Abstract
The warm venture cooperation built between venture capitalists and entrepreneurs may still be interrupted by the management's conflicts occurred due to various managerial factors. As a result, this study investigates the management conflict in venture capital investments. A cross-sectional study of questionnaire survey research design was conducted in this respect. Questionnaire data was generated from 35 Malaysian venture capital companies located in Kuala Lumpur and Selangor. The questionnaires were distributed through the mailing procedure. Overall, the findings indicate that the managerial factors significantly influence the management conflict. Further results show that managerial factors which consist of Deal Origination and Screening (DOS), Evaluating Venture Proposal (EVP), Contracting and Deal Structuring (CDS), Monitoring and Post Investment Activities (MPI) and Risk Management (RM) significantly influence the formation of management conflict in venture cooperation. Based on the findings, it is inferred that managerial factors does influence the occurrence of management conflict in venture cooperation. Thus, the study recommends that Malaysian venture capitalists give consideration to the managerial factors in reducing or curbing the possibility of conflict to occur.
Highlights
The ultimate goal in any venture cooperation is to create a successful venture business
The findings demonstrated that the managerial factors such as evaluating venture proposal, contracting and deal structuring and monitoring and post investment activities significantly influence the management conflict
The individual testing result further shows that deal origination and screening influence the management conflict, suggesting that particular independent variable is a significant factor that contributes to the occurrence of management conflict in venture cooperation
Summary
The ultimate goal in any venture cooperation is to create a successful venture business. The investee firms are not fully supervised and they have a measure of independence which tempts them to exploit the trust, i.e. by avoiding the risk and to shirk on effort In this view, the venture capitalists may be worried about the possible action of the investee firms, and may work toward precaution strategies and direct management involvement (Park & Steensma, 2012; Yitshaki, 2008). The venture capitalists may be worried about the possible action of the investee firms, and may work toward precaution strategies and direct management involvement (Park & Steensma, 2012; Yitshaki, 2008) This may lead toward positive instead of artificial business scenario. Where informational asymmetries are significant among them, the investee firms are tempted to defect from the financial contracts because it is quite easy to manipulate strategic information to the venture capitalists about their venture businesses to their short-term ends (Minai et al, 2011; Miller & Wesley, 2010)
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