Entrepreneurial decisions and legal issues in early venture stages: Advice that shouldn’t be ignored

Entrepreneurs make numerous business decisions each day, many of which have significant legal implications. Due to a lack of time and knowledge, however, these entrepreneurs too often make quick decisions regarding important matters—both current and future—based on a few primary factors, one of which is cost. Entrepreneurs appear to make decisions based on concrete, but frequently inappropriate, factors such as comparison of bottom-line dollar value or relatively small fees; in this scenario, short-term decisions are made that do not take into account intricate legal and strategic implications which may arise down the road. As such, we would suggest a different approach whereby entrepreneurs take the time to learn about and understand the implications of these decisions on long-term sustainability, liability protection, and growth potential. Herein, we discuss how using cost to compare and make decisions has an impact on three issues with legal implications that occur early in the start-up process, and which pose major implications for the entrepreneur if he or she does not deal with them properly. Toward this end, we propose some solutions to help prevent this from happening.     

Financial slack and venture managers' decisions to seek a new alliance

We examine two distinct perspectives to analyze the role of financial slack in the decisions of technology venture managers to seek strategic alliances. According to the capabilities perspective, financial slack provides managers with the ability to maximize the benefits from acquiring missing capabilities through alliance formation, whereas according to the resource dependence perspective, financial slack buffers the managers' motivations to seek alliances as a reaction to external environmental scarcity. Drawing on an experimental design and data on 1632 decisions nested within 51 managers, we find support for a combined perspective demonstrating that managerial discretion in the form of financial slack moderates how internal capabilities and context encourage managers to seek alliances. We discuss implications of our work for the alliance literature.     

Women on boards of directors: Why skirts in seats aren’t enough

Most organizations focus their attention on simply achieving gender diversity on their boards. This approach misses the point. A complex relationship exists between board gender diversity and good governance whereby such diversity can have a negative, positive, or neutral impact on organizational performance, indicating that organizations may only reap the benefits of gender-diverse boards under proper conditions. This article examines which conditions allow gender-diverse boards to flourish and which conditions lead to failure. Organizations usually increase female representation on boards of directors to achieve one of two goals: gender parity or improved governance. Each of these goals is influenced by different circumstances and thus must be approached in a unique manner. Three recommendations are offered herein for organizations trying to achieve each goal. Gender, ethnic, and cultural board diversity all share related justifications and challenges, so organizations that follow the recommendations in this article will be well positioned to benefit from all three sources of increased diversity on their boards of directors.     

The contrasting interaction effects of improvisational behavior with entrepreneurial self-efficacy on new venture performance and entrepreneur work satisfaction

Although improvisation is often considered to be an elemental component of entrepreneurship, little work has been done to evaluate factors that influence the relationship of entrepreneur improvisational behavior with important outcome variables. In an attempt to partly fill this gap, the current study examines the moderating effect of entrepreneurial self-efficacy on the relationship of founders' improvisational behavior with both the performance of their startups and their individual level of work satisfaction using a national (United States) random sample of 159 entrepreneurs. In alignment with our predictions, improvisational behavior was found to have a positive relationship with new venture performance (i.e., sales growth) when exhibited by founders who were high in entrepreneurial self-efficacy, whereas improvisational behavior was found to have a negative relationship with new venture performance when exhibited by founders who were low in entrepreneurial self-efficacy. Contrary to our expectations, entrepreneurial self-efficacy was found to have a negative moderating effect on the relationship between entrepreneur improvisational behavior and work satisfaction.     

Understanding a firm's openness decisions in innovation

The degree of openness in innovation, ranging from closed to multiple levels of openness, is a key strategic decision for managers. Therefore, this study aims to carefully investigate the underlying drivers of openness. A major result of this study is that the degree of openness underlies separate mechanisms for being closed in innovation and higher degrees of openness. The factors that prevent firms from being open are a lack of market and technological knowledge (knowledge gaps), ineffective intellectual property (IP) protection mechanisms, and competitor threats such as market entries and imitation. The most important factors that increase the degree of openness are a firm's need for financial funding in innovation and the effectiveness of a firm's IP protection mechanisms.     

Women and corporate boards of directors: The promise of increased, and substantive, participation in the post Sarbanes-Oxley era

Few aspects of corporate board diversity have generated the focused attention that the participation, position, and promise of women's service on the board has generated, especially in recent years. Of particular note is the extent to which women serve on large firm boards of directors (e.g., Fortune 500 firms). Increases in levels of participation have been described as glacial. While critics decry the level of participation of women on large-scale corporate boards, careful scrutiny suggests substantial progress. Concurrent with steady increases in the overall participation of women on corporate boards are increases in their presence on key board committees. Importantly, women's leadership of key board committees and their service as lead directors has improved in parallel with increases in their board memberships. These increases are particularly noteworthy in the post Sarbanes-Oxley (SOX) period. Such trends suggest the continued progress of women in assuming prominent positions in the corporate governance landscape, and provide evidence that the increasingly challenging environment in the post-SOX era has not attenuated the gains noted in the pre-SOX period.     

Toward a theory of transformative entrepreneuring: Poverty reduction and conflict resolution in Rwanda's entrepreneurial coffee sector

This study illustrates how entrepreneurship may catalyze prosperity as well as peace in entrenched poverty–conflict zones. We bring to life a conceptualization of transformative entrepreneuring by assessing interrelationships between poverty and conflict indicators from the perspective of rural dwellers in Rwanda's entrepreneurial coffee sector. Our findings suggest that individuals' perceptions of poverty alleviation and conflict reduction are sequentially linked, notably via increased quality of life. This enables us to advance theory on entrepreneuring by unpacking the mechanisms through which entrepreneurial processes may transform the lives of such ‘ordinary’ entrepreneurs in settings where economic and social value creation are desperately needed.     

Change Theory as an Evaluation Tool for a Community Action Board of Directors

The dynamics of a board of directors resemble those of other groups. They are either positive or negative in their flow of communication, their dispute resolution style, their problem solving ability and their ability to make decisions. This article discusses a model of change theory that is used in evaluating the effectiveness of a board of directors and assisting it to make changes for the betterment of the organization it serves.     

CEO pay fairness as a predictor of stakeholder management

This study examines the relationship between chief executive officer (CEO) pay fairness and future stakeholder management (SM) as well as the effect of the board of directors on this relationship. The results show that CEO pay fairness has an effect on future SM such that when underpaid, CEOs decrease SM and when overpaid, CEOs increase SM. Additionally, the relationship between CEO pay fairness and SM becomes stronger as the ratio of inside directors on the board increases, which suggests that as both management control increases and board diversity decreases, the CEO's control over SM increases. Implications for SM and CEO pay are discussed.     

Affective conflict and identification of knowledge sources in MNE teams

How does affective conflict influence identification of knowledge sources in MNE teams? We apply social exchange theory and consider the effect of two types of affective interpersonal conflict: relational tension and self-interest on identification of knowledge sources in MNE teams. We further analyse how these effects are related to geographic and nationality differences. We test our hypotheses with a field study of 1181 dyadic interactions between 160 members within 40 MNE teams engaged in product innovation, human resources, and operational improvement in three large diversified MNEs. We find that affective conflict has a direct negative relationship to identification of knowledge sources in MNE teams. This relationship is further negatively moderated by geographic differences and nationality differences. Our study contributes to theoretical and empirical micro-foundations of conflict and identification of knowledge sources in MNE teams.     

The role of positive emotions in experiential decisions

This research examines how consumers experience decision making for experiential products such as vacations. We combine data from 1) ethnographic interviews, 2) online community discussion forums, and 3) an introspective vacation-planning task to explore the experience of emotion in the decision process and to develop a new model of decision making that extends extant decision theories. We find that consumers experience a variety of positive emotions as they plan vacations, from facilitative feelings that guide the plan to fantasy feelings consumed for pleasure. Positive emotions are most evident in reaction to imagery and when the consumer's self identity is salient, and often precede more analytic information processing. Overall, this research offers a richer understanding of the emotional nature of consumer decision making for experiential products and services.     

The Economics of State Subsidies in Early Stage Financing

We analyze the effect of state subsidies on early stage investments. In a two‐period investment model with incomplete stage financing contracts, we describe optimal and second‐best investment levels. Optimality depends on external effects: given that private early stage financing generates positive external effects, the subsidies might be designed to use scarce state money most efficiently to mobilize private investment capital. However, a subsidy might also contribute to greater efficiency of the contractual relationship itself without regard to external effects. Refinancing subsidies can be optimal under both perspectives and are always optimal under last of the two approaches. The comparison of the main types of subsidies, i.e. refinancing subsidies, guarantees and direct investments, speaks against the use of guarantees. Finally, we show that our results do also hold if some investors (e.g. venture capitalists) have a superior screening capability.     

Conflict resolution strategies in joint purchase decisions for major household consumer durables: a cross‐cultural investigation

Previous studies on joint purchase decisions have investigated the types of conflict resolution strategies used by spouses, the usage frequency of different conflict resolution strategies, and the effects of demographics and various other variables, on the uses of conflict resolution strategies. Despite efforts to address this largely unexplored area, the role that culture plays in the use of conflict resolution strategies has been significantly ignored. Using a cross‐cultural perspective, this study addresses the gap in our understanding of the joint purchase decisions in the family by examining how husbands and wives of three ethnic groups in Britain – British Whites, Indians and African Blacks – use different conflict resolution strategies while jointly purchasing major household consumer products. The total sample comprised 583 husbands and wives of British White, Indian and African Black origin residing in London and Manchester in Britain. Our results showed that three conflict resolution strategies are used by both husbands and wives: bargaining, assertiveness and playing on an emotion. In addition, disengagement emerged as a strategy for husbands, whereas supplication emerged for wives. The study presented in this paper also provides substantial evidence of differences in the use of conflict resolution strategies by husbands and wives from the three ethnic groups, which greatly improves our knowledge on a cross‐cultural perspective of joint purchase decisions.     

Private equity investment decisions in family firms: The role of human resources and agency costs

This study examines decision making criteria that are employed by private equity (PE) investors selecting family firms. Hypotheses test the likelihood of investment based on family firm characteristics. Findings show that PE professionals take into account family-specific criteria, including human resources and opportunities to reduce agency costs. Furthermore, PE professionals prefer family firms that are already professionalized. This research contributes to the family firm literature on both a theoretical and a methodological level, exploring nonfamily succession routes and employing techniques— conjoint analysis for data collection and multilevel models for data analysis— that have seldom been used in this context.     

Synthesis of Complex Criteria Decision Making: A Case Towards a Consensus Agreement for a Middle East Conflict Resolution

The title of this paper reflects both the process and the outcome of the current undertaking. Frustrated with the current state of the Middle East but encouraged by earlier attempts at modeling complex problems, the authors participated in a panel discussion assembled to address the conflict and propose a possible road-map to peace. However, the participants of this project did not come to a single course of action that will result in peace in the Middle East but did reach a consensus agreement about a resolution that needs to be managed. This paper explores the process, the outcome and the factors that influence the decision as well as potential pitfalls. The Analytic Network Process (ANP), a well known multicriteria decision making approach, applied frequently in recent years to examine conflicts around the world, is used in this analysis. It provides a framework for synthesizing judgments on the diverse aspects of the problem represented in the structure of the decision. It pieces together these judgments in a holistic and logical way.     

The importance of importance: Its impact on decision-making in mall retail categories during an economic downturn

The study examines how, during an economic downturn, the perceived importance of the value offering of retail store categories, as identified by a major international mall operator based in Australia, influences the relationship between consumers’ shopping attitudes and likelihood of purchasing in those categories. The findings show variance in the importance pertaining to retail store categories between those that have and those that have not altered their shopping behaviour. Different mediating effects were found in the major, mini-major, leisure, apparel, and mobile phone categories, suggestive of each group having differing levels of self-interest in the value offerings of each category, thus, symptomatic of dissimilar decision-making strategies for each group. Contributions to theory and practice are discussed.     

我国董事会约束机制现状及其问题——对我国500家上市公司的描述性实证分析

完善的董事会约束机制是确保上市公司董事会有效参与公司决策与监督的关键。由于我国上市公司处于由行政型治理向经济型治理转化的过程中,公司治理的各项外部监督机制如公司控制权市场、产品市场、专业董事市场等对上市公司董事会的约束力较弱。掌握董事会治理的状况,强化对董事会的约束,对提高董事会治理的效率具有一定的指导意义。     

安徽省上市公司董事会治理与公司绩效关系的实证研究

以安徽省上市公司为研究样本,对董事会治理与公司绩效的关系进行实证分析,结果表明:适当的董事会规模、董事薪酬与董事持股比例对公司绩效有积极作用;独立董事比例、董事会领导权结构与董事变更对公司绩效影响不显著;过多的董事会会议不利于公司绩效的提高。     

Ethics Programs, Board Involvement, and Potential Conflicts of Interest in Corporate Governance

Board composition, insider participation on compensation committees, and director compensation practices can potentially cause conflicts of interest between directors and shareholders. If these corporate governance structures result in situations where actions beneficial to directors do not also benefit shareholders, then shareholders may suffer.Corporate ethics programs usually address conflicts of interest that may arise in the firm's activities. Some boards of directors take active roles in their firms' ethics programs by actively overseeing the programs. This paper empirically examines the relationship between ethics programs and potential conflicts of interest and the relationship between board involvement in a firm's ethics program and potential conflicts of interest.Evidence in this paper shows that firms with ethics programs have a lower percentage of inside directors on their compensation committees than do firms without ethics programs. Firms in which boards are actively involved in the programs have more independent boards (higher percentage of independent directors and lower percentage of inside directors) and are more likely to compensate outside directors with equity than are firms in which boards are not actively involved in the programs. Supplemental analyses show that the incidence of potential conflicts of interest is not significantly different between firms without ethics programs and firms in which boards are not actively involved in the programs. Taken together, the evidence in this paper indicates that a board actively involved in an ethics program, and not the simple existence of an ethics program, is related to the incidence of potential conflicts of interest.