Growth of born globals: the role of the entrepreneur’s personal factors and venture capital

This paper examines to what extent the human capital of entrepreneurs and the receipt of venture capital (VC) financing affect the growth of born globals (BGs). The study analyzes a sample of 242 BGs resulting from a survey on high-tech start-ups operating in the ICT and electronics sectors, located in different countries throughout the world. A multivariate explorative analysis controlling for the endogenous nature of VC is conducted. The results indicate that the experience of the entrepreneur in having previously established another entrepreneurial firm positively affects the growth of BGs. A negative effect is associated with the presence of heterogeneity in the management team in terms of education background. With regard to the linkage between financial capital and growth, it is found that both VC financing and the number of founders (a proxy for the availability internal capital) positively influence the growth of BGs.     

Network advantage’s effect on exit performance: examining venture capital’s inter-organizational networks

This study investigates how a venture capital’s network affects its exit performance. While most network research focuses on individual characteristics such as centrality and density, this study explores the overall advantage that results from holding a network position (i.e., a network advantage). This network advantage is examined at the syndicate level, which is a group of organizations. Within this context, the study contemplates the syndicate’s network advantage and hones in on the syndicate’s network advantage diversity, because the composition of members’ network advantage within the syndicate as well as the syndicate’s network advantage itself may affect the syndicate’s performance. To do this, first it is hypothesized that both a venture capital syndicate’s network advantage and its network advantage diversity are positively associated with its exit performance. Next, the study predicts that a syndicate’s network advantage diversity negatively moderates the positive relationship between the syndicate’s network advantage and its exit performance. Then a two stage least squares analysis of 1137 venture capital syndicate investments largely confirms the predicted effects. A syndicate’s network advantage is shown to contribute to its exit performance. A syndicate’s network advantage diversity clearly weakens the positive relationship between the syndicate’s network advantage and performance, while its direct effect on performance is not significantly supported. Overall, these findings show that a syndicate’s network advantage and its diversity are critical determinants of its exit performance in the venture capital industry.

     

Measurement of an individual entrepreneur��s social capital: a multidimensional model

The aim of this paper is twofold. First of all, we participate in the open discussion on the nature of social capital and we show that the one-dimensional approach is not enough to capture the complex nature of social capital. Second, we present, implement and validate a specific three-dimensional measurement tool that can be used to analyze the role of social capital in further entrepreneurship research. The measurement tool is implemented through a Structural Equation Model, which is estimated and validated from a database including information from 282 Argentinean entrepreneurs who answered a questionnaire specifically designed for this research. Our measurement model considers the dimensions proposed by Koka and Prescott (Strategic Management Journal, 23:795–816, 2002), i.e. relational, resources and structural.     

Linking entrepreneurial and market orientation to the SME’s performance growth: the moderating role of entrepreneurial experience and networks

Entrepreneurial orientation and market orientation (EO and MO, respectively) have received extensive research attention in the past several decades. Although scholars widely agree that both MO and EO are critical to firms’ performances, a better understanding is still needed about how market and entrepreneurial orientation develop over time as well as their relative impact on the growth of the SME’s performance. This study does not consider MO and EO as generic resources that always positively influence firms’ performances; instead, it tries to explore contingent elements, such as social and business networks and accumulated entrepreneurial experience. The hypotheses were tested on 191 small and medium-sized electronic firms located in an Italian geographical cluster during two periods: 2005 and 2016. This study suggests that SMEs, which develop social networks, may enjoy considerable advantages from entrepreneurial and market orientation, improving their performance benefits. Moreover, our results show that previous entrepreneurial experience, when specific, can reinforce the impact of entrepreneurial and market orientation on firms’ performance growth. This analysis makes several important contributions to the management literature on the strategic orientation of firms, the entrepreneurial experience and network development.

     

Entrepreneurial motivation: a non-entrepreneur’s journey to become an entrepreneur

In entrepreneurship literature, much research effort is focused on differentiating entrepreneurs, recognizing or exploiting opportunities, resources available or required, or a combination of the three entrepreneurship-defining factors. There is, however, very little research on understanding a non-entrepreneur’s motivation to become an entrepreneur. This greatly limits our knowledge of the entrepreneurial process. It has hindered our understanding of how non-entrepreneurs are motivated to pursue entrepreneurial career options and has led to misinformed decisions by scholars and policy makers. In this paper, our goal is to develop a theory of entrepreneurial motivation that explains how non-entrepreneurs develop the motivation to pursue entrepreneurship. We argue that an individual’s self-assessment of their identity is the primary factor in individuals developing entrepreneurial motivation. The identity self-assessment leads individuals either to seek enhancement of their identity or establish a new identity that opens them to the influence of entrepreneurial motivation reinforcing entrepreneurial exposure in their social environment.     

The conflict potential of the entrepreneur’s decision-making style in the entrepreneur-investor relationship

While prior research has indicated the importance of conflicts between investors and entrepreneurs, little is known about their causes. We use theory on entrepreneurial decision-making to examine the impact of a founding team’s causal versus effectual decision style on the level of perceived task conflict that founders experience with their venture capitalists. Based on a sample of 141 German ventures, we find that a founding team perceives fewer conflicts when following the causal principle of overcoming the unexpected and the effectual principle of affordable loss.     

The negative influence of the entrepreneur’s level of higher education on the attractiveness of European SMEs as alliance partners in Brazil: the role of practical experience and international entrepreneurial orientation

Notwithstanding the contemporary relevance of alliance strategies for SME internationalisation, especially in the case of uncertain business environments, few studies have investigated human resource issues in the context of SMEs prior to alliance formation. Even more scarce are studies looking at the impact of a manager/entrepreneur’s characteristics on pre-alliance formation, despite recognition of the expected crucial role of the entrepreneur in this context and of the strong connection between an entrepreneur and their SME. Drawing on international entrepreneurship theory and empirical observations from an exploratory study, we propose a post hoc conceptual model. The exploratory empirical part of our study employs a sample of entrepreneurs from biotechnology SMEs in the United Kingdom and Germany intending to ally in a large emerging market (i.e. Brazil). Our empirical observations suggest an anomalous (at first glance) negative association between the entrepreneur’s level of higher education (a construct at the individual level) and the attractiveness of the SME as a partner firm vis-à-vis alliance formation (a construct at the firm level). Our post hoc model emphasises the role of practical experience and the corresponding levels of international entrepreneurial orientation as theorised variables mediating the observed empirical relationship. We develop theoretical propositions, and suggest practical implications and future research directions.     

Economic and capital market antecedents of venture capital commitments (1960–2010)

Using vector autoregression technique, we examine the interrelation between venture capital flows, economic development, capital market fund-raising activities, and capital market valuation, based on annual data of the United States over the past half-century. We find that venture capital commitments appear to be correlated with GDP and capital market valuation. While capital market fund-raising activities (Initial Public Offerings and Seasoned Equity Offerings) are also correlated with venture capital flows, these effects are subsumed by GDP, indicating that the overall economy drives both venture capital flows and capital market financing activities. Analyses from impulse response functions suggest that shocks to GDP have a permanent effect on venture capital flows, while the impact of capital market valuation (Standard & Poor 500 returns) on venture capital flows is rather short lived. Overall, both economy-wide development and financial market fluctuations seem to impact venture capital flows.     

Franchising and intellectual capital: A franchisee’s perspective

Various studies have focused on the reasons for franchising. Most studies have concentrated principally on the franchisors’ motivations for franchising, with only a few exploring franchising as a route to self-employment. This paper seeks to provide a conceptual framework which examines the value of franchising to franchisees, employing an intellectual capital perspective. It is suggested that the (perceived) value of the franchise system is unlikely to remain static over time, and that the perceived benefits of franchise systems will vary according to both system and franchisee attributes.

The changing role of network ties and critical capabilities in an international new venture’s early development

The importance of networks for firm internationalization has been pointed out for several decades. Especially for small and new firms, networks have been found to be an important tool to gain access to resources and to overcome liabilities of newness, smallness and foreignness. Yet, there is a lack of understanding regarding which types of capabilities are developed through networking and how and when networks are used. The aim of this article is to explore how and when different networking activities develop critical capabilities during different phases of an international new venture’s early development. The article is based on a longitudinal, in-depth case study of a Swedish international new venture from the medical-technology industry. We find that the development process is greatly affected by how the individual key actors leverage their network ties to develop critical capabilities – they use existing network ties and different indirect ties during the pre-founding, start-up and establishment of production phases. During the commercialization and sales growth phases, however, many new network ties are developed. The heterogeneity of the individual actors’ backgrounds plays an important role during the different developmental phases. We conclude by advancing a number of propositions in relation to how critical capabilities are developed through networking during different developmental phases.     

Private equity and venture capital funds—from the state of research to a comprehensive model and an interdisciplinary research outlook

In the following article I not only aim at giving a comprehensive overview, but at integrating contemporary research on PE into a comprehensive model of PE investment. In doing so, I point out new avenues for future research and the methodological challenges. Finally, I attempt to look at the opportunities for interdisciplinary knowledge transfer to strategic management (SM) and international business (IB) research. I argue that the lessons of PE research offer a unique opportunity to (re)discover the ??liabilities side?? of strategy and international business.     

Economic growth,volatility and their interaction: What’s the role of finance?

This paper examines the relation between financial depth and the interaction of economic growth and its volatility. We use a sample of 52 countries for the period 1980–2011, and our main finding is that, at moderate levels of financial depth, further deepening increases the ratio of average growth to volatility; however, as financial depth increases, this relation reverts, and the rise in volatility overcomes that of economic growth. This result is obtained both in the medium and long run; however, the peak of the relation seems to be lower in the medium run (around 40%–55% of domestic credit/GDP) than in the long run (around 75%–99%). This suggests that increasing the level of domestic credit may intensify relative volatility in the medium term, but still raise relative long-term growth before the long-run threshold is achieved.     

The role of the seller’s stock performance in the market reaction to divestiture announcements

Divestitures have the potential to create shareholder value. However, the extent of the market reaction should depend on the likelihood of finding more valuable uses for the divested assets or the ability on the part of the seller to eliminate negative synergies. We hypothesize that strong performers have less scope to achieve substantial improvements compared to poorly performing firms. Using the seller’s stock return in excess of the market return in the 1-year and 2-year periods preceding the divestiture announcement to expose the divesting firm’s inefficient use of its assets, we show that the market reaction to divestiture announcements is significantly higher for underperforming firms. The difference in abnormal returns can be as high as 4 %. In contrast, none of the accounting-based variables that have been used in previous studies are found to be significantly related to the announcement returns. These results suggest that the firm’s stock performance is a more useful indicator of the wealth effect associated with divestitures.     

High-performance work practices and nurses’ intention to leave: the mediating role of organizational cynicism and the moderating role of human resource management-related educational background

Recently, an increasing stream of research has examined high-performance work practices in the health care context. In this vein, high-performance work practices have been shown to be related to various employees’ attitudes and behaviors including intention to leave. This study attempted to improve our understanding of the relationship between high-performance work practices and intention to leave by jointly examining mediating and moderating mechanisms. Results from a sample of 299 private nurses supported our moderated mediation model thus demonstrating that organizational cynicism mediated the relationship between high-performance work practices and intention to leave and further that this indirect effect is dependent on nurses’ human resource management-related educational background.     

High-performance human resource practices and firm performance: the mediating role of employees’ competencies and the moderating role of climate for creativity

Drawing on the resource- and competency-based view, this paper examines the relationship between high-performance human resource (HR) practices and firm performance. Using a sample of 189 firms in mainland China, a positive relationship between high-performance HR practices and firm performance was found that was partially mediated by employees’ competencies. We also found the organisational climate for creativity to strengthen such relationship. The implications and future directions of these findings are discussed.     

Erratum to: Fiscal decentralization and China’s provincial economic growth: a panel data analysis for China’s tax sharing system

Quality & Quantity -     

Dimensional effects of Korean SME’s entrepreneurial orientation on internationalization and performance: the mediating role of marketing capability

This study examines how three different dimensions of entrepreneurial orientation (proactiveness, innovativeness, and risk-taking) each determine internationalization strategies and enhance international performance among small and medium-sized enterprises (SMEs) through the mediating role of marketing capabilities. An integrative theoretical framework built on international entrepreneurship and a resource-based approach was tested in the context of Korean SMEs. Analyses of 401 survey data collected from Korean exporting SMEs revealed the differential effects of each entrepreneurial orientation and the mediating effect of marketing capability on internationalization strategies and performance. Proactiveness and risk taking appeared to function as significant antecedents of marketing capability. Marketing capability, in turn, significantly decreased internationalization scope and increased the financial performance of Korean SMEs, though it did not influence internationalization scale. This study further confirms that the mediating role of marketing capability in entrepreneurial orientation-performance relationships vary by entrepreneurial orientation dimensions. Taking the direct and indirect roles of the entrepreneurial orientation dimensions together, this study recommends the critical prioritization of risk-taking over proactiveness. It extends previous approaches to the triad of resource–capability–performance. Theoretical contributions and insightful managerial implications are also provided.     

Informational externalities of initial public offerings: Does venture capital backing matter?

We examine the role of venture capital backing on informational externalities generated by IPO firms. Theoretical models predict that going public firms generate positive externalities creating a spillover effect for other firms to go public. In this paper, we posit that venture backed IPOs convey positive information about industry and this information is transferred to rival firms. We also hypothesize that intra-industry information transfer varies with rivals’ characteristics and IPO price revisions generate additional information that affects rivals’ valuation. The results show that rivals have positive valuation effects in response to venture backed IPOs and no significant reaction in response to non-venture backed IPOs. We find evidence that the effect on rival firms is stronger if they operate in less concentrated industries and have high growth opportunities. The larger the IPO proceeds, the higher the magnitude of rivals ‘valuation effects. Positive (negative) information revealed in the form of upward (downward) price revisions significantly impacts rivals’ reaction in response to venture backed IPOs.     

Emotional competencies and cognitive antecedents in shaping student’s entrepreneurial intention: the moderating role of entrepreneurship education

This paper focuses on the analytic thinking of emotional competencies and their influence, in particular, in shaping university students’ entrepreneurial intentions, backed by an extended model of Ajzen’s Theory of Planned Behaviour, and analyses the moderating role of entrepreneurial education among the variables under study. The results, derived from an ex-ante and ex-post questionnaire addressed to Spanish university students engaged in a compulsory entrepreneurship course, were subjected to structural equation modelling analysis. Our findings show that entrepreneurship by university students is favoured by the development of their emotional competencies, due to the direct influence of the latter in shaping entrepreneurial intention and its positive impact on their cognitive antecedents (entrepreneurial attitudes and perceived self-efficacy), and suggest that students with a higher degree of emotional competencies who receive entrepreneurship education will have a more positive attitude towards entrepreneurship and will perceive themselves more capable of becoming entrepreneurs. The primary contribution of this paper is to spotlight the use of emotional competencies in encouraging entrepreneurship, and to heighten awareness of the positive effect of education on emotionally-competent students, a factor that should be taken into account to improve entrepreneurship education programmes.