In the field:Coase an exemplar in the tradition of Smith, Marshall and Ostrom

This paper argues that Coase provides the primary 20th century exemplar of the grounding of analytical developments in economics in direct fieldwork observation. In particular, his focus on the business enterprise, its internal functions (including decision-making), and its external relations (including contracting) has provided a stimulus for radical developments in microeconomics and in managerial and decision economics in particular. The argument is developed by a stylization of the development of economics, referring to Adam Smith in the 18th century, Alfred Marshall in the 19th century, Ronald Coase in the 20th century, and Elinor Ostrom in the 21st century

Performance and strategy:simultaneous equations analysis of long-lived firms

A simultaneous equations model of performance, strategy and size is tested using fieldwork evidence on long-lived firms in Scotland. Estimation is by I3SLS, with correction for sample selection bias. The contributions of this paper are that it: (a) grounds estimation on fieldwork evidence; (b) calibrates performance and competitive strategy; (c) tests and models endogeneity; and (d) computes robust trade-off elasticities between firm size and performance. It shows how this trade-off provides the entrepreneur with two strong incentives: (i) to seek greater efficiency typically by an increase in the human capital of the ‘core’ workforce; (ii) to achieve higher levels of performance by adopting more diverse competitive strategies

Decision support for firm performance by real options analytics

This paper develops a real options decision support tool for raising the performance of the firm. It shows how entrepreneurs can use our intuitive tool quickly to assess the nature and type of action required for improved performance. This exploits our estimated econometric relationship between precipitators of entrepreneurial opportunities, time until exercise, and firm performance. Our 3D chromaticity plots show how staging investments, investment time, and firm performance support entrepreneurial decisions to embed, or to expedite, investments. Speedy entrepreneurial action is securely supported with this tool, without expertise in econometric estimation or in formulae for real options valuation

Realities of long-term post investment performance for venture-backed enterprises

This paper constructs a model of long-run performance for SMEs that have received venture capital backing. The model explains performance by financial structure. FAME data are used for estimating performance equations over the period 1989 to 2004 for UK businesses in their post-investment period. The econometrics uses robust techniques, including least absolute error (LAE) and Tukey trimean estimation. It is shown that the key determinants of performance (measured by ROSF) are profit margins and risk, with lesser, but significant, roles played by liquidity and gearing. The sample is used to identify consistently high performers, and chronic low performers. From the latter group, two detailed case studies illustrate how chronic low performance can emerge, in each case caused by failure to achieve technological milestones, and thereby failing, ultimately, to convince investors of potential company worth

Practitioner views on financial reporting for smaller entities

This paper has four purposes. First, to establish the policy background leading to a special financial reporting standard for small firms (FRSSE), aimed at reducing compliance costs. An indirect policy implication of this was that small firms would be stimulated, for example, in terms of start-up rate, performance (including survival rate, and profitability, and growth), and contribution to employment and innovation within the economy. Second, to consider the implications for FRSSE itself on compliance costs, and to ask what forms they may take. Third, to analyse new evidence on adopters and non-adopters of the FRSSE. Fourth, to cast this new evidence into a cost effectiveness framework, to judge whether adopters who engage in upgrading of skills to implement the FRSSE had attained a net benefit as compared to non-adopters. The conclusion, based on this preliminary evidence, is that upgrading of skills to implement the FRSSE has indeed led to a significant net benefit

Co-evolution of Information Systems in Fast-Growing Small Firms

The paper examines the co-evolution of different dimensions of information systems for a sample of fast-growing small firms. The investigation uses primary source longitudinal empirical evidence. The data are taken from a large database on the lifecycle experience of one-hundred-and-fifty new business starts over a four-year period. They were collected by face to face interviews with owner-managers of small entrepreneurial firms. Interviews were conducted using an administered questionnaire that covered the agenda of markets, finance, costs, business strategy, the development of a management information system, human capital, organisation and technical change. This work uses primarily the data on management information systems. The basic approach used is to compare the attributes of the fastest and slowest paced firms, as identified by their growth rates. We then examine the evolution of these firms' management information systems. The measures used to identify changes in systems include: capital investment techniques, such as return on investment, residual income, net present value, internal rate of return and payback period; methods for managing costs, like just-in-time management, activity-based costing, quantitative risk analysis, value analysis, strategic pricing and transfer pricing; and using computer applications for storing information, project appraisal, financial modelling, forecasting and sensitivity analysis. 'Time lines' are graphed to show the points at which various features of information systems are introduced (e.g. data storage, forecasting, sensitivity analysis), and derived techniques (e.g. ROI, ABC) implemented. Firms are dichotomised into highgrowth and low-growth groups. Comparisons are made within firms and across firms in terms of the co-evolution of different aspects of their accounting information systems

Venture capital investor behaviour in the backing of UK high technology firms : financial reporting and the level of investment

This paper is an empirical investigation into the ways in which venture capitalists value (and invest in) high technology firms, focusing on financial reporting, risk disclosure and intangible assets. It is based on questionnaire returns from UK investors in diverse sectors, ranging from biotechnology, through software/ computer services, to communications and medical services. This evidence is used to examine: (a) the usefulness of financial accounts; (b) the implications of technopole investment; (c) the extent of investor control over the investee's AIS; and (d) the role of investor opinion (e.g. on disclosure, due diligence and risk reporting) in determining the level of equity provision

Venture capital and risk in high-technology enterprises

We find UK investors and entrepreneurs are significantly concordant in rankings of investments and key factors for risk but significantly discordant on risk classes. Investors emphasise agency risk (e.g., motivation, empowerment, alignment), and entrepreneurs emphasise business risk (e.g., market opportunities)

What\u27s It Worth to Keep a Secret?

This article is the first major study of protection and valuation of trade secrets under federal criminal law. Trade secrecy is more important than ever as an economic complement and substitute for other intellectual property protections, particularly patents. Accordingly, U.S. public policy correctly places a growing emphasis on characterizing the scope of trade secrets, creating incentives for their productive use, and imposing penalties for their theft. Yet amid this complex ecosystem of legal doctrine, economic policy, commercial strategy, and enforcement, there is little research or consensus on how to assign value to trade secrets. One reason for this gap is that intangible assets in general are notoriously difficult to value, and trade secrecy by its opaque nature is ill-suited to the market-signaling mechanisms that offer at least some traction in other forms of valuation. Another reason is that criminal trade secret law is relatively young, and the usual corrective approaches to valuation in civil trade secrecy are not synonymous with the greater distributive concerns of criminal law. To begin to fill this gap, we examine over a decade of trade secret protection and valuation under the U.S. Economic Espionage Act of 1996. From original data on EEA prosecutions, we show that trade secret valuations are lognormally distributed as predicted by Gibrat’s Law, with valuations typically low on the order of $5 million but reaching as high as$250 million. There is no notable difference among estimates from various valuation methods, but a difference between high and low estimates on one hand and the sentencing estimates on the other. These findings suggest that the EEA has not been used to its full capacity, a conclusion buttressed by recent Congressional actions to strengthen the EEA

What's it worth to keep a secret?

This article is the first major study of protection and valuation of trade secrets under federal criminal law. Trade secrecy is more important than ever as an economic complement and substitute for other intellectual property protections, particularly patents. Accordingly, U.S. public policy correctly places a growing emphasis on characterizing the scope of trade secrets, creating incentives for their productive use, and imposing penalties for their theft. Yet amid this complex ecosystem of legal doctrine, economic policy, commercial strategy, and enforcement, there is little research or consensus on how to assign value to trade secrets. One reason for this gap is that intangible assets in general are notoriously difficult to value, and trade secrecy by its opaque nature is ill-suited to the market-signaling mechanisms that offer at least some traction in other forms of valuation. Another reason is that criminal trade secret law is relatively young, and the usual corrective approaches to valuation in civil trade secrecy are not synonymous with the greater distributive concerns of criminal law. To begin to fill this gap, we examine over a decade of trade secret protection and valuation under the U.S. Economic Espionage Act of 1996. From original data on EEA prosecutions, we show that trade secret valuations are lognormally distributed as predicted by Gibrat’s Law, with valuations typically low on the order of $5 million but reaching as high as$250 million. There is no notable difference among estimates from various valuation methods, but a difference between high and low estimates on one hand and the sentencing estimates on the other. These findings suggest that the EEA has not been used to its full capacity, a conclusion buttressed by recent Congressional actions to strengthen the EEA