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The influence of strategic control and operational control on new venture performance

Ya-Hui Lin (Department of International Business, College of Management, Ming Chuan University, Taipei, Taiwan)
Chung-Jen Chen (Graduate Institute of Business Administration, College of Management, National Taiwan University, Taipei, Taiwan)
Bou-Wen Lin (Institute of Technology Management, National Tsing Hua University, Hsinchu, Taiwan)

Management Decision

ISSN: 0025-1747

Article publication date: 19 June 2017

Abstract

Purpose

The purpose of this paper is to investigate the impacts of strategic control and operational control on new venture performance in the China context.

Design/methodology/approach

This study tests the hypotheses in a sample of 83 new ventures that have equity investment by established firms and are founded between 1993 and 2007 that issued initial public offerings while not more than eight years old.

Findings

The results of this study show that: strategic control has a significantly negative relationship with new venture performance; operational control has a significantly positive relationship with new venture performance; industry relatedness between the corporate investor and the new venture and the new venture’s political ties moderate the relationships between the two types of control and new venture performance. The results are robust to alternative measurements of new venture performance.

Practical implications

The management control that the corporate investor exercises over the new venture is a significant determinant of the new venture success. Managers have to distinguish between strategic control and operational control and understand their impacts on new ventures.

Originality/value

This study highlights the issue of management of corporate venturing capital relationships from the new venture’s perspective. In addition, this study separates strategic and operational control within management control and examines how they influence new venture performance.

Keywords

Citation

Lin, Y.-H., Chen, C.-J. and Lin, B.-W. (2017), "The influence of strategic control and operational control on new venture performance", Management Decision, Vol. 55 No. 5, pp. 1042-1064. https://doi.org/10.1108/MD-07-2015-0324

Publisher

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Emerald Publishing Limited

Copyright © 2017, Emerald Publishing Limited