Abstract: Most past work on the antecedents of CEO turnover has emphasized the importance of economic and socio-political considerations. Considerably less attention has been paid to the processes by which boards of directors interact. In this study, we focus on the interaction processes that unfold within the boards of venture capital-backed firms. In particular, we focus on two key dimensions of board interaction: the extent to which the board is involved in monitoring the CEO and the extent to which the board provides advice and counsel to the CEO, and we develop hypotheses about the effects of these behaviors on CEO turnover. We plan to test these hypotheses on a sample of 166 venture capital-backed firms.

Abstract: We apply the attention-based view of the firm to the problem of fast decision making under conditions of uncertainty. Firms use comprehensive decision-making processes to reduce the risk embedded in decision making under conditions of uncertainty. However, in dynamic settings firms use fast decision-making. We theorize that under uncertainty in dynamic environments, firms base their decisions on salient signals of legitimacy rather then on in-depth analysis of information. We use the selection stage in the Venture Capital funding process to test our theory. Our findings show that social referrals serve as strong legitimizing signals. Previous research has shown that legitimizing signals affect the outcome of decision-making processes. We contribute to our understanding of decision-making processes by suggesting when such signals are beneficial and why.

Abstract: Adding to the corporate effect literature, we study the effect of owners on firm performance in a new context, that of venture capital (VC) firms and the start-up firms in which they invest. In so doing, we hope to add to the literature that contextualizes ownership effects. This study makes two contributions. First we analyze the effect of different VCs on the post-VC-investment fates of start-up firms. How much does a particular VC’s involvement affect whether its portfolio companies are successfully sold (either on the IPO market or with a private acquisition) versus declare bankruptcy? Second, we extend the methodology that is frequently used in corporate effect literature by applying a variance decomposition approach to an ordinal regression.

Abstract: Research has documented a wide variation in investor mix across firms, countries and industries. In this paper I ask whether investor mix affects firm’s performance. Both a relational view of the firm and the resource-dependence theory predict that those ventures that partner with investors with valuable resources will have a higher likelihood of experiencing a liquidity event. I test the hypotheses using a sample of 689 biotechnology firms from outside the U.S. founded between 1990 and 2004. I find that the greater the prior successful experience of the investors, the greater the likelihood of a liquidity event. I also find that the presence of a U.S. venture-capital firm in the syndicate increases the likelihood that the venture goes public when financial markets are less developed.