Venture Experience Research Articles

Understanding the Internationalization of the US Venture Capital Industry: The Role of Experience, Reputation, and Networks

The development of breakthrough innovation in new nations, the emergence of entrepreneurial talent to new regional clusters, and the attendant need to participate in emerging growth markets have encouraged venture capital firms to develop global strategies and make offshore investments. While a growing collection of studies document the globalization of venture capital investment and its impact on portfolio firms, we know surprisingly little about the internationalization processes of venture capital firms themselves or the consequences for performance. This study departs from the conventional emphasis on venture capital as an inherently local business and draws upon the resource-based view and the capabilities literature to explain why some venture capital firms internationalize and others do not. We develop and test propositions using panel data over a twenty-eight year period containing 21,604 rounds of venture capital financing. Our results showcase the subtle interplay between venture capital firm experience, reputation, and network quality in the global market for the financing of high-growth new ventures.

The role of academic entrepreneur's experience in building networks

This paper develops a theory relating to how academic entrepreneurs (AEs) with differing levels of venture experience build networks outside their academic arena to create and develop biotechnology spin-outs in the UK. It is argued that a lack of appropriate networks can significantly limit venture growth especially at an early stage of development. This area of research has gained significance within contemporary literature, because it remains unclear how AEs build networks outside their academic arena, e.g. research institutes, labs, etc., help to grow their nascent ventures. This paper examines types of AEs with different levels of entrepreneurship experience. Entrepreneurship experience is further explained by looking at prior founding experience. Using a participant observation qualitative research approach, each entrepreneur is examined retrospectively.

Who Learns What?—A Study Based on Entrepreneurs from Biotechnology New Ventures

Despite a proliferation of research in the field of entrepreneurship, our understanding of entrepreneurial learning remains limited. We do not have systematic answers to many key questions. To what extent does the context of the learning shape that learning? How does the prior experience of an entrepreneur influence what they learn in new ventures? Does the specific role that the entrepreneur plays in a new venture, and the characteristics of the venture team, influence learning? To address this gap, and to progress the broader program of empirical research into entrepreneurial learning, we need to more fully explicate both the context and the content of learning. That is the objective and contribution of this study. We find that prior experience, the “division of (decision‐making) labor” and the “knowledge” characteristic of the venture team shape learning. One implication is that future research will need to assess more carefully both the content of new learning from the new venture experience, and the context of learning.

Does culture matter? The impact of cultural differences on VC-CEO interaction

Sapienza and Gupta (1994) examined the impact of agency risks and task uncertainty on venture capitalist-chief executive officer (VC-CEO) interaction. They found that the frequency of interaction depended on the extent of VC-CEO goal congruence, the degree of the CEO's new venture experience, the venture's stage of development and the degree of technical innovation. But their model overlooks the situation under which VCs invest overseas, making the internationalisation of venture capital remain an unfilled gap at VC-CEO interaction in cross-cultural contexts. Drawing on Sapienza and Gupta's work, the author consider the moderating effects of cultural differences on VC-CEO interaction. The author proposes that cultural differences affect the strength of the functions of agency risks and uncertainty on VC-CEO interaction by influencing not only VCs' assessment of agency risks and uncertainty, but also VCs' behavioural responses to their assessment.

PRACTICAL INTELLIGENCE OF HIGH POTENTIAL ENTREPRENEURS: ANTECEDENTS AND LINKS TO NEW VENTURE GROWTH.

We draw upon cognitive psychology, social cognition, and social cognitive theories to develop a model of practical intelligence, its antecedents, and its role in the exploitation phase of entrepreneurship. Related venture and industry experience and two learning orientations interacted to predict practical intelligence. Practical intelligence predicted higher venture growth across four years.

The Role the Collegiate American Marketing Association Plays in Professional and Entrepreneurial Skill Development

Professional student organizations offer members a wide range of learning opportunities for applied marketing experiences. Little research exists in the marketing education literature on the role student organizations play in preparing their members for life beyond school. Understanding what students seek as members of such organizations and how satisfied they are with their experiences is not only important for continued chapter development but also useful for faculty not directly involved with such organizations but impacted by their activities. A model, developed and tested through a large-scale study of American Marketing Association collegiate members, suggests four experiential dimensions affect member satisfaction and professional development—strategic and tactical activities, interpersonal and networking skills, entrepreneurial and venture experience, and applied learning through contacts with professionals. Recommendations for improving American Marketing Association chapters are presented.

Domestic and International Equity REIT Joint Ventures: Structuring Corporate Options

We examine a sample of 185 Joint Ventures parented by publicly-traded Equity Real Estate Investment Trusts 1994–2001. These transactions are found to be motivated by a wide variety of corporate strategies. Shareholder returns for REIT parents are significantly positive, which is consistent with wealth effects previously reported for joint ventures formed by non-REIT real estate firms. In a subsample of joint ventures formed to structure partial dispositions of property, however, abnormal returns are significantly negative, which is consistent with the free cash flow theory of Jensen. REIT joint venture experience in Asia has been neutral for value, but may improve in the future if early ventures have created options for more efficient partnerships later.

Political constraints, organization design and performance measurement in China’s state-owned enterprises

This study develops a theoretical model to test how political constraints on labor decisions mediate the effects of economic liberalization forces on aspects of organizational design such as delegation, performance measurement, and incentives in Chinese state-owned enterprises. Hypotheses tests using a large survey of divisional managers generally confirm the model: that the influence of three liberalization forces (industry level growth and foreign firm competition, joint venture experience and stock market listing) on organization design is mediated by political constraints.

Predicting Organizational Success within a Project-Based Joint Venture Alliance

Project-based joint ventures (a special type of alliance) are an often-used method to form competitive organizational structures in the global market; they allow participants to quickly assemble project-needed assets on a short-term basis without substantial investment. However, published discussions of joint ventures describe mixed success and focus on factors that affect the ventures after they are formed. This paper exposes factors, which may be observed at joint venture inception, that are predictive of organizational success within the joint venture. The survey research of U.S. architecture/engineering/construction (A/E/C) firms indicates that smaller partners in a joint venture experience more market growth and are more successful. Also, a firm with strength in legitimacy (client trust) is more likely to gain in short-term income but will likely suffer some long-term market loss in comparison to its less-legitimized partners. It is further concluded that culture match among partners plays a significant role in ensuring profitable joint venture returns.

The adoption of “Western” management accounting/controls in China's state-owned enterprises during economic transition

This study explores the influences on the adoption of “Western” management accounting/control practices by China's state-owned enterprises (SOEs). This topic is important given the potential for such practices to affect SOE operations in the midst of China's continued privatization programme, and the continued opening of its markets to competition. In-depth interviews were conducted with managers at four SOEs and two of their joint ventures. These interviews indicated increased use of a range of Western management accounting/controls in the SOEs. They also shed light on the factors that influenced the level of adoption. These findings were used to refine a survey instrument for data collection from 82 other SOEs. The survey indicated significant and predicted influences from use of limited-term employment contracts, joint venture experience, stock exchange listing, and the availability of training.

Joint venture research and development activity: an analysis of the international biotechnology industry

The research question we investigate is under what conditions will joint ventures engage in research and development (R&D) activity within the context of a global, high-technology environment. To explore this question, we examine the collective impact of initial conditions that influence the presence of R&D activity among joint ventures (JVs) formed in the global biotechnology industry. Our investigation is driven by two streams of research in joint ventures: transaction costs and initial conditions. Specifically, we examine whether business relatedness, cultural relatedness, country risk, and prior joint venture experience are related to R&D activity in joint ventures. Our results show that cultural relatedness and country risk factors do matter when it comes to R&D activity in biotechnology joint ventures. On the other hand, business similarities and prior JV experience between the parents do not seem to be as important as one might expect.

Private Funds, Utility Development, and Government Policy

Between 1995 and 1997, the Clark Development Corporation (CDC) used the joint venture model, a variety of the built-operate-transfer (BOT) model, to attract private funds for utility development in the Clark Economic Zone in the Philippines, located on the site of the former Clark Air Base. The principle elements of the joint venture model were a capital investment by a strategic partner and eventual sale to the public of the CDCs share of the joint venture corporation. Gavieta states that the success or failure of such a program is largely dependent on the conduct of the bid solicitation and the contract award process. Lessons learned from the joint venture experience concerned the absence of construction completion guarantees, performance undertakings, and environmental insurance cover; minimum bid price; tariff caps versus IRR caps; valuation of the existing right of way and equipment qualitative evaluation of bidders; minimum term commitments by joint venture partners; independent third-party venture evaluation of joint venture performance; and corporate governance of joint ventures.

Performance of international joint ventures from developing and developed countries: An empirical study in a developing country context

In response to the need for research on International Joint Ventures (IJVs) from developing countries, this paper examines the multivariate determinants of performance of 59 IJVs from both developing and developed countries in a developing country context. Resource complementarity, cooperation, joint venture experience, technology and export-orientation were found to be significant determinants of performance of joint ventures. While the determinants varied for IIVs from developing and developed countries, there were no significant differences in their performance levels. The empirical findings and their implications, including limitations and areas for further research are discussed.

Venture capitalists and serial entrepreneurs

Habitual entrepreneurship is receiving growing attention, much of which has focused on entrepreneurs who have started more than one venture. This paper examines the importance of habitual entrepreneurs to the venture capital industry, with particular emphasis on those who have exited from an initial investment in the venture capitalist's portfolio, termed serial entrepreneurs. As venture capital markets mature, increasing numbers of entrepreneurs are likely to exit from their initial enterprises, creating a pool of entrepreneurs with the potential for embarking on subsequent ventures. Venture capitalists making investments may invest both in entrepreneurs starting new ventures and those who purchase a venture through a management buy-out or buy-in. On this wider basis, the paper develops a classification of types of serial venture. A number of issues are raised for venture capitalists, notably the relative attractiveness of reinvesting in exited entrepreneurs and the policy they adopt in tracking and assessing such individuals.The paper addresses venture capitalists' perspectives on investing in serial entrepreneurs based on a representative sample of 55 UK venture capitalists (a response rate of 48.7%, and a follow-up survey of those who had more extensive experience of serial entrepreneurs (23 respondents). The results of the survey show that despite a strong preference for using an entrepreneur who had played a major role in a previous venture, the extent to which exiting entrepreneurs are funded from their own portfolio again is limited, though there is more extensive use of such individuals in a consultancy capacity. In screening entrepreneurs exiting from previous ventures for subsequent investments, venture capitalists scored attributes relating to commercial awareness, experience in a particular sector, and personal ambition of the entrepreneur most highly.Venture capitalists do make extensive use of serial entrepreneurs who have exited from other venture capitalists' portfolios, primarily to lead management buy-ins. Indications from the survey are that venture capitalists rarely assess entrepreneurs formally at the time of exit and that it is unusual to maintain formal links with entrepreneurs after they have exited. These apparent shortcomings suggest that perhaps investment opportunities are being missed. Those venture capitalists preferring serial entrepreneurs generally had a larger volume of funds under investment and were rather older than those venture capitalists who do not prefer to use serial entrepreneurs, reflecting the possibility that longer established venture capitalists have had more opportunity and experience in relation to second-time entrepreneurs.Investment appraisal factors were subject to a principal components analysis to identify underlying dimensions/relationships between them. With respect to the general investment appraisal factors, five factors were identified. Two factors were related to track record; one of these reflected ownership experience, while the other represented management experience. The third factor was related to personal attributes such as age, knowledge, and family background. The fourth factor represented links to the funding institution, and the final factor (a single variable factor) concerned financial commitment. The principal components analysis for screening factors on management buy-ins produced a single factor comprising all variables. These factors were then subject to a multivariate analysis of variance (MANOVA), with preference for use of a serial entrepreneur as the independent variable. The results suggest that there are significant differences between venture capitalists who prefer serial entrepreneurs and those who do not in respect to their business ownership experience, the length of their entrepreneurial careers, and the number of their previous ventures.The results of the study have implications for practitioners. First, the findings emphasize the importance of not considering previous venture experience in isolation but in the context of other key investment criteria. Second, the lack of strongly greater performance from serial, versus novice, entrepreneurs further emphasizes the care to be taken in assessing experienced entrepreneurs. Third, the relatively low degree of formal and rigorous post-exit assessment and monitoring by venture capitalists suggests that important opportunities to invest in experienced entrepreneurs may be missed.

Impact of Agency Risks and Task Uncertainty on Venture Capitalist–CEO Interaction

This study examined the impact of agency risks and task uncertainty on venture capitalist-chief executive officer (VC-CEO) interaction. Results from 51 VC-CEO dyads indicate that the frequency of interaction depends on the extent of VC-CEO goal congruence, the degree of the CEO's new venture experience, the venture's stage of development, and the degree of technical innovation it is pursuing. However, contrary to conventional expectations, the degree of management ownership had no impact on the frequency of interaction.

Joint venture attitudes and experience: A TIE Research Survey

Joint venture attitudes and experience: A TIE Research Survey