The Effects of Corporate Venture Capital, Founder Incumbency, and Their Interaction on Entrepreneurial Firms’ R&D Investment Strategies

2017 | Organization Science | Citations: 0

Authors: Paik, Yongwook; Woo, Heejin

Abstract: Corporate venture capital (CVC) investment has increasingly become an important ... Expand

Abstract: Corporate venture capital (CVC) investment has increasingly become an important source of entrepreneurial finance. Accordingly, while scholars have traditionally focused on understanding the main motivations behind CVC activity and its impact on the investing corporate firm, more recently, scholars have also started to emphasize the importance of understanding the impact of CVC investment on the investee venture. In particular, these recent studies commonly show that CVC investment has a positive effect on the venture’s innovation. While the positive link between CVC investment and the venture’s innovation output is well established in the literature, the organizational mechanisms through which this relationship unfolds within the venture remain relatively underexplored. In this study, we fill this gap in the literature by examining the effects of CVC ownership, founder incumbency, and the CVC investor–founder interaction on research and development (R&D) investment strategies in venture capital (VC)-financed, technology-based entrepreneurial ventures. In doing so, we aim to provide a novel explanation of the organizational mechanisms that lead to greater investment in research and development (R&D), especially with regard to the interaction between CVC investors and founder managers. We argue that CVC ownership and founder incumbency positively affect entrepreneurial firms’ R&D investment and, more importantly, that the CVC ownership effect is effectively amplified when the founder is an incumbent top manager because of goal congruence and knowledge spillover from the CVC firm. Our empirical analysis supports our hypotheses while addressing potential endogeneity concerns. Our results also support various mechanisms by utilizing the data on CVC investor’s board membership, CVC investor heterogeneity, the founder’s technological background, and the investee venture’s industry. The online appendix is available at https://doi.org/10.1287/orsc.2017.1133. Collapse

Topics: research and development knowledge spillover innovation management productivity corporate governance

Methods: robustness check qualitative interview Wald test regression analysis method longitudinal research

Theories: agency theory

Corpus Periodization Framework to Periodize a Temporally Ordered Text Corpus

2016 | Americas Conference on Information Systems | Citations: 0

Authors: Alsudais, Abdulkareem; Tchalian, Hovig

Abstract: Corpus Periodization is the process of segmenting a corpus into a set of smaller ... Expand

Abstract: Corpus Periodization is the process of segmenting a corpus into a set of smaller and discursively coherent periods while retaining its chronological order. Corpus Periodization is often used by social researchers in fields such as sociology and history to examine texts of topic-specific and temporally ordered corpora. Currently, there are no robust, automated, and easy-to-implement methods to periodize text corpora. In this paper, we propose a new framework that automates Corpus Periodization. This method relies on a simple statistical significance test that assesses the changes in the number of documents between neighboring segments and a document similarity measure that evaluates the similarity of texts between neighboring segments. We tested the proposed solution on a corpus consisting of 4,821 news articles containing the term “corporate governance.” We were able to reduce the original number of annual segments from twenty-eight to seven or fewer relevant periods. Collapse

Topics: corporate governance armed conflict

Methods: literature sample experiment Pearson's chi squared test of independence between categorical variables case study chi squared test

Competition and Cooperation in Corporate Governance: The Effects of Labor Institutions on Blockholder Effectiveness in 23 European Countries

2013 | Organization Science | Citations: 0

Authors: van Essen, Marc; van Oosterhout, J. (Hans); Heugens, Pursey P. M. A. R.

Abstract: We provide an analysis of the costs and benefits of blockholding in Europe, wher ... Expand

Abstract: We provide an analysis of the costs and benefits of blockholding in Europe, where it is a dominant, but certainly not universal, corporate governance strategy for shareholders of publicly listed firms. We find that the effectiveness of blockholding is conditioned by the specific labor institutions that distinguish European countries from the rest of the world, and that these institutional effects involve both competition and cooperation between blockholders and collective labor interests. We also find that relational blockholders are better able to cope with, or benefit from, these institutional effects than arm's-length blockholders. Empirically, we use advanced meta-analytic methods on a total sample of 748,569 firm-year observations, derived from 162 studies covering 23 European countries. Collapse

Topics: corporate governance organizational productivity decision making anonymity accounting

Methods: statistical hypothesis test meta analysis longitudinal research descriptive statistic robustness check

Theories: agency theory theory of economic crises organizational theory theory of economic development

Institutional Logics or Agency Costs: The Influence of Corporate Governance Models on Business Group Restructuring in Emerging Economies

2008 | Organization Science | Citations: 0

Authors: Chi-Nien Chung; Xiaowei Luo

Abstract: Business groups, the leading economic players in emerging economies, have respon ... Expand

Abstract: Business groups, the leading economic players in emerging economies, have responded to the market-oriented transition primarily through corporate restructuring. Agency theory predicts that acquisition and divestiture would serve the interests of dominant families and foreign investors in different ways. Further, dominant families, foreign investors from shareholder-based countries, and foreign investors from stakeholder-based countries each operate under distinct institutional logics of appropriate restructuring strategies. We test hypotheses about agency and institutional mechanisms using large business groups in Taiwan between 1986 and 1998 as our empirical example. We find that, consistent with both mechanisms, family-controlled business groups are less likely to divest of unrelated businesses. However, the institutional logics mechanism can better explain the relative lack of unrelated acquisition in family-controlled groups and the difference in divestiture between groups with more shareholder-based foreign investment and those with more stakeholder-based investment. Our study contributes to the neo-institutional perspective of corporate restructuring and strategic management in general by empirically separating the two mechanisms and examining organizational responses to conflicting institutional logics. Our study also adds to the understanding of business group restructuring in emerging economies. Collapse

Topics: corporate governance strategic management financial performance organization learning anonymity

Methods: descriptive statistic statistical hypothesis test theory development regression analysis method chi squared test

Theories: agency theory

Incentives to Cheat: The Influence of Executive Compensation and Firm Performance on Financial Misrepresentation

2007 | Organization Science | Citations: 44

Authors: Harris, Jared; Bromiley, Philip

Abstract: Despite the many undesirable outcomes of corporate misconduct, scholars have an ... Expand

Abstract: Despite the many undesirable outcomes of corporate misconduct, scholars have an inadequate understanding of corporate misconduct's causes and mechanisms. We extend the behavioral theory of the firm, which traditionally assumes away the possibility of firm impropriety, to develop hypotheses predicting that top management incentive compensation and poor organizational performance relative to aspirations increase the likelihood of financial misrepresentation. Using a sample of financial restatements prompted by accounting irregularities and identified by the U.S. Government Accountability Office, we find empirical support for both incentive and relative performance influences on financial statement misrepresentation. Collapse

Topics: accounting organizational productivity corporate governance strategic management

Methods: Compustat SEC EDGAR robustness check statistical hypothesis test descriptive statistic

Theories: behavioral theory of the firm theory of bounded rationality behavioral theory organizational theory

Culture and CEO Compensation

2004 | Organization Science | Citations: 6

Authors: Tosi, Henry L.; Greckhamer, Thomas

Abstract: The theory and research on chief executive officer (CEO) compensation tends to b ... Expand

Abstract: The theory and research on chief executive officer (CEO) compensation tends to be dominated by assumptions and values reflective of those dominant in the national culture of the United States, where most of this work is done. This suggests that an underlying theme focuses on how CEO compensation is related to instrumental choices made in a competitive, capitalist culture. This study seeks to expand the understanding of CEO compensation by examining it in the context of other cultures, based on the premise that national culture plays a significant part in the nature of compensation strategies. We relate cultural dimensions (uncertainty avoidance, power distance, individualism, and masculinity-femininity) developed by Hofstede (Hofstede 1980a, 2001) to several dimensions of CEO compensation. These dimensions are total CEO pay, the proportion of variable pay to total compensation, and the ratio of CEO pay to the lowest level employees. The main findings of our paper are (1) all of the different dimensions of CEO pay were related to power distance, leading us to infer that CEO pay in a culture is most reflective of the strength of the power structure in a society, and (2) total compensation and the ratio of variable pay to total pay are related to individualism. We conclude that cultural dimensions can contribute to understanding cross-national CEO compensation. The implication of this conclusion is that there are different ways that CEO compensation fits into the cognitive schema of various cultures and, furthermore, that these cognitive schema vary across societies that affect the nature of the "cultural matrix into which [money] is incorporated" (Bloch and Parry 1989, p.1). Moreover, our results imply that particular forms of CEO compensation do not mean the same thing in different cultures, but rather carry different symbolic connotations depending on the values dominant in a society. Thus, not only does the compensation structure of a firm within a culture have... Collapse

Topics: corporate governance national culture anonymity organizational productivity

Methods: longitudinal research autocorrelation analysis survey likelihood-ratio test generalized least square

Theories: cultural dimensions theory agency theory social comparison theory information theory