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Book part
Publication date: 8 November 2010

Helena Buhr and Jason Owen-Smith

Networks connecting two important supporting institutions – law firms and venture capital partnerships – explain regions’ disparate abilities to sustain diverse…

Abstract

Networks connecting two important supporting institutions – law firms and venture capital partnerships – explain regions’ disparate abilities to sustain diverse high-technology ventures. In order to explain the diversity of entrepreneurial activity in a region, we distinguish between institutional capacity (the number of law firms and venture capitalists in a locale), strong interinstitutional connections that span legal and financial domains, and cohesive structural communities of directly and indirectly connected supporting organizations. We argue that strong connections and cohesive communities are essential, but little examined contributors to the development of diverse research-based economies. We find support for the argument in an empirical analysis of initial public offerings (IPOs) by U.S. high-technology companies in five industries between 1993 and 2005. Linking regional outcomes to strong ties that span local legal and financial institutions and to cohesive structures that weld them into communities offers new insights for research on the institutional and network underpinnings of entrepreneurship and regional economic development.

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Institutions and Entrepreneurship
Type: Book
ISBN: 978-0-85724-240-2

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Article
Publication date: 1 March 2013

Fariss‐Terry Mousa, Dan Marlin and William J. Ritchie

This study aims to improve the understanding of the relationship between organizational slack and firm performance for high technology initial public offerings (IPOs).

Abstract

Purpose

This study aims to improve the understanding of the relationship between organizational slack and firm performance for high technology initial public offerings (IPOs).

Design/methodology/approach

Using cluster analysis the paper investigates configurations of slack and their associated performance implications.

Findings

The findings indicate the existence of distinct configurations of slack resources and associated performance differences among the configurations. Implications of the findings for managerial practice and future research are discussed.

Originality/value

The purpose of this study is to extend slack measurement research by examining the slack and performance relationship in high‐technology IPOs from a configurational perspective.

Details

Management Decision, vol. 51 no. 2
Type: Research Article
ISSN: 0025-1747

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Article
Publication date: 30 August 2013

Hussam A. Al‐Shammari, W. Ross O'Brien and Yousuf Hamed AlBusaidi

Building on new venture internationalization, agency, and signaling theories, the purpose of this paper is to examine the relationship between the level of firm…

Abstract

Purpose

Building on new venture internationalization, agency, and signaling theories, the purpose of this paper is to examine the relationship between the level of firm internationalization and initial public offering (IPO) performance. Further, the purpose of this paper is to evaluate the moderating role of firm ownership structure on this relationship.

Design/methodology/approach

The data set for this study is composed of 298 firms that made IPOs in years 1997, 1998, 2001 and 2002 in the US stock exchanges. The study utilizes hierarchical ordinary least squares (OLS) regression analyses to test its hypotheses. The model developed in this study identified IPO firm ownership structure as the moderator variable, IPO firm internationalization as the predictor variable, and underpricing as the criterion variable. This paper utilized robust regression modeling analyses available in Stata to analyze the data and test their hypotheses.

Findings

Results based on data collected from 298 IPO firms suggest that firm internationalization has a positive impact on IPO underpricing. Results also report that the relationship between firm internationalization and IPO underpricing is moderated by CEO and blockholder ownership, with the relationship being stronger in IPO firms with higher levels of CEO and blockholder ownership.

Originality/value

The current paper examines the impact of an IPO firm's internationalization prior to its going public on the subsequent performance of the IPO. In doing so, this paper seeks to help in resolving some of the apparent theoretical and empirical contradictions identified in literature. In addition, the introduction of IPO ownership structure as a moderator variable in the relationship between IPO firm internationalization and performance extends the applicability of agency theory to IPO firms and ensures a multi‐theoretic, finer‐grained conceptualization of this relationship.

Details

International Journal of Commerce and Management, vol. 23 no. 3
Type: Research Article
ISSN: 1056-9219

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Book part
Publication date: 31 July 2009

Howard E. Aldrich

In our 1983 paper, McKelvey and I (McKelvey & Aldrich, 1983) took the field of “organization science” to task for not paying sufficient attention to the scope conditions…

Abstract

In our 1983 paper, McKelvey and I (McKelvey & Aldrich, 1983) took the field of “organization science” to task for not paying sufficient attention to the scope conditions under which research findings are valid. (Today I would argue that the field also had not paid sufficient attention to matching theoretical ambitions with research designs.) We argued that the field fell short on three critical criteria: classifiability, generalizability, and predictability. We noted that samples of organizations were so poorly described that classifying them was impossible, that generalizations were being carelessly drawn, and that the predictive power of most theories was extremely weak.

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Studying Differences between Organizations: Comparative Approaches to Organizational Research
Type: Book
ISBN: 978-1-84855-647-8

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Book part
Publication date: 10 November 2016

R. Greg Bell, Abdul A. Rasheed and Sri Beldona

To date there is little understanding of the factors that impact the survival of foreign IPOs after they list on US stock exchanges. In this study, we examine how foreign…

Abstract

To date there is little understanding of the factors that impact the survival of foreign IPOs after they list on US stock exchanges. In this study, we examine how foreign IPO survival is contingent on institutional factors associated with the firm’s home country. We also explore how corporate governance and organizational identity influence the survival of foreign IPOs in the United States. Results suggest that the US institutional environment supports foreign firms with more independent and professional leadership, and that knowledge-intense organizations have higher chances of long-term success after listing on US exchanges.

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Global Entrepreneurship: Past, Present & Future
Type: Book
ISBN: 978-1-78635-483-9

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Article
Publication date: 7 September 2012

Zhijian Xu and Libo Xu

The purpose of this paper is to study whether there is correlation between valuation in initial public offering (IPO) and board composition, the ownership dispersion of…

Abstract

Purpose

The purpose of this paper is to study whether there is correlation between valuation in initial public offering (IPO) and board composition, the ownership dispersion of top management teams (TMTs) and their human capitals, in entrepreneurial firms of China's new growth enterprise market (GEM). Also, it aims to evaluate the relative importance of various factors in determining initial public issuing value.

Design/methodology/approach

The SPSS 16.0 statistical package was used to perform the analysis. The authors compute descriptive statistics, calculate correlation coefficients for all variables and use multiple regression analysis test the hypothesis.

Findings

The paper shows that IPO valuation has significant positive correlation with board composition, significant negative correlation with TMT ownership dispersion, but it does not show significant correlation with TMT human capital. The empirical results also show that: the influence of variable “CEO also Founder” on IPO valuation is significant, which indicates that investors are concerned with the leadership of firms in IPO. Also the influence of the variable “underwriter prestige” on IPO valuation is also significant, but weaker, which indicates that investors still keep confidence in the well‐known underwriters for their vision and ability of judging the firms.

Research limitations/implications

Based on the first batch of 28 entrepreneurial firms listed on Chinese GEM, the sample size is relative small. Also, the measure of TMT human capital, defined by the education degree level, is not an accurate rule in this paper.

Originality/value

Focusing on 28 new firms in China's new security market, this paper presents some interesting and new findings, by using data from the first batch of listed companies in China's GEM, which comprises many privately‐owned, high technology and entrepreneurial firms.

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Article
Publication date: 1 June 2005

Mingsheng Li, Steven Xiaofan Zheng and Melissa V. Melancon

To test the effects of underpricing and share retention (i.e. the proportion of shares retained by the pre‐initial‐public‐offering (IPO) owners) on IPO aftermarket liquidity.

Abstract

Purpose

To test the effects of underpricing and share retention (i.e. the proportion of shares retained by the pre‐initial‐public‐offering (IPO) owners) on IPO aftermarket liquidity.

Design/methodology/approach

Uses both percentage spread and turnover ratio to measure liquidity. The percentage spread is the quoted bid‐ask spread divided by the quoted midpoint and measures the trading cost relative to share price. Turnover ratio is the daily trading volume divided by the number of shares offered and measures the speed of transaction. Both non‐parametric analyses and multiple regressions are conducted to investigate the effects of underpricing and share retention on liquidity.

Findings

Results indicate that initial return is positively related to turnover ratio and negatively related to percentage spread. These relations are significant even after controlling for other factors. Also finds that the pre‐IPO owners’ retention rate is positively related to turnover ratio and negatively related to percentage spread. High retention rates attract more trades, provide quality assurance, and improve IPO aftermarket liquidity.

Originality/value

This paper investigates the theoretical links between underpricing and liquidity and provides direct evidence on Booth and Chua's liquidity theory. In addition, this is one of the first empirical studies to analyze the effect of share retention on aftermarket liquidity.

Details

International Journal of Managerial Finance, vol. 1 no. 2
Type: Research Article
ISSN: 1743-9132

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Article
Publication date: 2 March 2012

Fariss‐Terry Mousa and William Wales

This paper aims to explore the effects of entrepreneurial orientation (EO) on firm survival and examine whether founder chief executive officers (CEOs) are more effective…

Abstract

Purpose

This paper aims to explore the effects of entrepreneurial orientation (EO) on firm survival and examine whether founder chief executive officers (CEOs) are more effective than other types of managers at utilizing entrepreneurial orientation at initial public offerings (IPOs).

Design/methodology/approach

Using survival analysis the authors investigate the effects of EO on firm survival as well as the moderating role of founder CEOs.

Findings

The results suggest that EO increases post‐IPO survival. Further, founder‐CEOs moderate the EO‐survival relationship.

Originality/value

The paper shows that entrepreneurial orientation enhances long‐term survival in IPO firms. Survival is an important, though generally overlooked consideration in EO research. The paper also concludes that firms with founder CEOs are more likely to value and implement EO. Finally, the paper addresses calls for greater use of secondary measures of EO.

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Article
Publication date: 20 February 2009

Michael Aitken, Frederick H. deB., Thomas H. McInish and Kathryn Wong

The purpose of this paper is to investigate the cross‐sectional determinants of the role of the underwriter in aftermarket price discovery.

Abstract

Purpose

The purpose of this paper is to investigate the cross‐sectional determinants of the role of the underwriter in aftermarket price discovery.

Design/methodology/approach

The paper estimates Gonzalo‐Granger common factor weights across underwriter and non‐underwriter execution channels in the IPO aftermarket and investigates the cross‐sectional determinants of these CFWs.

Findings

The first novel result is that verifiable facts are not a substitute for, but a complement to, underwriter certification and advice. Specifically, the underwriter's contribution to price discovery increases with the number of supplier and customer contracts reported in the prospectus. Second, the underwriter's role in price discovery declines when the IPO is first in a new technology or product space. These findings indicate that the verification process, not de novo information production, is the key function of the underwriter.

Research limitations/implications

Research design is applicable to IPOs in the USA and elsewhere.

Originality/value

Previous research examining IPO aftermarket trading has been largely limited to the first day of trading. The paper contributes to the small but growing literature that examines the role of the underwriter beyond this period.

Details

International Journal of Managerial Finance, vol. 5 no. 1
Type: Research Article
ISSN: 1743-9132

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Article
Publication date: 5 August 2014

Stephanie A. Fernhaber and Patricia P. McDougall-Covin

The purpose of this paper is to investigate how ventures manage the negative returns associated with higher levels of internationalization. Many new ventures are…

Abstract

Purpose

The purpose of this paper is to investigate how ventures manage the negative returns associated with higher levels of internationalization. Many new ventures are internationalizing to fully exploit new innovations and/or gain access to larger markets. Yet at some point the rising costs associated with internationalization outweigh any benefits, resulting in an inverted U-shaped relationship between internationalization and performance.

Design/methodology/approach

New ventures are theorized to better manage high levels of internationalization by limiting exposure to other sources of risk. This can be achieved by leveraging greater size and/or limiting simultaneous diversification efforts on product innovation. To test the hypotheses, a regression using Heckman selection was run using a sample of 210 US-based, publicly held ventures in high-technology industries.

Findings

The results confirm that when higher levels of internationalization are coupled with either a low emphasis on product innovation or larger size, the negative returns are mitigated and actually become positive.

Research limitations/implications

A key implication lies in recognizing the role of risk management for internationalizing ventures. Future research could benefit by testing for generalizability in other countries as well as among privately held ventures.

Practical implications

To manage the trade-offs associated at higher levels of internationalization, ventures need to maintain a low emphasis on product innovation or meet a threshold in terms of size.

Originality/value

The value of this research lies in better understanding how ventures are able to overcome rising costs at higher levels of internationalization.

Details

European Business Review, vol. 26 no. 5
Type: Research Article
ISSN: 0955-534X

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