Building on the organizational capabilities view, this study explores the impact of network and managerial capabilities on the performance of entrepreneurial firms in the architecture and real estate sector. We apply an extended organizational capabilities model by integrating Porter’s value chain model and Grant’s hierarchy of organizational capabilities. Starting from differences in entrepreneurial orientation between architecture and real estate development firms, we argue that under higher environmental uncertainty, network capabilities are more important for the performance of architecture firms whereas managerial capabilities are more important for the performance of real estate development firms. Employing data from Austria, Germany, and Switzerland, the research results support the hypotheses. This study integrates Porter’s value chain concept and the organizational capabilities model and delivers a contribution to the organizational capability theory. In addition, it contributes to the entrepreneurship literature by showing that network capabilities are more important for creating competitive advantage in entrepreneurial firms than in other firms.     

董事会断裂带对创业导向的影响——行为整合机制的调节效应

以高阶梯队理论和群体断裂带理论为基础,探索董事会断裂带与创业导向之间的关系,以及影响二者关系的两种重要行为整合机制——董事会成员交叉任期和董事长职能背景广泛性.基于信息传输、软件和信息技术服务业A股上市公司2012~2016年面板数据的实证研究表明:董事会断裂带对创业导向具有负向影响;董事会成员交叉任期和董事长职能背景广泛性对上述关系具有正向调节作用.文章探讨特定行为整合机制下董事会断裂带与创业导向的关系丰富了有关创业导向前因的研究,通过提出并验证交叉任期和董事长职能背景广泛性这两个具体的行为整合机制而丰富了高阶梯队理论,对企业的创业管理实践亦具有重要启示.     

Top management team’s formal network and international expansion of Chinese firms: The moderating role of state ownership and political ties

This article explores the role of the formal network centrality of top management teams (TMT) for foreign expansion, looking at the case of Chinese firms. The former is defined by the degree to which top managers are connected with TMTs of other firms in formal ways, through service as independent board members. We explore boundary conditions, comparing state ownership with political ties. The analysis of a panel data of 489 firms expanding to 72 developed and developing host markets in the period 2000–2012 confirms that network centrality facilitates internationalization. We found that TMT network centrality had a stronger effect on internationalization in developed than emerging markets. Conversely, state ownership had a positive moderating effect in the latter and political ties a negative effect in developed ones. The literature on comparative institutional analysis suggests that formal ties are more important in developed economies, and informal ties in emerging ones. However, formal political ties and/or links to the Chinese state may be more of value in internationalizing into other emerging markets, where the balance of diplomatic power may be more skewed in China’s favor.     

Family firms and internationalization: An exploratory study on high-tech entrepreneurial ventures

This paper empirically explores a highly relevant, although poorly investigated topic: internationalization of family firms that operate in high-tech industries. Specifically, we compare internationalization of family and nonfamily entrepreneurial ventures in these industries. Relying on prior studies on internationalization of family firms, we speculate on how the specificities of high-tech industries shape the advantages and disadvantages of family entrepreneurial ventures in pursuing internationalization as compared with their nonfamily peers. In the empirical part of the paper, through a rigorous quantitative analysis of unique data from 264 Italian high-tech entrepreneurial ventures, we explore whether in high-tech industries family entrepreneurial ventures are more (or less) likely to pursue internationalization than their nonfamily counterparts. Surprisingly enough, our econometric estimates indicate that, in high-tech industries, family entrepreneurial ventures exhibit a higher internationalization propensity than their nonfamily peers.     

Entrepreneurial Orientation and Performance of Chinese High-Tech Firms： The Mediating Role of Organizational Learning and Moderating Role of Firm Life Cycle

The evidence about how entrepreneurial orientation （EO） affects firms＇ performance remains inconclusive. This study joins the research by incorporating organizational learning （OL） as a micro-macro link and by extending empirical work to the largely underexplored context of Chinese high-tech industries. Results from a survey of 252 Chinese high-tech firms demonstrate： （1） entrepreneurial orientation is positively related to firm performance; （2） organizational learning is also positively related to firm performance; （3） organizational learning partly mediates the positive impact of entrepreneurial orientation on firm performance; and （4） high-tech companies in the start-up and growth stage are likely to demonstrate stronger linkages in the EO-OL-performance relationship than in mature stage, which shows that the EO-OL-performance relationship is moderated by firms＇ life cycle.     

Integrating organizational learning with high-performance work system and entrepreneurial orientation: a moderated mediation framework

This study proposes a moderated mediation model to investigate the relationship between organizational learning and firm performance. We argue that entrepreneurial orientation mediates the positive effect of organizational learning on firm performance. Furthermore, the relationship between organizational learning and entrepreneurial orientation is strengthened when firms employ a higher level of high-performance work system. Hypotheses are supported by data from 181 firms operating in the manufacturing and service industries in China. Statistical results further reveal that a high-performance work system has different moderating effects on exploitative learning and exploratory learning. This research extends our understanding of organizational learning theory, entrepreneurship and human resource management literature by cross-fertilizing constructs in these fields with empirical evidence.     

Strategic Leadership of Corporate Sustainability

Strategic leadership and corporate sustainability have recently come together in conspicuously explicit fashion through the emergence of top management team (TMT) positions with dedicated corporate sustainability responsibilities. These TMT positions, commonly referred to as “Chief Sustainability Officers,” have found their way into the upper echelons of many of the world’s largest corporations alongside more traditional TMT positions including the CEO and CFO. We explore this phenomenon and consider the following two questions: Why are corporate sustainability positions being installed to the TMT? What effects do corporate sustainability TMT positions have at their organizations? We consider these questions through strategic leadership and neoinstitutional theoretical frameworks. Through the latter, we also engage with Weberian considerations of bureaucracy. We find that the reasons why corporate sustainability TMT positions are installed can be in response to a crisis at the corporation for which its legitimacy is challenged. We also find the corporate sustainability TMT position can be installed proactively in an effort to realize external opportunities that may have otherwise gone unrealized without concerted attention and coordination afforded by a strategic level position. Regarding effects, we determine the position can relate to the establishment of bureaucratic structures dedicated to corporate sustainability within the corporation through which formalized processes and key performance indicators to drive corporate sustainability performances are established. In the face of our finding that many corporate sustainability TMT positions are being removed despite having only relatively recently been introduced to their respective TMTs, we find that the successful implementation of bureaucratic machinery can help considerations to sustainability extend beyond the tenure of a corporate sustainability position within the TMT.