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There has been considerable debate concerning the contribution of venture capitalists (VCs) to their investee companies (Sapienza, Manigart, & Vermeir, 1996). This research has shown that VCs can add value and impact the strategic direction of their investee firms through their skills and knowledge. These skills lie in two distinct areas: financial (monitoring) and non-financial (strategic and operational involvement) skills (Pruthi, Wright, & Lockett, 2003). The monitoring and involvement of VC firms in their investees have been shown to vary according to their needs (Lerner, 1995). On balance, the evidence suggests greater involvement during the more uncertain earlier stages than during the later stages when the firm is more established (Sapienza, Amason, & Manigart, 1994; Elango, Fried, Hisrich, & Polonchek, 1995). This suggests that the VC's ability to bring about change will be mediated by the impact of the history of the firm via path dependency (Teece, Pisano, & Shuen, 1997).

This eighth volume in the series Advances in Entrepreneurship, Firm Emergence and Growth focuses on international entrepreneurship. We are fortunate to draw on scholars both new to the field as well as some of those who founded this unique specialty. International entrepreneurship, perhaps more than any subfield of entrepreneurship, is a product of our particular zeitgeist. The last quarter of the 20th Century brought about one of the periods of the greatest internationalization in all phases of business.

Recently, there has been much progress in developing Markov switching stochastic volatility (MSSV) models for financial time series. Several studies consider various MSSV specifications and document superior forecasting power for volatility compared to the popular generalized autoregressive heteroscedasticity (GARCH) models. However, their application to option pricing remains limited, partially due to the lack of convenient closed-form option pricing formulas which integrate MSSV volatility estimates. We develop such a closed-form option pricing formula and the corresponding hedging strategy for a broad class of MSSV models. We then present an example of application to two of the most popular MSSV models: Markov switching multifractal (MSM) and component-driven regime switching (CDRS) models. Our results establish that these models perform well in one-day-ahead forecasts of option prices.

This volume includes two major explanations of the meltdown that I critically discuss. The first is a “normal accident theory” arguing that the complexity and coupling of the financial system caused the failure. Although these structural characteristics were evident, I argue that the case does not fit the theory because the cause was not the system, but behavior by key agents who were aware of the great risks they were exposing their firms, clients, and society to. The second interpretation is a neoinstitutional one, emphasizing that ideologies, worldviews, cognitive frames, mimicry, and norms were the source of behaviors that turned out to be disastrous for the elites and others. The implication is that elites were victims, not perpetrators. I argue that while ideologies, etc., can have real effects on the behavior of many firm members and society in general, in this case financial elites, to serve personal ends, crafted the ideologies and changed institutions, fully aware that this could harm their firms, clients, and the public. Complexity and coupling only made deception easier and the consequences more extensive. For anecdotal evidence I examine a decade of deregulation, examples of elected representative, regulatory officials, firms, and the plentiful warnings.