Human resource redeployability and entrepreneurial hiring strategy

The timing of talent acquisition is a central decision for new ventures. On one hand, hiring after demand is proven minimizes losses. On the other hand, hiring before demand is proven allows new ventures to start developing unique capabilities. We resolve this tension by proposing that the timing depends on human resource redeployability. We test our theory with the population of Finnish ventures showing that portfolio entrepreneurs hire more employees early on because of higher redeployment potential and that they hire employees with more transferable skills in order to benefit from the redeployment option. To probe our mechanisms, we examine how talent acquisition strategies in portfolio and standalone ventures vary with external conditions that reduce or amplify the benefits of redeployment

Trading Efficiency of Fund Families: Impact on Fund Performance and Investment Behavior

Mutual funds are part of larger organizations, which make decisions with consequences for all their member funds. This study examines how the efficiency of trading desks operated by fund families affects the performance and trading of affiliated funds. We introduce a novel approach to measure the efficiency of trading desks, which allows for comparisons across families with different investable universes. By operating efficient trading desks, which reduce trading costs, fund families improve the performance of their funds significantly. Furthermore, the lower trading costs resulting from more efficient trading desks enable mutual funds to trade more and hold less liquid portfolios

Network Centrality and Pension Fund Performance

We analyze the relation between the location of a pension fund in its network and the investment performance, risk taking, and flows of the fund. Our approach analyzes the centrality of the fund's management company by examining the number of connections it has with other management companies through their commonality in managing for the same fund sponsors or through the same fund consultants. Network centrality is found to be positively associated with risk-adjusted return performance and growth in assets under management, after controlling for size and past performance, for domestic asset classes; however, we do not find this relation for foreign equity holdings. These findings indicate that local information advantages, which are much stronger among managers holding locally based stocks, exhibit positive externalities among connected managers. Of particular note is that we do not find that the centrality of a manager within one asset class (e.g., domestic bonds) helps the performance of the manager in another asset class (e.g., domestic equity), further indicating that our network analysis uncovers information diffusion effects. Network connections established through consultants are found to be particularly significant in explaining performance and fund flows, consistent with consultants acting as an important information conduit through which managers learn about each other's actions. Moreover, the importance of network centrality is strongest for larger funds, controlling for any economic scale effects. Better connected funds are also better able to attract higher net inflows for a given level of past return performance. Finally, more centrally placed fund managers are less likely to be fired after spells of low performance. Our results indicate that networks in asset management are one key source of the dissemination of private information about security values

Entrepreneurial role models, fear of failure, and institutional approval of entrepreneurship: A tale of two regions

Studies on the influence of entrepreneurial role models (peers) on the decision to start a firm ar-gue that entrepreneurial role models in the local environment (1) provide opportunities to learn about entrepreneurial tasks and capabilities, and (2) signal that entrepreneurship is a favorable career option thereby reducing uncertainty that potential entrepreneurs face. However, these studies remain silent about the role of institutional context for these mechanisms. Applying an ex-tended sender-receiver model, we hypothesize that observing entrepreneurs reduces fear of fail-ure in others in environments where approval of entrepreneurship is high while this effect is signif-icantly weaker in low approval environments. Taking advantage of the natural experiment from recent German history and using data from the Global Entrepreneurship Monitor Project (GEM), we find considerable support for our hypotheses