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This study presents and validates a theoretical model linking individual characteristics of the founding or lead innovative entrepreneur of a start-up venture – the entrepreneur's values, entrepreneurial attitudes and entrepreneurial self-efficacy – to the firm's entrepreneurial orientation (EO) and market orientation (MO) and, ultimately, to firm performance.

We conducted a survey on a stratified random sample of founders of early-stage South Australian micro- and small enterprises with a response rate of 24% (N = 204). Structural equation modelling was used to evaluate the model.

The study found that there is a significant relationship between the individual lead entrepreneur and firm strategies developed in early-stage firms in explaining firm performance. It also found that internal values are positively related to entrepreneurial attitude. Entrepreneurial attitude is positively related to entrepreneurial self-efficacy and EO innovativeness. In turn, entrepreneurial self-efficacy is related to innovativeness, proactiveness and risk-taking. The proactiveness dimension of EO and entrepreneurial attitude is related to MO. Entrepreneurial self-efficacy, innovativeness and MO are related to firm performance.

This research was limited to entrepreneurial ventures in South Australia and may lack generalisability in other states and countries.

The research contributes to the understanding of the heterogeneity within self-employed individuals, in particular among innovative entrepreneurs, by expanding insights regarding antecedents and consequences of the entrepreneurial process. It develops insights into the links of individual-level constructs with firm-level constructs to develop a more meaningful understanding of new venture creation and performance. It enhances our knowledge of the heterogeneity within the group of self-employed by exploring the individual entrepreneurial antecedents of performance in early-stage firms.

Private equity and venture capital (VC) firms in the capital markets sector invest capital with the primary goal of delivering economic value. However, some firms in the capital markets sector have started to shift this focus to create (i.e. invest in) social value. More specifically, traditional VC firms are starting socially oriented funds, while other firms have emerged to focus solely on investments in social enterprises. These VC firms are contributing to an interesting paradox – performance metrics are not measured by profit alone but also by social innovation. From an architectural perspective, the authors examine the implications of internal design, i.e. how specific strategic and structural factors influence the financial performance of VC firms with a social orientation to determine if these firms really can “do well and do good.”

Social orientation was determined by content analysis of mission statements of the VC firms. Firm strategies, structures and performance were sourced from secondary data. A moderated mediation model was used to test relationships.

Results suggest that (1) socially responsible VC firms adopt distinct foci of social investing that directs their strategic orientation and (2) these various foci have vastly differing effects on the firm's overall performance, strategic decisions made and the architecture of their structural design.

This study is among the first to explore socially responsible VC architectural dimensions, with implications for firm design based on blended measures of success.

This paper analyzes the importance given by venture capital (VC) firms to the different characteristics of the patent portfolio of a young innovative company (YIC). In an attempt to go beyond previous studies, the authors argue that not only is the size of a technological portfolio significant but also its nature. It is also examined whether the correlation between patents and VC financing varies across different industrial sectors and over different rounds of VC investments.

The empirical analysis has focused on a sample of 1,096 European YICs between the years 2010 and 2014. Target companies were identified in the monthly bulletins of Go4Venture, which reported the largest European deals and gathered information on the amount of VC financing. Additional data was derived from FinSMEs and crunchbase. Industrial sectors were differentiated according to their ability to appropriate the returns of innovation by relying on patent protection mechanisms. A multivariate regression framework at the patent family level was adopted to investigate empirical associations between the amount of VC financing and the characteristics of a YIC's patent portfolio.

The results confirm the positive value of patents. Both the size and the characteristics of a YIC patent portfolio have been found to be positively associated with the total amount of VC financing. Additionally, the correlation between a YIC patent portfolio and VC investment varies across industries and over rounds of funding. Although the number of patents is positively correlated with VC investments in sectors with strong Intellectual Property (IP) regimes, the same does not apply to sectors characterized by lower patent intensity, where qualitative metrics seem to have a stronger correlation. Significant differences have also been found for the different rounds of VC investments.

The limitations of this paper are related to data availability. Empirical associations have been investigated, but causal effects cannot be ascertained in this framework. The authors focused on a sample of firms that received VC funding. Several transactions were excluded, due to a lack of specifications pertaining to the round series. Furthermore, a number of potential drivers of the financed amounts, such as variables related to the founder or the management team, have not been considered in this study.

For firms operating in sectors with weak IP regimes, patents are positively associated with attracting equity capital, if they are the output of R&D collaborations and have higher technical merit. In industries where patent intensity is higher, patent portfolio size matters more than quality. This suggests that VC investors award innovation quality to cases in which patenting is less frequent. Since the results indicate that positive associations between patenting and VC financing are more significant in later stages, managers should plan their patenting strategy in advance to reap the related benefits, and then collect the premium at later VC stages.

In this paper, the importance given by VC firms to different characteristics of a YIC patent portfolio has been analyzed in terms of size, quality, and complexity. While previous empirical analyses mainly focused on a single sector, the authors have examined whether the relevance of patents for VC financing decisions varies across industries and over different rounds of investment. The geographical coverage of the sample is another novelty of the paper. Previous works focused on a limited number of countries, whereas this research has considered firms operating in several European countries.

This paper aims to examine the impact of the corporate lifecycle on the corporate governance practices of firms in the Republic of Korea.

The authors use five corporate lifecycle measures and corporate governance scores from Black et al. (2012) to estimate governance-prediction models inclusive of corporate lifecycles measures for a sample of 497 Republic of Korea firms over the 1998–2004 period.

The authors find little evidence which points to a corporate governance lifecycle for firms in the Republic of Korea. The findings suggest that factors other than firm lifecycle best explain the corporate governance practices of firms in Korea.

Using a battery of lifecycle measures and corporate governance indexes and subindexes, the authors believe this paper represents the most rigorous study yet to study the corporate governance lifecycle in an emerging market economy, namely, the Republic of Korea.

This paper aims to explain the fundraising and valuation processes of startups and discuss the conflicts of interest between entrepreneurs, venture capital (VC) firms and stakeholders in the context of startup corporate governance. Further, this paper uses the examples of WeWork and Zenefits to explain how a failure of stakeholders to demand an external audit from an independent accounting firm in early stages of funding led to an opportunity for fraud.

The methodology used is a literature review and analysis of startup valuation combined with the Fraud Triangle Theory. This paper also provides a discussion of WeWork and Zenefits, both highly visible examples of startup fraud, and explores an increased role for independent external auditors in fraud risk mitigation on behalf of stakeholders prior to an initial public offering (IPO).

This paper documents a number of fraud risks posed by the “fake it till you make it” ethos and investor behavior and pricing in the world of entrepreneurial finance and VC, which could be mitigated by a greater awareness of startup stakeholders of the value of an external audit performed by an independent accounting firm prior to an IPO.

An implication of this paper is that regulators should consider greater oversight of the startup financing process and potentially take steps to facilitate greater independence of participants in the IPO process.

Given the potential conflicts of interest between VC firms, investment banks and startup founders, the investors at the time of an IPO may be exposed to the risk that the shares of the IPO firms are overvalued at offering.

This study demonstrates how startup practices can be extended to the Fraud Triangle and issue a call to action for the accounting profession to take a greater role in protecting the public from startup fraud. This study then offers recommendations for regulators and standards entities.

There are few academic papers in the financial crime literature that link the valuation and culture of startup firms with fraud risk. This study provides a concise explanation of the process of valuation for startups and highlights the considerations for stakeholders in assessing fraud risk. In addition, this study documents an emerging role for auditors as stewards of proper valuation for pre-IPO firms.

The purpose of this paper is to investigate the value relevance of Research and development (R&D) and free cash flow (FCF) in an efficient investment setup. Most importantly, this paper examines whether the value relevance of R&D and FCF is associated with life cycle stages. Furthermore, this paper reports whether the market response to R&D and FCF is different in competitive market as compared to the concentrated market.

The analysis is based on the Ohlson (1995) model for the determination of value relevance of earnings and book value. Capitalized R&D and FCF data comprising of the Chinese A-listed firms from the year 2008 to 2016 are selected for this study. Following Anthony and Ramesh (1992), the authors divided the firm life cycle into different stages. HHI index is used to measure the product market competition.

The main result shows that R&D and FCF are value relevant in Chinese A-listed firms. The impact of R&D and FCF on the value relevance of earnings and book value is also positive and significant. The findings of the effect of R&D and FCF on the value relevance of accounting information signify that the information content (R²=0.46) of the mature stage is higher than that of the growth and stagnant stage. The explanatory power measured by R² value for competitive industries (0.47) is much higher than the concentrated industries (0.33).

Despite taking into account all the possible available variables, there are few limitations of the study. This study only studies the effect of EPS, BPS, R&D and FCF on the value relevance of accounting information. Other determinant such as size, growth, leverage and firm age is ignored. Since the R&D expenditure is discretionary, therefore the findings cannot be generalized to all the sectors. A sector wise comparative study can be done in future, to understand the differences in the information contents of R&D and FCF. Also, the tax effect of R&D is ignored in this study. For future call, the value relevance of tax effect on R&D can be explored.

The investors can now determine the present value of all the future cash flows of investing activities. The results of the study are significant for the Chinese investors who should incorporate the R&D and FCF along with investment efficiency. The investors should keep in mind the life cycle stage while investing in a certain stock. The competitive markets have more information content than the concentrated markets. The corporate managers can benefit from this study while issuing new shares. The market responds positively to the stock having investment efficient R&D and FCF investment. For the policy implication perspective, the security market regulator should devise the effective pro-effective product market regulations.

The contribution of this study is manifold. First, according to the authors’ knowledge, this is the first study that incorporates investment efficiency with R&D and FCF and explores its effect on the value relevance of accounting information. Second, the impact of R&D on the value relevance is studied by numerous researchers (Lev and Sougiannis, 1996; Han and Manry, 2004). Similarly, FCF-agency cost effect has also been investigated by (Rahman and Mohd-Saleh, 2008; Chen et al., 2012) but the value relevance of R&D and FCF during different life cycle stages still needs to be answered. Finally, this study also tries to answers the question if the market response to R&D and FCF is different in a competitive market as compared to the concentrated market.

This paper examines the governance function that incubators perform for entrepreneurial firms. The authors demonstrate that this governance function has both a consultative and a control dimension and illustrate how these are enacted in the interactions between incubators and entrepreneurs. The authors also show how these interactions come into being and how entrepreneurs assess the value of the governance role played by incubators.

The paper is based on a cross-sectional interview study with entrepreneurs of 21 start-ups that were hosted by three different incubators. The start-ups are all early-stage technology firms. The analysis in the paper follows an inductive approach.

The authors find that the governance role of incubators is about both consultation and control. Consultative forms of governance include providing input and advice as well as questioning ideas and assumptions. Controlling forms of governance comprise setting targets and tracking progress as well as enforcing structures and documentation. The authors furthermore show that governance episodes are triggered either by the entrepreneurs themselves or by the incubator. In the former case, such episodes are mainly about consultation, while in the latter one, they often have a pronounced control element, which materializes particularly through regularly enforced meetings. Most entrepreneurs seem to appreciate this control element, acknowledging that, in its absence, they would lack the self-discipline of doing some things that need to be done.

This study’s findings extend prior research on inter-organizational relationships and the types of governance mechanisms observed therein. The authors show that a strict separation between actors who offer consultation and those who exercise control is too simplistic. Incubators influence entrepreneurial firms both through consultative and controlling forms of governance. In terms of limitations, this study’s analysis focuses on the perspectives of entrepreneurs, and the authors did not include the perspectives of incubators nor did the authors directly observe meetings between these two parties.

This paper provides examples for how entrepreneurial firms can benefit from being part of an incubator.

This study contributes to the discussion of the governance of inter-organizational relationships by focusing on incubators. In so doing, the authors also complement extant literature on management control in entrepreneurial settings by showing how the incubator fulfills a control function for entrepreneurs before these implement control mechanisms themselves.

This study aims to explore how entrepreneurial firms' networking logics may change under different types of perceived uncertainty. The arrival of new knowledge from the entrepreneurial firm's network may alter the perceived technology and market uncertainty that in turn determines how the firm adopts or combines the two opposing logics of causation and effectuation. Focusing on the roles of external advisors recruited by the firms, the study probes the details of the cyclical process and the mechanism through which networking logics are altered.

In this study the authors conducted a 3-year longitudinal multiple case study of 12 United Kingdom (UK) high-tech start-ups from prefounding to A-round funding with 54 semistructured interviews and meeting observations.

The knowledge of external advisors with distinct experience often reshapes the entrepreneurial firm's perceptions of uncertainty, leading to logics change in network development. The authors identify two types of knowledge brought by external advisors and discover how these can influence three networking logic pathways under different levels of technology and market uncertainty.

The study is one of the first to map the paths of changing logics along with different types of uncertainty in the context of entrepreneurial network development. The study unpacks one of the key mechanisms of networking logic changes: the knowledge and expertise of those advisors recruited by the entrepreneurial firms. The process model of changing logics contributes to the effectuation literature and entrepreneurial network research.

This paper empirically investigates the processes by which manufacturing firms create radical innovations in their core production process, referred to as radical manufacturing technology innovations (RMTI). The purpose of this paper is to improve the understanding of the processes and practices manufacturing firms use to create RMTI.

Creation processes for 23 RMTI projects from diverse industry and technology contexts are explored. Data were collected via semi-structured interviews, and an inductive analysis was carried out to identify similarities and differences in RMTI types and creation processes.

Three types of RMTI and three alternative RMTI creation processes are revealed and characterized. An integrated view is developed of the activities of the equipment supplier and the manufacturing firm, highlighting their different roles and interaction across the three RMTI creation process types.

The exploratory design limits the depth of the analysis per RMTI project, and the focus is on manufacturing technology innovations in one country. The results extend previous case and context-specific findings on RMTI creation processes and provide novel frameworks for cross-case comparisons.

The manufacturing firms’ proactive role in RMTI creation is defined. A framework is proposed for using different RMTI creation processes for different types of RMTI.

This study addresses recent calls for empirical research on understanding the ways in which process innovations unfold in manufacturing firms. The findings emphasize the role of manufacturing firms as creators of RMTI in addition to their role as innovation adopters and implementers and reveal the suitability of different RMTI creation processes for different RMTI types.

This article focuses on “born globals” (Knight and Cavusgil 1996) and interfirm resources to explain international entrepreneurship. The theory posed here challenges the traditional image of international business as a long, gradual process not occurring until later in the life cycle, and applying only to large multinational corporations (MNCs). Increasingly, new ventures must expand their operations internationally early in their history in order to be competitive (Oviatt and McDougall 1994), and require infrastructure (Van de Ven 1993), or interfirm resources, for success. Specifically, firms may rely on three factors to expand internationally: cost factors, unique global resources, and networks.