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Upper echelons and portfolio strategies of venture capital firms

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  • Patzelt, Holger
  • zu Knyphausen-Aufseß, Dodo
  • Fischer, Heiko T.

Abstract

In this study we analyze how the composition of the top management team (TMT) influences the portfolio strategy choice in venture capital (VC) organizations. We develop a model of risk perception to investigate how education and experience of TMT members impact whether VC organizations invest with a focus on early stage ventures or not, specialize or diversify across industries, and invest with a broad or narrow geographic scope. Evaluation of data on TMTs and portfolio strategies of 136 European VC firms revealed that VC firms with higher proportions of TMT members with science/engineering education and entrepreneurial experience more likely invest with an early stage focus. Furthermore, TMTs with more management education diversify their portfolios more across industries. Finally, the more international experience TMT members of VC organizations have, the broader the geographic scope of investees. We discuss the implications of our findings for the VC literature.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Business Venturing.

Volume (Year): 24 (2009)
Issue (Month): 6 (November)
Pages: 558-572

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Handle: RePEc:eee:jbvent:v:24:y:2009:i:6:p:558-572

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Web page: http://www.elsevier.com/locate/jbusvent

Related research

Keywords: Top management team Education Experience Early stage focus Portfolio diversification Geographic scope;

References

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Citations

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Cited by:
  1. Dimo Dimov & Pablo Martin de Holan & Hana Milanov, 2012. "Learning patterns in venture capital investing in new industries," Industrial and Corporate Change, Oxford University Press, Oxford University Press, vol. 21(6), pages 1389-1426, December.
  2. Petra Andries & Dirk Czarnitzki, 2014. "Small firm innovation performance and employee involvement," Small Business Economics, Springer, Springer, vol. 43(1), pages 21-38, June.
  3. Chan, Chien Sheng Richard & Park, Haemin Dennis, 2013. "The influence of dispositional affect and cognition on venture investment portfolio concentration," Journal of Business Venturing, Elsevier, Elsevier, vol. 28(3), pages 397-412.

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