Mitigation of Moral Hazard and Adverse Selection in Venture Capital Financing: The Influence of the Country’s Institutional Setting

A venture capitalist (VC) needs to trade off benefits and costs when attempting to mitigate agency problems in their investor-investee relationship. We argue that signals of ventures complement the VC’s capacity to screen and conduct a due diligence during the pre-investment phase, but its attractiveness may diminish in institutional settings supporting greater transparency. Similarly, whereas a VC may opt for contractual covenants to curb potential opportunism by ventures in the post-investment phase, this may only be effective in settings supportive of shareholder rights enforcement. Using an international sample of VC contracts, our study finds broad support for these conjectures. It delineates theoretical and practical implications for how investors can best deploy their capital in different institutional settings whilst nurturing their relationships with entrepreneurs

Trust, control and knowledge transfer in small business networks

The ability to transfer knowledge effectively in the networks of small and medium-sized firms (SMEs) is paramount for supporting firm competitiveness. Our research is the first one that explores the joint effect of trust and control mechanisms on knowledge transfer in the case of networks of SMEs. We use a multiple case study approach based on six Italian networks of SMEs. We analyse the joint impact of different ethical based trustworthiness factors—namely benevolence and integrity—and the levers of control (LOCs)—namely, belief, boundary, diagnostic and interactive LOCs—on knowledge transfer between SMEs in networks. We find that trust substitutes for the implementation of boundary, diagnostic, and belief tools, while it works jointly with interactive tools in order to support knowledge transfer. These insights not only provide a rich foundation for follow-up research, but also inform SME managers about how to increase the effectiveness and efficiency of knowledge transfer with their network partners

The DNA replicating capacity of isolated E. coli cell wall-membrane complexes

The only DNA synthesizing activity left in a bacterial mutant lacking DNA polymerase is associated with the cell membrane

A DNA polymerase induced by bacteriophage T7

A bacteriophage-induced DNA polymerase was purified from T7-infected bacteria. This enzyme is composed of one single polypeptide chain with a molecular weight of about 100000. The enzyme requires single-stranded DNA with a 3′-OH end as a primer. In addition to its polymerising activity the enzyme has a 3′-exonucleolytic activity

Fast sedimenting deoxyribonucleic acid in bacteriophage T7-infected cells

3H-Thymidine added late in infection to bacteriophage T7 infected cells was partially recovered in fast sedimenting (40 S–80 S) DNA forms. These structures are most probably precursors to unit length viral DNA molecules. In cells infected with amber mutants in gene 3 (coding for an endonuclease) and gene 6 (coding for an exonuclease), 3H-thymidine pulse label appeared exclusively in these fast sedimenting DNA forms showing that (1) the 40 S–80 S DNA is an obligatory intermediate in T7 DNA replication, and (2) that the restriction imposed on T7 development by amber mutations in gene 3 and gene 6 is, at least partially, a defect in T7 DNA maturation

The impact of contracts on trust in entrepreneur–venture capitalist relationships

Venture capitalists (VCs) increasingly rely on elaborate formal contracts and incentivization through share ownership to manage their relationships with the entrepreneurial firms in which they invest. This study analyses the impact of a high degree of such ‘neoclassical contracting’ on entrepreneurs’ trust in their VC backers. The results from a sample of 86 Dutch entrepreneurial firms indicate not only that a high degree of neoclassical contracting tends to erode entrepreneurs’ trust in their VCs, but also that the use of more informal, relational contracting fails to moderate the negative association between a strong focus on neoclassical contracts and trust. However, entrepreneurs do welcome some level of monitoring, which highlights the enduring tension between trust and control, and the need for VCs to strike a productive balance