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Article
Publication date: 1 February 2021

Helen McGrath and Thomas O'Toole

The purpose of this paper is to identify the early stage network engagement strategies that new ventures use to gain traction in interaction in the development of network…

Abstract

Purpose

The purpose of this paper is to identify the early stage network engagement strategies that new ventures use to gain traction in interaction in the development of network capability.

Design/methodology/approach

Using 24 new ventures in the micro-brewing industry in Ireland, Belgium and the USA as an empirical base, the authors use an inductive case study approach owing to the exploratory nature of the research aim and the lack of prior literature in the area.

Findings

The findings suggest five early stage network engagement process strategies in network capability development: business-to-business network prospecting; co-branding/co-promoting activities; from maker-mindset to adapting; social media platforming; and recognition and activation of network role.

Research limitations/implications

The findings are limited to the micro-brewery sector at one point in time, although in multiple country contexts. Analyzing other sectors and taking a temporal view of strategizing, analyzing the sector at another time point, would show how dynamics in engagement change as the actors acquire new experiences from interaction.

Practical implications

The potential to gain from network resources and the paucity of these resources in new ventures makes early stage engagement strategizing for network capability development an attractive business strategy for new firms. All firms are born within a social network that has economic importance. Identifying the five early stage network engagement strategies can mitigate the challenge for the new venture in moving from the initial social network to collaborating within wider business networks to gain access to resources, technology and customers.

Originality/value

Strategizing in new venture contexts is a relatively new stream of research for the industrial marketing and purchasing group. This paper adds to the growing body of literature that places interaction, relationships and networks at the heart of strategy making and provides important insights for new ventures, which may lead to earlier and greater success for the firms. The authors respond to calls for increased research addressing capability development in a new venture context and for research to take a more interactive perspective on new venture processes.

Details

Journal of Business & Industrial Marketing, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 0885-8624

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Article
Publication date: 15 February 2016

Swati Panda and Shridhar Dash

Maintaining cooperation and avoiding opportunism is essential for a healthy venture capitalist (VC) – entrepreneur relationship. Therefore, the purpose of this paper is to…

Abstract

Purpose

Maintaining cooperation and avoiding opportunism is essential for a healthy venture capitalist (VC) – entrepreneur relationship. Therefore, the purpose of this paper is to explore the role of control and trust for developing a cooperative VC-entrepreneur relationship in an agency environment in the Indian context.

Design/methodology/approach

The study adopts a multiple case study approach to investigate ten VC-entrepreneur dyads. It uses data collected from both primary and secondary sources. Content analysis was used as the data treatment technique.

Findings

The empirical evidence indicates that VC-entrepreneur relationships emerging in the early stages suffer from low agency risks and use more of relational mechanisms to curb opportunism and develop cooperation while relationships at an advanced stage suffer from higher agency risks and employ more of control mechanisms to address it.

Practical implications

The findings can be utilized to enhance cooperation in VC-entrepreneur relationship by identifying the appropriate context to apply relational or control mechanisms, which would eventually lead to better performance of the venture.

Originality/value

This distinction results in the development of a theoretical model which shows how the dual governance mechanisms of control and trust interact with one another to affect confidence in partner cooperation as an entrepreneurial venture raises multiple rounds of venture capital across various stages. The data collected from Indian VC-entrepreneur dyads offers a rich description of the relationship dynamics across the Indian entrepreneurial ecosystem.

Details

Journal of Small Business and Enterprise Development, vol. 23 no. 1
Type: Research Article
ISSN: 1462-6004

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Article
Publication date: 1 January 1994

Harry J. Sapienza, Allen C. Amason and Sophie Manigart

This research was funded in part by the Center for International Business Research, University of South Carolina.

Abstract

This research was funded in part by the Center for International Business Research, University of South Carolina.

Details

Managerial Finance, vol. 20 no. 1
Type: Research Article
ISSN: 0307-4358

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Article
Publication date: 6 December 2019

Li Xiao

The purpose of this paper is to explore the role of trust in the unobservable decision-making process of lead investors and follow-on investors in the specific context of…

Abstract

Purpose

The purpose of this paper is to explore the role of trust in the unobservable decision-making process of lead investors and follow-on investors in the specific context of equity crowdfunding (ECF) campaigns.

Design/methodology/approach

This work employs a case study approach. The author conducts a three-year inductive field study of Chinese ECF – AngelCrunch. The author gathered both campaign and platform-level data from the selected case covering a period of seven years from 2011 to 2018. The data set used for this study includes the characteristics of 189 online campaigns, 25 face-to-face interviews with the platform managers, early-stage investors and entrepreneurs, first-hand observations and quarterly reports on online campaigns supplemented with informal interviews with the authors for the reports.

Findings

The findings from this study provide early insights onto the unobservable decision-making process of ECF investors. It demonstrates that lead investors use both selective signalling information and physical interactions with the entrepreneurs to build competence and relational trust on which they rely for making an early pledge. It also shows that follow-on investors differ from lead investors in the process of building trust for decision-making. Furthermore, this work uncovers the role of ECF platforms in facilitating the process of building interpersonal trust for the decision making, with challenges to maintain the notion of platforms in raising a small amount of capital from a large crowd.

Research limitations/implications

This study is constrained by the limited scale of qualitative elements available. The findings of the study have implications for platform managers, investors and policy makers.

Originality/value

Building on entrepreneurial finance and trust theory, this work demonstrates how lead investors build competence and relational trust on which they rely to make an early pledge in the context of ECF. The perception of a lead investor and the commitment together with the selective and formative information by the entrepreneur/s are key in follow-on investors’ decision making. This study uncovers that crowdfunding enables additional and valuable information to be assessed by crowd investors to manage extreme risk and uncertainty occurred in early-stage investments. This work also demonstrates that virtual world has its limitations to build interpersonal trust for managing extreme risk.

Details

International Journal of Entrepreneurial Behavior & Research, vol. 26 no. 2
Type: Research Article
ISSN: 1355-2554

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Book part
Publication date: 4 August 2014

Janke Dittmer, Joseph A. McCahery and Erik P. M. Vermeulen

There is arguably a balance between exploration and exploitation within a commercial organization which leads to sustainable growth and value creation. Exploratory…

Abstract

There is arguably a balance between exploration and exploitation within a commercial organization which leads to sustainable growth and value creation. Exploratory activities are associated with search, innovation, risk-taking and experimentation. Activities, such as selection, implementation and execution are considered exploitative in nature. We show that the governance structures and mechanisms that are typically employed in venture capital-backed companies ensure an optimum balance between the exploratory behavior of entrepreneurs and the exploratory focus of venture capitalists. New players in the venture capital cycle, such as crowdfunding platforms and corporate venture capital units, often fail to understand the importance of the interaction and interrelation between the apparently opposing exploratory and exploitative activities. However, collaborative venture capital models that are currently emerging appear to restore the necessary equilibrium in the “new” venture capital cycle.

Details

Exploration and Exploitation in Early Stage Ventures and SMEs
Type: Book
ISBN: 978-1-78350-655-2

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Article
Publication date: 12 August 2014

José Carlos Nunes, Elisabete Gomes Santana Félix and Cesaltina Pacheco Pires

The purpose of this paper is to identify the importance assigned to the various criteria used by the Portuguese venture capitalists (VCs) to evaluate and select early stage

Abstract

Purpose

The purpose of this paper is to identify the importance assigned to the various criteria used by the Portuguese venture capitalists (VCs) to evaluate and select early stage venture capital (VC) projects.

Design/methodology/approach

The data were collected through a questionnaire answered by 20 Portuguese VCs. The authors use descriptive statistics techniques and non-parametric tests to identify the most valued criteria and test differences in the importance assigned to the criteria of several types of VCs and investments.

Findings

The study reveals that personality and experience of the entrepreneur and of the management team are the most valued groups of criteria. VCs with a majority of private share capital value more the personality of the entrepreneur and management team than the companies with a majority of public share capital. Additionally, the VCs that did not yet internationalize consider the personality of the entrepreneur and management team and the financial aspects, to be more important than the VCs that have already expanded abroad.

Originality/value

It provides evidence on the VCs behavior in a small VC market. Since most of the existing literature on this area refer to large VC markets, the present study is important to investigate whether the conclusions reached by the previous studies can be extended to a small VC market. Also, this study is a contribution to the literature on the internationalization of VCs and it is the first study that explores the impact of the VCs being internationalized on the value given to the various selection criteria of early stage VC projects.

Details

Journal of Small Business and Enterprise Development, vol. 21 no. 3
Type: Research Article
ISSN: 1462-6004

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Book part
Publication date: 9 August 2017

Alex F. DeNoble and Ted D. Zoller

The emergence of the lean start-up movement has cast doubt and skepticism among entrepreneurship educators and practitioners regarding the usefulness of writing a formal…

Abstract

The emergence of the lean start-up movement has cast doubt and skepticism among entrepreneurship educators and practitioners regarding the usefulness of writing a formal business plan for training the next generation of entrepreneurs. In one camp, there is a group of entrepreneurship education professionals who continue to advocate for the usefulness and necessity for teaching students these basic business plan development skills. In an alternative camp, there is another faction of education professionals who believe that the business plan process is counterproductive and is an unnecessary distraction for today’s millennial entrepreneurs seeking to create their own new ventures. In this chapter, we argue why it is important to adopt a lean start-up framework and approach in both entrepreneurship courses and in curriculum design in early-stage venturing. We offer 10 reasons why entrepreneurship educators should place less emphasis on business planning and more emphasis on business modeling during the early stages of evaluating the feasibility of a venture. We believe that educators and curriculum designers need to rethink the traditional approach of building an entrepreneurship program based upon the business plan as the guiding framework. We then conclude our discussion with suggestions on where and how elements of the business plan can and should be introduced into the new venture development process and appropriately positioned in entrepreneurship curricula. We propose a renewed and reconciled view of the Lean Start-up versus Business Plan debate, as both are considered necessary but neither is sufficient to support the full lifecycle of the venturing process.

Details

The Great Debates in Entrepreneurship
Type: Book
ISBN: 978-1-78743-076-1

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Article
Publication date: 1 March 1991

Vance H. Fried and Robert D. Hisrich

The venture capital industry is of vital importance to many entrepreneurial firms, as well as to those interested in economic development. Research on the venture capital…

Abstract

The venture capital industry is of vital importance to many entrepreneurial firms, as well as to those interested in economic development. Research on the venture capital industry generally treats it as a single, homogeneous industry. However, the industry is actually made up of a variety of sub‐groups. An understanding of these sub‐groups is important to venture capitalists, entrepreneurs, public policy makers and academics.

Details

Management Research News, vol. 14 no. 3
Type: Research Article
ISSN: 0140-9174

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Article
Publication date: 17 August 2020

Yawei Fu and Sin Huei Ng

The purpose of this paper is twofold to examine the factors that contribute to local bias of venture capital in China and to explore the relationship between local bias…

Abstract

Purpose

The purpose of this paper is twofold to examine the factors that contribute to local bias of venture capital in China and to explore the relationship between local bias and performance of venture capital institutions.

Design/methodology/approach

Local bias was measured in line with the model developed by Cumming and Dai (2010). Regression techniques were performed for our long-term cross-sectional data to analyse the potential determinants of local bias. This is followed by the Probit model to test the relationship between local preference and successful exit.

Findings

The overall finding indicated that local bias in China increased over time. The stiff competition among venture capital institutions reduced local bias, but the enhanced innovation capabilities of a particular geographical area amplified local bias because of the knowledge spillover effect. Finally, the results suggested that venture capital institutions with less local bias enjoy a greater likelihood of making successful exits.

Research limitations/implications

This study used successful venture capital exit as a proxy for venture capital institution’s performance because of the unavailability of information such as internal rate of return. Future research should try to adopt other way of measuring venture capital institution’s performance.

Practical implications

This study sheds light on the various possible causes of local bias that the policymakers need to be aware of. Despite the rapid rise of China’s venture capital market in recent years, venture capital institutions have yet to make inroads into the local high-tech industry. This study implies to the policymakers that to reverse this trend, they should formulate policies that foster the long-term performance of venture capital institutions, mitigate the severity of local bias and raise the competitiveness of the Chinese venture capital market.

Originality/value

Because of data limitations, there is currently lack of prior empirical research on local bias of Chinese venture capital institutions based on large-scale data. This study intends to fill the gap.

Details

Journal of Asia Business Studies, vol. 15 no. 1
Type: Research Article
ISSN: 1558-7894

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Article
Publication date: 5 November 2018

Ya-long Wei, Dan Long, Yao-kuang Li and Xu-sheng Cheng

The purpose of this paper is to build a research model to examine the effects of business planning on the new venture emergence, as well as to examine the moderating…

Abstract

Purpose

The purpose of this paper is to build a research model to examine the effects of business planning on the new venture emergence, as well as to examine the moderating effects of innovativeness of products.

Design/methodology/approach

Four hypotheses are put forward and examined by hierarchical binary logistic regression. The data of this paper are based on the first two waves of data from Chinese Panel Study of Entrepreneurial Dynamics project.

Findings

Results show that engaging in business planning has a positive effect on the new venture emergence, and the timing of business planning does not affect the new venture emergence significantly. This study also finds that the innovativeness of products has a positive moderating effect on the relationship between the timing of business planning and the new venture emergence.

Research limitations/implications

This study has some limitations. The innovativeness of products is measured by a single indicator, which may not completely reflect the meaning of the attribute. Moreover, this study explores new ventures only in the nascent stage.

Practical implications

The study is useful for entrepreneurs to realize the importance of business planning. First, engaging in business planning in early start-up stage is a very valuable activity, because business planning can help new ventures reduce the loss caused by trial and error learning. Second, engaging in business planning is more likely to ensure high innovative products quickly be accepted by the market. Because in the process of new venture emergence, the legitimacy signal to stakeholders can be transmitted and new products can be promoted to get support and recognition from stakeholder through the business plan.

Originality/value

This paper focuses on the early stage of new venture life cycle and the contextual factors to explore the influence of business planning on the new venture emergence under the logic of legitimacy. This paper could enrich business planning research from the perspective of legitimacy theory by inspiring scholars to focus on the differences between new ventures and mature enterprises and to offer proposals of legitimation strategies suitable for new ventures. Meanwhile, this study contributes to the understanding of the contextual factors of business planning. And it discusses the impact of the attribute in business planning on the new venture emergence, which helps scholars to get a deep thought about the value of business planning in entrepreneurial process.

Details

Chinese Management Studies, vol. 12 no. 4
Type: Research Article
ISSN: 1750-614X

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