Slack resources, firm performance, and the institutional context: Evidence from privately held European firms

This is the author accepted manuscript. The final version is available from the publisher via the DOI in this recordResearch summary: Integrating the behavioral and institutional perspectives, we propose that a country's formal institutions, particularly its legal frameworks, affect managers' deployment of slack resources. Specifically, we explore the moderating effects of creditor and employee rights on the performance effects of slack. Using longitudinal data from 162,633 European private firms in 26 countries, we find that financial slack enhances firm performance at diminishing rates, whereas human resource (HR) slack lowers performance at diminishing rates. However, financial slack has a more positive effect on firm performance in countries with weaker creditor rights, whereas HR slack has a more negative effect on performance in countries with stronger employee rights. The results provide a richer view of the relationship between slack and firm performance than currently assumed in the literature. Managerial summary: A key dilemma managers often encounter is whether, on the one hand, they should build in excess resources to buffer their firms from internal and external shocks and to pursue new opportunities or whether, on the other hand, they should develop “lean” firms. Our study suggests that excess cash resources—which are usually viewed as easy to redeploy—benefit firm performance, especially when firms operate in countries with weaker creditor rights. However, excess human resources—which are usually viewed as more difficult to redeploy—hamper firm performance, particularly when firms operate in countries with stronger labor protection laws. Thus, the management of slack resources critically depends on the characteristics of these resources (e.g., redeployability) and the institutional context in which managers operate. Copyright © 2016 John Wiley & Sons, Ltd.Research Foundation—FlandersNational Bank of BelgiumHercules FoundationKU Leuve

Equity Crowdfunders’ Human Capital and Signal Set Formation: Evidence from Eye Tracking

This is the author accepted manuscript. The final version is available from SAGE via the DOI in this record.Signaling theory typically assumes that attention is always given to observable signals. We study signal receivers’ formation of signal sets—the signals to which receivers attend and that they can use for subsequent interpretations. Drawing on a cognitive perspective, we argue that signal receivers’ human capital influences the volume and type of signals they attend to and the time they take to form signal sets. Using eye tracking, we show that equity crowdfunders do not attend to many signals that are easily observable on a campaign page, and that differences in crowdfunders’ human capital uniquely affect their signal set formation.Research Foundation – Flander

Relocation to get venture capital : a resource dependence perspective

This is the author accepted manuscript. The final version is available from SAGE via the DOI in this record.Using a resource dependence perspective, we theorize and show that non-venture-capital-backed ventures founded in U.S. states with a lower availability of venture capital (VC) are more likely to relocate to California (CA) or Massachusetts (MA)—the two VC richest states—compared to ventures founded in states with a greater availability of VC. Moreover, controlling for self-selection, ventures that relocate to CA or MA subsequently have a greater probability of attracting initial VC compared to ventures that stay in their home state. We discuss the implications for theory, future research, and practice

Business angel exits: A theory of planned behaviour perspective

Although there are a handful of studies on business angel investment returns, the business angel literature has given little or no attention to exits and the exit strategy. This is surprising given that a primary objective of investing is to achieve a capital gain through some form of liquidity event. Using the theory of planned behaviour (TPB) as an interpretative heuristic, we examine how exits happen: specifically, what are the motivations to seek an exit and to what extent are they planned or opportunistic? Based on multiple case studies in which business angels were invited to tell the story of their most recent exit(s), the evidence suggests that the majority of liquidity events are the outcome of planned behaviour. We propose a typology of angel-backed investment exits as the basis for identifying future directions for research and developing practical advice to angels on effective business practices

Angel investors' and entrepreneurs' intentions to exit their ventures: A conflict perspective

This study examines the relationships among angel investor-entrepreneur relationship conflicts, task conflicts, and goal conflicts on the one hand and their intentions to exit on the other. I evaluate the hypotheses with survey data from 65 angel investors and 72 entrepreneurs belonging to 54 ventures located in either California or Belgium. Regression analyses indicate that entrepreneurial intentions to exit are higher for entrepreneurs who face more task and goal conflicts. Angel investors' intentions to exit are only increased when faced with more goal conflicts. Together, these results indicate the importance of taking into account investor-entrepreneur relations when studying their respective exit processes

Conflicts between entrepreneurs and investors: the impact of perceived unethical behavior

This paper examines the impact of perceived unethical behavior by entrepreneurs, angel investors and venture capitalists on their conflict process. For this purpose, we use an embedded case study design to provide a diversity of perspectives on the topic at hand. From the eye of the beholder, i.e. investor, entrepreneur or both, 11 conflict situations were analyzed for any perceived unethical behavior. Based on findings from within- and cross-case analysis, we propose that perceived unethical behavior among venture partners triggers conflicts between them through increased fault attribution or blaming. Further, we propose that perceived unethical behavior affects venture partners' choice of conflict management strategy and increases the likelihood of conflict escalation and of conflict having a negative partnership outcome such as failure or another form of involuntary exit. As such, this paper contributes to the entrepreneurship literature by addressing calls for more research on the darker sides of investor-investee relationships