Venture Partners Research Articles

The Market Price of Managerial Indiscretions

To what extent should investors be concerned about the personal behavior of the top managers of the companies they invest in? In a study published recently in the Journal of Financial Economics, the authors shed light on this question by examining the market responses to revelations of over 300 cases of personal misconduct by senior executives and directors, including episodes of domestic violence, DUIs, extramarital affairs, and public dishonesty. In so doing, they provide suggestive evidence of how “tone at the top” can affect corporate policy by way of its culture and how a manager's reputation spills over to that of the firm.The authors' findings show that the companies employing these executives experienced meaningful financial and product market penalties following the disclosure of their unethical behavior. Following the revelation of an indiscretion, investors suffered immediate losses in shareholder wealth—on the order of 4% in cases involving CEOs—and the company's stock continued to underperform during the ensuing year, with total losses amounting to 12 %–14% of firm value. Such companies also tended to lose joint venture partnerships and major customers following these scandals, thereby forcing them into lower‐margin lines of business. The authors also find that such companies were more likely later to commit fraud and be targeted in shareholder class‐action lawsuits.The offending managers themselves were disciplined by the labor market for their missteps in that they faced a higher likelihood of dismissal, and those who were retained earned around $400,000 less pay following the indiscretion. Nevertheless, it is notable that a majority of these executives were not fired, implying that their supervising boards felt they contributed more value to the firm than the damage they caused through their off‐the‐job behavior. Interestingly, the board members supervising these executives were also held accountable for managerial indiscretions in that they received less shareholder support in director elections following the scandals.

Determination of Phase 3 Dose for X4P-001 in Patients with WHIM Syndrome

Background: WHIM (Warts, Hypogammaglobulinemia, Infections, Myelokathexis) Syndrome is a serious, ultrarare genetic disorder caused by a gain-of-function mutation in CXCR4 that causes profound neutropenia and lymphopenia associated with increased rates of bacterial and viral infections. Long-term sequelae include hearing loss, bronchiectasis, and HPV-associated malignancies. The cancer risk in WHIM patients is estimated at 30% by age 40. There is currently no treatment that addresses the underlying mechanism of disease. G-CSF increases neutrophil counts but does not appear to reduce infection rates; use of parenteral gamma globulin has had mixed reports of benefit, but no controlled trials have been reported; Plerixafor, a CXCR4 antagonist, has been shown to increase leukocyte counts and reduce infection rates when absolute neutrophil counts (ANC)>600 mm-3 and absolute lymphocyte counts (ALC)>1000 mm-3, but is a parenteral agent that must be administered twice daily. X4P-001 is an orally available, allosteric inhibitor of CXCR4 that is being developed to treat WHIM. We report here the PK/PD data from the Phase 2 portion of Phase 2/3 trial X4P-001 MKKA (NCT03005327) in WHIM patients that led to selection of the dose for Phase 3 development.Methods: Study X4P-001 MKKA is a Phase 2/3 study. The primary objective of Ph2 portion was to assess the dose required to achieve a consistent increase in circulating neutrophils and lymphocytes. Adult patients with WHIM syndrome, with documented WHIM-associated genotype, and either ANC <400 mm-3 and/or ALC<650 mm-3 were treated with escalating doses of X4P-001. After at least 5 weeks on a dose, patients were hospitalized overnight for rich PK sampling. At each sampling point ANC and ALC were also determined. An area under the curve for ANC and ALC was calculated using the trapezoidal rule and normalized to AUCs assuming maintenance of the threshold values of 600 mm-3 for ANC and 1000 mm-3 for ALC over 24hr. Dose escalation was permitted for adjusted AUC value <0 cell/hours/μL. AUC values ≥0 were considered as having met the primary objective for Phase 2.Results: Eight patients were enrolled and were evaluable for efficacy. 6 of 8 were female, and the mean (SD) age was 35.5 (13.37). Two patients started treatment with 50 mg, then received, 100, 150, 300 and 400 mg; 2 started at 100 and then received 200 and 300 mg; 2 started at 200 mg; 1 escalated to 300 and 400 mg while the other terminated after 1 week due to an adverse event (AE). Two started at 300 mg and did not escalate. Doses of at least 300 mg/day were needed to achieve success criteria for ANC, while at doses ≥100 mg/day, 50-100% met success criteria for ALC. (Figure 1)Two patients discontinued: 1 due to an AE of grade 1 rash, and 1 voluntarily withdrew. No serious AEs were reported. One patient had unrelated cholecystitis (grade 3). All other AEs were grade 1 or 2.Conclusions: Treatment of WHIM patients with X4P-001 results in meaningful increases in ANC at doses ≥300 mg, and in ALC at doses ≥100 mg per day for at least 5 weeks. These doses are anticipated to be associated with clinically meaningful outcomes in terms of infections and warts. X4P-001 appeared to be safe and well-tolerated at doses of 50-400 mg per day.4 [Display omitted] DisclosuresDale:Athelas, Inc.: Equity Ownership; Amgen: Consultancy, Research Funding; Sanofi-Aventi: Consultancy, Honoraria; Cellerant: Other: Scientific Advisory Board; Hospira: Consultancy; Prolong: Consultancy; Beheringer-Ingelheim: Consultancy; Coherus: Consultancy. Hartmann:Cetara: Employment; X4P Pharmaceuticals: Consultancy. Brown:Certara: Employment; X4P Pharmaceuticals: Consultancy. Ebrahim:X4Pharmaceuticals: Employment. Gorelick:X4 Pharma: Consultancy; PIN Pharma: Consultancy; Shire: Consultancy; NGN Capital: Consultancy, Other: Venture partner; IntraBio: Consultancy; Zymo Consulting Group LLC: Employment.

Post termination interaction in international joint ventures (IJV)

PurposeThis paper aims to explore dynamics of post termination interaction between international joint venture (IJV) partners and empirically examines IJV level and dyad level factors that influence the choice of post IJV termination interaction as supplier, complement or competitor.Design/methodology/approachIn-depth literature review is undertaken to identify IJV and dyad level that could influence the choice of post termination interaction between terminated IJV partners. Hypotheses are empirically validated using multinomial logistic regression on data collected on terminated IJV headquartered in India.FindingsThe results denote that the choice of post-IJV termination interaction between IJV partners as supplier, complement or competitor is influenced by interdependence, bargaining power, foreign partner’s purpose of IJV, complementarity and type of IJV termination.Research limitations/implicationsThis paper explores an under researched area in extant IJV literature that could be taken up for study by academicians. The paper upholds and strengthens the dynamic capabilities view of strategic management in IJV context.Practical implicationsThis paper examines a practice adopted by businesses in emerging markets and determines important factors that influence the choice of interaction post IJV termination between partners. Practitioners will be encouraged to understand and plan post termination dynamics with their terminated IJV partner.Originality/valueThe paper undertakes examination of a practical business phenomena, i.e. interaction post termination between terminated IJV partners.

Creating an award‐winning practice

Jonathan Grey and Gloria De Palma are joint venture partners at Vets4Pets. Here, they explain how they opened a practice together and won a national award within 12 months of treating their first patient.

Analisis Strategi Pemasaran Mengunakan Metode Quantitative Strategic Planning Matrik (QSPM) Studi Kasus : Borneo Project

&lt;p&gt;&lt;em&gt;Borneo Project is a new business in the field of ordering services of various types of clothing. In doing its marketing strategy Borneo Project relies on marketing through friendship, word of mouth from one to another one and using social media as a marketing tool. This has not had a much positive effect on sales in Borneo Project. Therefore it is necessary to analyze the marketing strategy that can be applied in Borneo Project.&lt;/em&gt;&lt;/p&gt;&lt;p&gt;&lt;em&gt;Determining the strategy carried out in three stages: an input stage, matching stage, and the stage of the decision. The input stage is done by using Internal Factor Evaluation Matrix (IFE) and External Factor Evaluation Matrix (EFE). In the IFE matrix, obtained a total score of 2.407, while the EFE Matrix obtained score of 2.831. Based on internal and external factor analysis then matching phase with IE Matrix method and SWOT Matrix. The final stage was the decision stage used QSPM method. QSPM is used to evaluate alternative strategies obtained in the SWOT Matrix, then rank them. The first rank is the strategy of applying for credit funds, seeking investors or business joint venture partners and seeking financial assistance from corporate CSR with the acquisition of power score Pull of 5,824. Alternative strategies are prioritized to be applied is to ask a credit fund, seek a joint venture partner and investor or business and are looking for financial aid CSR.&lt;/em&gt;&lt;em&gt;&lt;/em&gt;&lt;/p&gt;&lt;strong&gt;&lt;em&gt;Keywords: Marketing Strategy, Borneo Project, QSPM&lt;/em&gt;&lt;/strong&gt;

A new way to look at an old problem: International joint venture partner selection via constrained systematic search

Although international joint ventures (IJVs) provide many benefits to multinational enterprises (MNEs), IJVs continue experiencing high dissolution rates; there is a pressing need to re-evaluate the partner selection process for IJVs. In this article, I utilize constrained systematic search (CSS) as the proposed process by which to improve the partner selection process and reduce IJV dissolution rates. CSS is a process MNEs can utilize to gain private information about potential IJV partners. The implementation of CSS can improve the success rates for an MNE entering an IJV in two ways: MNEs can more effectively identify (1) information withholding/misleading behavior of potential partners and (2) complementary resources in potential partners.

Impacts of classic transaction cost-related factors on partner’s cooperative and opportunistic behaviour in joint ventures

PurposeThis study aims to investigate impacts of classic transaction cost-related factors (i.e. partner selection cost, specific asset investment and extorting rent cost) on joint venture (JV) partner’s cooperative and opportunistic behaviour, from the perspective of transaction cost economics.Design/methodology/approachItem measurements, based on which the questionnaire was developed, were derived according to a thorough search and review of related literature. In all, 226 valid responses from manufacturing enterprises in China were collected. A structural equation modelling approach was used to analyse the data and examine the fitness of the proposed model.FindingsThis study shows that partner selection cost, specific asset investment and extorting rent cost are positively related to a JV partner’s cooperative behaviour. Specific asset investment exerts the most significant influence on partner’s cooperative behaviour. The results also reveal that partner’s opportunistic behaviour is not significantly affected by specific asset investment but is negatively influenced by extorting rent cost. Both partner selection cost and extorting rent cost show positive impacts on specific asset investment.Research limitations/implicationsThe investigation focused on only manufacturing enterprises in one country. Future research could be directed to investigating other countries to increase the generalizability of the findings.Practical implicationsThe findings suggest that increasing the extorting rent cost to promote the probability of specific asset investment is a core element to enhance JV partner cooperation.Originality/valueThe study not only empirically investigates the relative importance of classic transaction cost-related factors on JV partner opportunism and cooperation, but also enables a deeper understanding of the interrelationship among the classic transaction cost-related factors and their influences on partner cooperation and opportunism.

Fintech venture capital

AbstractManuscript TypeEmpiricalResearch Question/IssueWhere are fintech venture capital investments taking place around the world? What is the role of institutional factors on the international allocation of fintech venture capital?Research Findings/InsightsWe document a notable change in the pattern of fintech venture capital (VC) investments around the world relative to other types of investments after the global financial crisis. We show that fintech venture capital investments are relatively more common in countries with weaker regulatory enforcement and without a major financial center after the financial crisis. Also, we show the fintech boom is more pronounced for smaller private limited partnership venture capitalists that likely have less experience with prior venture capital booms and busts. These fintech VC deals are substantially more likely to be liquidated, especially when located in countries without a major financial center.Theoretical/Academic ImplicationsWe build on the institutions and corporate governance literatures by showing the importance of enforcement in driving relative differences in investment patterns and investor participation. For entrepreneurial startups, regulatory arbitrage drives investment into countries with a dearth of enforcement and regulatory costs. We argue that the spike in fintech venture capital in certain countries is attributable to differential enforcement of financial institution rules amongst startups versus large established financial institutions after the financial crisis.Practitioner/Policy ImplicationsRegulatory arbitrage in the context of fintech venture capital can spur booms and busts. Less experienced venture capitalists seem more prone to undertake investments that exacerbate boom and bust cycles. National governance is strengthened by the enforcement of regulatory standards, and corporate governance through investor experience and oversight can mitigate these swings, and facilitate better investment outcomes.

The conflict over the proposed LNG hub in Western Australia’s Kimberley region and the politics of time

In 2013, the Australian oil and gas company, Woodside Petroleum, and its multinational joint venture partners announced that they would not be proceeding with a $40 billion liquefied natural gas (LNG) processing facility on the coast of the Kimberley, north-western Australia. The corporations’ decision was made after a five-year campaign against the gas hub by Indigenous, community and environmental groups. The limited academic literature on this case has focused on particular sets of actors and stages of the conflict. This paper applies a broader perspective by examining the positions of a range of actors over a longer time period. It argues that i) the concept of the politics of time provides a useful lens for understanding the dynamics of the conflict ii) the state attempted to exercise control over the development using temporal strategies, but this facilitated alliances between Indigenous and non-Indigenous people and iii) the state also exercised control over corporate actors, but was ultimately unable to compel investment in an increasingly globalized market featuring new floating LNG technology (FLNG).

Lanxess to complete rubber business exit

Lanxess has agreed to sell its 50% stake in rubber maker Arlanxeo to joint venture partner Saudi Aramco for $3.4 billion. The business employs 3,800 and generates annual sales of about $3.6 billion. Lanxess sold the first half of the business to Aramco in 2016. It had planned to hold onto the other half until 2021. Moving the sale forward should allow Lanxess to improve its focus on midsize specialty chemical markets, says Chairman Matthias Zachert.

Using and Disposing of Joint Venture Partners to Reap the Benefits of Multinationality

The lifetime of international joint ventures is often limited. Research suggests that MNCs abandon their local partners when the reasons for partnering have become obsolete. This paper shows that the obsolescence of these reasons may not only occur but be part of a two-phase strategy: as MNCs gain competitive advantage from levering resources across borders, they will at first benefit from joint venturing with local partners to better embed their subsidiaries in the host country environment and access local resources. Later they will benefit from disposing of these partners to better embed their subsidiaries in the parent organization and transfer the acquired resources to different locations. Moderated-mediation regressions provide evidence of such practice in the empirical context of capital resources. The strategy seems to work out. Panel regressions show that partnering with local firms is associated with appropriating resources from host countries, and that later abandoning the partners is associated...

Allostery-focused HotSpot debuts

HotSpot Therapeutics is debuting with $45 million from Atlas Venture and Sofinnova Partners to explore allosteric inhibitors against tough-to-drug targets. The biotech firm is developing small molecules that hit regulatory hot spots, areas on proteins that nature uses to control activity. Unlike proteins’ active sites, which most conventional drugs target, allosteric sites, or pockets, are involved in protein function. Founded by two former Nimbus Therapeutics executives, HotSpot is tapping into the ways nature uses allosteric sites to turn proteins on and off. The firm first draws on computational technology to identify pockets that nature uses to regulate proteins. It then probes those pockets by pairing engineered proteins with a library of small molecules designed to bind to regulatory hot spots. HotSpot is one of a number of allostery-focused biotech firms to emerge in recent years. Geraldine Harriman, HotSpot’s cofounder and chief scientific officer, sees a few reasons for the interest

An Alternative Quantitative and Qualitative Analytical Tool to Evaluate Joint-Venture Negotiations: The Joint-Venture Negotiation Box (JVN-BOX)

In this article, we introduce the Joint-Venture Negotiation Box (JVN-Box), a new methodological approach to evaluate the negotiation between two players in a joint-venture partnership. The JVN-Box primarily calculates a suitable point of balance between two players and hence, generates harmony in a joint venture partnership. Since the division between players always depends on the opportunity cost and incentives in the process of negotiation, the study proposes the need for players to diligently engage in formal discussions to find the most suitable point of balance to consolidate a joint venture partnership. The JVN-Box helps to find that suitable balance point and hinges the success of any joint venture negotiation between two players on the effort of hard work by the weak player to step up and sacrifice welfare to step down from the stronger player.

국제합작기업 파트너 특성, 제휴몰입도, 그리고 합작기업성과의 관계에 대한 연구: 중국 소재 국제합작기업을 중심으로

국제합작기업 파트너 특성, 제휴몰입도, 그리고 합작기업성과의 관계에 대한 연구: 중국 소재 국제합작기업을 중심으로

Relationship of Age to Trust, Commitment, and Learning in International Joint Ventures

Strategic alliances between multinational organizations have been prevalent for more than half a century. These alliances are costly to enter and yet, have a history of failure. International Joint Ventures (IJVs), which is a type of strategic alliance, has been an important mode of entry for companies aiming to operate in foreign markets. However, companies have been guarded of forming an IJV due to their high failure rate. Despite their shortcomings, joint ventures are valuable for several reasons, including sharing resources, gaining access to potentially closed markets, and learning complementary skills from the venture partner. However, he age of the alliance (or venture) is an important element in assessing whether the partners achieve their goals. This study looks at the relationship between the age of the joint venture, trust, commitment, and learning effectiveness in Indian international joint ventures. Results show that age of the joint venture is positively related to trust between partners, commitment to the venture, and learning that takes place as a result of the venture.

Class Action Spillover Effects on Joint Venture Partners

Firms exhibit a US$106MM average market capitalization decline when a Securities Class Action lawsuit against their joint venture partner is announced. After their partner’s lawsuit, their own probability of facing similar litigation increases from 4.12% to 7.52%. Such litigation is 1.3 times more likely for every common monitor (auditor, institutional blockholder, or analyst) non-sued venture firms share with their sued partner. Other spillovers to non-sued venture firms substantially affect their financial reporting practices, their investment policies, and their assessment by both analysts and auditors. While these venture firms are not named in their partner’s complaint, they suffer non-trivial spillover effects.

International Joint Ventures and Internal vs. External Technology Transfer: Evidence from China

This paper studies international joint ventures, where foreign direct investment is performed by a foreign and a domestic firm that together set up a new firm, the joint venture. Employing administrative data on all international joint ventures in China from 1998 to 2007-roughly a quarter of all international joint ventures in the world-we find, first, that Chinese firms chosen to be partners of foreign investors tend to be larger, more productive, and more likely subsidized than other Chinese firms. Second, there is substantial technology transfer both to the joint venture and to the Chinese joint venture partner, an external, intergenerational technology transfer effect that this paper introduces. Third, with technology spillovers typically outweighing negative competition effects, joint ventures generate on net positive externalities to other Chinese firms in the same industry. Joint venture externalities are large, perhaps twice the size of wholly-owned FDI spillovers, and it is R&D-intensive firms, including the joint ventures themselves, that benefit most from these externalities. Furthermore, the positive external joint venture effect is larger if the foreign firm is from the U.S. rather than from Japan or Hong Kong, Macau, and Taiwan, while this effect is virtually absent in broad sectors that include economic activities for which China's FDI policy has prohibited joint ventures.

Cost recovery: when reducing costs for an asset can increase costs for an operator

In an unpredictable environment, oil and gas companies within Australia need to reduce their cost of production in order to protect the company’s margins. Many large companies are doing this by adapting a traditional asset-based operating model to be a central functionally aligned model, and creating synergies through offshoring, outsourcing, combining corporate capabilities across global assets, and/or creating centres of excellence. A functionally aligned centralised operating model, however, has the potential to increase the complexity for companies when recovering costs from their joint venture partners. In order to be recoverable, an operator must prove that the costs incurred are still directly related to the asset and by moving functions away from the front line, attribution to assets can be complex. If not allocated, documented and communicated in line with the joint venture agreements, the recoverability of these costs is put at risk. It could, therefore, eventuate that the reduction of costs for an asset results in an increase of costs for the operator. When assessing the recoverability of costs, operators should consider: (i) documenting the end to end cost allocation process and communicate this with joint venture partners; (ii) embedding robust governance and tools to aid cost transparency; and (iii) reviewing their contractual obligations as operations evolve. If the appropriate steps are taken, an operator can reduce costs without increasing their own costs by putting recoverability at risk.

Network information and cross‐border M&amp;A activities

Research SummaryHow information about social networks affects firms’ global expansion is an important but rarely investigated question. We argue that different sources of network information will affect a firm's investment activities in the global market, but their relative importance may vary. Moreover, the influence of network information can be bounded by the global trade network. The results from a sample of cross‐border merger and acquisition (M&amp;A) activities conducted by U.S. publicly listed firms reveal that although M&amp;A experience of both interlocking and joint venture partners affects the focal firm's global expansion, the effect of interlocking partners is more influential than joint venture partners. Meanwhile, when mutual trade dependence between countries is high, the positive effect of network information from board interlocks diminishes.Managerial SummaryFirms are hesitant to engage in cross‐border M&amp;As, because it is difficult for them to get information about local business practices and environmental idiosyncrasies. This study shows that firms can deal with this challenge by accessing relevant information from the M&amp;A experience of interlocking partners and joint venture partners. The information generated from the M&amp;A experience of interlocking partners is even more valuable and important than that of joint venture partners in shaping firms’ cross‐border M&amp;A decisions. Moreover, the M&amp;A experience of interlocking partners and joint venture partners is particularly valuable for firms contemplating M&amp;A activities in a country with relatively fewer buyer‐seller exchange networks with their home country.

Traditional farm expansion versus joint venture remote partnerships

Traditionally, farms expand by buying out a neighbour. But might remote partnerships be a better way of expanding a farm business given projected climate change and price volatility? This question is addressed using farm business financial modelling. Representative farms at 27 locations in Western Australia are constructed to enable comparison of the value of buying out a neighbour versus expansion using geographically distant joint venture (JV) partners. The farm models consider economies of size, bulk purchase price discounts, the variability and correlation of returns associated with farm expansion, and impacts of climate change. Random selection of a remote partner generates little improvement in wealth; on average only 2.3 and 1.6 per cent, respectively, under current and projected future climate across all locations. However, there is large variation in wealth appreciation opportunities for each location and between locations. Preferred partnerships are a function of each farm's characteristics. Locations highly preferred as JV partners under current climate are similarly preferred partners under projected future climate. The main sources of additional wealth come from economies of size advantages, risk‐spreading benefits of combining geographically separated farms and bulk discounts. Farmers seeking business expansion will often benefit greatly from careful selection of a remote partner.