Venture Firm Research Articles

The Influence of Founder CEO’s Human Capital Resources on the Relationship Between Workforce Gender Diversity and Venture Firm Performance

The Influence of Founder CEO’s Human Capital Resources on the Relationship Between Workforce Gender Diversity and Venture Firm Performance

Founder CEO Human Capital, Workforce Gender Diversity, and Venture Firm Performance

Founder CEO Human Capital, Workforce Gender Diversity, and Venture Firm Performance

The Benefits of Cross-Border Corporate Venture Capital Investment on the Likelihood of a Venture Firm’’s IPO

Purpose - Extant research indicates that CVC investments create value for venture firms and generally enhance the likelihood of a successful venture exit. In particular, despite the globalization of CVC investments, the impact on venture firm exit performance has been largely overlooked. Thus, this study explores the impact of cross-border CVC investments on the likelihood of a venture firm’s IPO. We argue that the foreignness of CVCs increases the likelihood of IPO, but this positive relationship is weakened when CVC units have a tight structure.
 Design/Methodology/Approach - The hypotheses are tested with 1,874 high-technology venture firms in the U.S. that received CVC investments between 1994 and 2009. A two-stage analysis was employed to address potential selection bias. In the first stage, we employed a probit model to predict the probability of receiving cross-border CVC investment. In the second stage, we conducted a probit regression analysis on the likelihood of IPO, incorporating the inverse Mills ratio to address selection bias.
 Findings - We found that the foreignness of CVCs increases the likelihood of a venture firm’s IPO. However, this positive impact is weakened when CVCs have a tight governance structure.
 Research Implications - This study highlights the benefits of cross-border CVC investments and enriches resource dependence theory by reconciling it with institutional theory, depicting the importance of both reducing resource constraints to create value for venture firms and the institutional logic pursued by CVCs. This study suggests that entrepreneurs should be careful with CVC units that prioritize strategic objectives.

The Optimal Open Innovation Strategy with Science-based Partners for Venture Firm’s Innovation Capabilities: Focusing on Innovation Modes

This study explores the difference in the effects of innovation modes on innovation capabilities dividing various collaborative activities conducted by venture firms with science-based partners into innovation modes. Venture firms that relatively lack the resources and capabilities for innovation perform various collaborative activities such as marketing support and management support as well as research and development collaboration with science-based partners. However, this has not received proper attention in the literature on open innovation. We classified venture firms according to innovation modes and compared each group through a multi-treatment model. As a result, we found that there was a difference in the impact on innovation capability according to the innovation mode with science-based partners. This study contributes to enriching the empirical bodies of open innovation research. In addition, it suggests that there is a need for a portfolio approach considering the innovation modes by establishing policies at the level of collaborative activities in supporting the collaboration of venture firms.

Real-Based Earnings Management of Venture Firm, Future Business Performance and Cost of Debt

본 연구는 우리나라 산업 전체의 중요한 성장동력으로 작용하고 있는 벤처기업을 중심으로 미래 경영성과 및 타인자본비용에 대한 실제 이익조정의 관련성을 살펴보는 데 목적이 있다. 분석 결과는 다음과 같다. 첫 번째, 벤처기업의 실제 이익조정은 미래 경영성과인 t+1기 당기순이익과 영업현금흐름과 음(-)의 관련성이 있는 것으로 나타난다. 이는 벤처기업의 경우 실제 이익조정을 통해서 단기적으로 이익을 상향 조정하면 기업 자원 흐름의 왜곡을 발생시켜 차기 당기순이익과 영업현금흐름에 부정적인 영향을 미칠 수 있음을 의미한다. 두 번째, 벤처기업의 실제 이익조정은 타인자본비용과 양(+)의 관련성이 있는 것으로 나타난다. 이는 벤처기업이 실제 이익조정에 의해 미래 현금흐름의 불확실성이 증가하고 있음을 자본시장에서 해석하고 위험 프리미엄을 요구함에 따라 타인자본비용이 증가하는 것으로 해석될 수 있다. 추가적으로 t+3기 경영성과 및 타인자본비용에 대한 실제 이익조정의 부정적 효과는 지속되는 것으로 나타난다. 본 연구는 벤처기업이 경영성과에 부정적 효과를 고려하여 발생액 이익조정보다 실제 이익조정을 선호하지 않는 원인에 대하여 이론적 배경을 본 연구는 제시할 수 있을 것으로 기대된다.

Leveraging smart capital through corporate venture capital: A typology of value creation for new venture firms

Corporate Venture Capital (CVC) units position themselves as smart capital providers in new venture firm New Venture Firm (NVF) financing. In line with the resource-based view and social capital theory, extant research postulates that CVCs contribute complementary assets beyond capital to their NVFs. However, the non-financial value for NVFs is mainly created through a corporate business unit within the CVC's corporate parent company. As agency theory implies, the strategic agendas of CVCs, NVFs, and corporate business units may not always align and thereby often hamper value creation. Hence, our qualitative research builds on a cross-industry case study of eleven CVC units to show how they leverage resources from their corporate sponsors to add value for NVFs. We reveal the mechanism behind CVC value creation holistically by identifying eight design elements that lead to a typology of four distinctive CVC forms. This classification offers a representation of the CVC landscape based on their institutional environment.

The Venture Firm’s Ambidexterity: Do Transformational Leaders Boost Organizational Learning for Venture Growth?

Having experienced the turbulent change in corporate value rankings over the past 20 years, companies are paying attention to their reorganization to quickly recognize changes and proactively adapt to these changes for survival. This study examines the relationships and intervening ambidexterity mechanisms between CEOs’ leadership style and employees’ learning agility. Using multilevel regression, we analyze hypotheses on a sample of 102 participating CEOs and 236 employees. Results reveal that the ambidextrous organization, which pursues the current organizational development while constantly adapting to changing environments, plays a role as a partial mediator between transformational leadership and members’ learning agility. These results explain that to increase the organization’s agility, a systematic organizational structure system that stimulates members’ motives and simultaneously pursues utilization and exploration must be established through clear goals and appropriate stimuli even in an uncertain environment. Our finding contributes to an understanding of how the CEO’s leadership style affects employees’ learning agility in ventures and to what extent the contextual ambidextrous structure influences the relationship.

How Large-established Joint Venture Firm Remains Resilient in a Disruptive Era: A Process Tracing Case Study

The crises have spread out globally and have impacted industries, either large firms or small firms. These impacts make the firms economically in intense trouble or file bankruptcies and lay off their employees, as their incomes are falling significantly globally. Therefore, this study investigates how businesses can improve their resilience and be prepared to cope with crises and threats in this disruptive era. What were the strategies the firm has implemented?

What affects new venture firm’s innovation more in corporate venture capital?

Although corporate venture capital (CVC) is a potential source of innovation, few studies have directly examined the impact of a parent company’s knowledge and resources on a new venture firm’s innovation performance. This article investigates the impact of experience with parent’s alliance and investment intensity on the extent to which new ventures in the U.S. use their parents’ knowledge and financial resources for their innovation activities at the inception of the CVC relationship over a 44-year period. Our findings suggest that ventures with alliance experience draw more on collaboration knowledge and relational capital, while investment intensity also increases innovation. At a low level of investment complexity, the use of alliance experience and investment intensity is positively related to innovation performance. However, when a parent company has high investment complexity for innovation performance, investment intensity and alliance experience are less effective. Our results, thus, unveil the CVC backing associated with the innovation of new venture firms.

E&P Notes (February 2020)

E&P Notes (February 2020)

Do Venture Firms Outlearn Investor Firms? CVC Investments, Venture Firm Learning, and IPO

The extant literature on corporate venture capital (CVC) has overwhelmingly viewed CVC success through the lens of the investor firm, leaving the venture firm’s perspective limitedly explored. Theo...

Funding acquisition drivers for new venture firms: Diminishing value of human capital signals in early rounds of funding

Multiple factors such as human capital, amount raised in the first round, innovation etc. have an impact on the funding prospect of new ventures. This paper explored the influencing factors that drive multiple rounds of funding for new venture firms and provided a much broader perspective of funding drivers during the early stages of the new venture firm. Using signalling theory and human capital theory, this paper analyzed signals that influence the acquisition of funds in the first round and whether those signals persisted for the second and third rounds of funding when information asymmetries between the investors and new venture firms reduce. This study disentangled the signalling effects of the human capital factors across three funding rounds and proved the diminishing value of signals across each subsequent round of funding. Finding showed that the signal effect from premier institution education was the only human capital signal that persisted across each round of funding, while other signals did not persist beyond the first round of funding. In addition, new venture firms with founders educated from premier educational institutions were able to attract more investors and close more funding rounds. This study also proved that the amount raised in the first round of funding positively impacted the amounts raised in the second and third rounds stressing its importance for new venture firms. Empirical demonstration of the propositions was done with 156 new venture firms in India, the fastest growing and third largest startup ecosystem in the world.

Medium-Small and Venture Firm Size Distribution and Trade Welfare

Medium-Small and Venture Firm Size Distribution and Trade Welfare

The Effects of Exports and Selling and Administrative Expenses on the Business Performance of Venture Firms

The objective of this study is to verify the effects of exports and selling and administrative expenses on business performance of venture firms. using multi-variate regression analysis. Results showed that venture firm exports had positive effects on business performance. Moreover, selling and administrative expenses of venture firms had positive effects on business performance, including the sub-elements of selling and administrative expenses such as entertainment expenses and advertising campaign expenses. On the other hand, selling and administrative expenses had negative effects on exports. Specifically, overseas market pioneering cost and export cost that were expected to be directly related to exports had positive effects on exports. Meanwhile, entertainment expenses, advertising campaign expenses and sales promotion expenses that used to have positive effects on sales in preceding research studies, had negative effects on venture firm exports.

The Multi-Edged Sword of Heterogeneity in Nascent New Venture Teams

Heterogeneity of nascent New Venture Teams (NVTs) exerts substantial influence on the emergence of new venture firms. However, extant research provides equivocal results regarding this relationship. Drawing on the configurational perspective, we investigate configurations of nascent NVT heterogeneity in terms of educational level, functional background, industry experience, age, and gender. A fuzzy set Qualitative Comparative Analysis (fsQCA) of data from 386 nascent NVTs indicates that different combinations of these constructs are likely to be causally relevant for both the occurrence and the non-occurrence of new venture firm emergence.

Entry to Avoid Competition? Venture Capital and Firm Market Entry in U.S. Local Telephone Industry

This paper offers a novel investigation on how venture capital (VC) may affect market entry strategies of the funded firms. Specifically, we theorize that a venture capital's portfolio diversity, a...

Effects of KOSDAQ Venture Firm's Tax Avoidance and Corporate Governance on Firm Value

Effects of KOSDAQ Venture Firm's Tax Avoidance and Corporate Governance on Firm Value

Case Study of Business Innovation of Agriculture Venture Firm through Strategic Alignment between Strategy and Infrastructure

Case Study of Business Innovation of Agriculture Venture Firm through Strategic Alignment between Strategy and Infrastructure

Changing the Game of Venture Capital: Expert Insights

Many industry analysts have cited the significant downsizing of venture capital, yet the future of venture capital does not need to remain grim. An analysis of the framework and operating principles of venture capital reveals areas of improvement that will minimize the effects of negative external economic forces. An examination of the historical impact of venture capital and the factors precipitating its downsizing reveals opportunities for a resilient venture firm less affected by market forces and able to deliver optimal returns on investments. The author presents the research within the context of the four phases: investment screening, selection, monitoring, and exit. The author offers best practice research (through interviews of experienced venture investors and supplemented by secondary research) and suggests alternate strategies for venture firms to consider. <b>TOPICS:</b>Private equity, portfolio construction, financial crises and financial market history

Success Factors of the Born Global Firm in the Cultural Contents Industry: A Case of Korean Classical Performance Venture Firm 'Dulsori'

본 연구는 국악공연기업 (사)문화마을 들소리의 국제화 사례를 통해 문화콘텐츠 산업의 태생적 국제화 기업 성공요인을 분석하였다. 국내 전통음악공연산업은 시장규모가 작고 음악공연콘텐츠는 초기투자비용 대비 제품수명주기가 짧아 수익성 향상을 위해서는 국제적 규모의 경제 창출이 필요하다. 이에 들소리는 경영자의 국제화 비전을 기반으로 법인설립 초기부터 외국시장을 목표로 한 국악기반의 넌버벌(non-verbal) 공연콘텐츠를 제작하였다. 또한, 외국시장지식을 습득하고 콘텐츠의 일회적·경험재적 속성으로 인한 국외수요의 불확실성을 감소시키기 위해 적극적으로 국내외 네트워크를 구축하고 활용하였다.