Conflicts between Entrepreneurs and Venture Capitalists: Explanations from Organizational Behavior Perspective

With rapid development of China’s capital market, corporation between start-up firms and venture capitalists has entered a booming period. However, from 2001 to 2016, twenty two famous entrepreneurial ventures in China have experienced dramatic conflicts between entrepreneurs and venture capitalists, and as a result, sixteen firm founders had to leave their own ventures. In the current study, we take an organizational behavior perspective to address the question of why entrepreneurs-VC conflicts are inevitable in practice and how conflicts unfold over time. Case study analysis and semi-structured interviews are used to provide insights into the topic at hand. And by analyzing twenty two cases and interview results, it is found that three major reasons, among many, contribute most to entrepreneur-VC contradiction, and they are conflict between corporate culture and venture professionalization (process conflict), different or even contradictory preference of how to accomplish tasks (task conflict), and disputes in individual characteristics and behavior patterns (relationship conflict). JEL classification numbers: G24Keywords: entrepreneur, venture capitalist, intragroup conflict, organizational behavior.