Advanced Search
MyIDEAS: Login to save this paper or follow this series

The Division of Ownership in New Ventures

Contents:

Author Info

  • Oliver Fabel

    ()
    (Department of Economics, University of Konstanz)

  • Dominique Demougin

    ()
    (School of Business and Economics, Berlin)

Abstract

The current study investigates a tripartite incentive contract between an innovator supplying an intellectual asset, a professional assigned to productive tasks, and a consulting firm specialized in recruiting qualified personnel. The liquidity-constrained professional is compensated by receiving a share of one half in the new venture. With continuous search activities of the consultant the pure tripartite partnership implements the consultant's expected profit maximum. The consultant's and the innovator's shares reflect the relative value of search. However, the consultant's optimal search effort is inefficiently low. With binary search and only two innovator types , there may also exist bipartite partnerships of equals between the innovator and the professional, and bipartite partnerships of equals between the consultant and the professional. The latter emerge from complete buy-outs of innovators with low value business ideas.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.ub.uni-konstanz.de/kops/volltexte/2004/1183/pdf/04-03.pdf
Download Restriction: no

Bibliographic Info

Paper provided by Research Group Heterogeneous Labor, University of Konstanz/ZEW Mannheim in its series Working Papers of the Research Group Heterogenous Labor with number 04-03.

as in new window
Length: 37 pages
Date of creation: 25 Feb 2004
Date of revision:
Handle: RePEc:knz:hetero:0403

Contact details of provider:
Postal: D-78457 Konstanz
Phone: +49 7531 88 2314
Fax: +49-7531-88-2145
Web page: http://www.uni-konstanz.de/forschergruppewiwi
More information through EDIRC

Related research

Keywords: new ventures ; tripartite incentive contract ; consulting contract ; partnerships;

Other versions of this item:

Find related papers by JEL classification:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. David Pérez-Castrillo & David Wettstein, 2005. "Implementation of the Ordinal Shapley Value for a Three-agent Economy," Working Papers 167, Barcelona Graduate School of Economics.
  2. Hart, O. & Moore, J., 1989. "Default And Renegotiation: A Dynamic Model Of Debt," Working papers 520, Massachusetts Institute of Technology (MIT), Department of Economics.
  3. Melumad, Nahum D. & Reichelstein, Stefan, 1989. "Value of communication in agencies," Journal of Economic Theory, Elsevier, vol. 47(2), pages 334-368, April.
  4. Murray Brown & Elmar Wolfstetter, 1989. "Tripartite Income-Employment Contracts and Coalition Incentive Compatibility," RAND Journal of Economics, The RAND Corporation, vol. 20(3), pages 291-307, Autumn.
  5. Dominique M. Demougin, 1989. "A Renegotiation-Proof Mechanism for a Principal-Agent Model with Moral Hazard and Adverse Selection," RAND Journal of Economics, The RAND Corporation, vol. 20(2), pages 256-267, Summer.
  6. Dilip Mookherjee, 2005. "Decentralization, Hierarchies and Incentives: A Mechanism Design Perspective," Boston University - Department of Economics - Working Papers Series WP2005-034, Boston University - Department of Economics, revised Sep 2005.
  7. Sahlman, William A., 1990. "The structure and governance of venture-capital organizations," Journal of Financial Economics, Elsevier, vol. 27(2), pages 473-521, October.
  8. HEGE, Ulrich & HAUSWALD, Robert, 2002. "Ownership and control in joint ventures: theory and evidence," Les Cahiers de Recherche 750, HEC Paris.
  9. Thomas Hellmann & Manju Puri, 2002. "Venture Capital and the Professionalization of Start-Up Firms: Empirical Evidence," Journal of Finance, American Finance Association, vol. 57(1), pages 169-197, 02.
  10. Hart, Oliver & Moore, John, 1994. "A Theory of Debt Based on the Inalienability of Human Capital," The Quarterly Journal of Economics, MIT Press, vol. 109(4), pages 841-79, November.
  11. Roberta Dessï¾’, 2005. "Start-Up Finance, Monitoring, and Collusion," RAND Journal of Economics, The RAND Corporation, vol. 36(2), pages 255-274, Summer.
  12. Raghuram G. Rajan & Luigi Zingales, . "Power in a Theory of the Firm," CRSP working papers 335, Center for Research in Security Prices, Graduate School of Business, University of Chicago.
  13. Bruno Biais & Enrico Perotti, 2008. "Entrepreneurs and new ideas," RAND Journal of Economics, RAND Corporation, vol. 39(4), pages 1105-1125.
  14. Catherine Casamatta, 2003. "Financing and Advising: Optimal Financial Contracts with Venture Capitalists," Journal of Finance, American Finance Association, vol. 58(5), pages 2059-2086, October.
  15. Paul Belleflamme & Francis Bloch, 2000. "Optimal Ownership Structures in Asymmetric Joint Ventures," Working Papers 411, Queen Mary, University of London, School of Economics and Finance.
  16. Aghion, Philippe & Bolton, Patrick, 1992. "An Incomplete Contracts Approach to Financial Contracting," Review of Economic Studies, Wiley Blackwell, vol. 59(3), pages 473-94, July.
  17. Laura Bottazzi & Marco Da Rin, 2002. "Venture capital in Europe and the financing of innovative companies," Economic Policy, CEPR & CES & MSH, vol. 17(34), pages 229-270, 04.
  18. Steven N. Kaplan & Per Stromberg, 2003. "Financial Contracting Theory Meets the Real World: An Empirical Analysis of Venture Capital Contracts," Review of Economic Studies, Wiley Blackwell, vol. 70(2), pages 281-315, 04.
  19. Vesa Kanniainen & Christian Keuschnigg, 2000. "The Optimal Portfolio of Start-Up Firms in Venture Capital Finance," CESifo Working Paper Series 381, CESifo Group Munich.
  20. Bergemann, Dirk & Hege, Ulrich, 1997. "Venture Capital Financing, Moral Hazard and Learning," CEPR Discussion Papers 1738, C.E.P.R. Discussion Papers.
  21. Christian Keuschnigg & Soren Bo Nielsen, 2003. "Taxes and Venture Capital Support," Review of Finance, Springer, vol. 7(3), pages 515-539.
  22. repec:ebl:ecbull:v:3:y:2005:i:48:p:1-8 is not listed on IDEAS
  23. Jensen, Richard A. & Thursby, Jerry G. & Thursby, Marie C., 2003. "Disclosure and licensing of University inventions: 'The best we can do with the s**t we get to work with'," International Journal of Industrial Organization, Elsevier, vol. 21(9), pages 1271-1300, November.
  24. Richard A. Jensen & Jerry G. Thursby & Marie C. Thursby, 2003. "The Disclosure and Licensing of University Inventions," NBER Working Papers 9734, National Bureau of Economic Research, Inc.
  25. Elfenbein, Daniel W., 2007. "Publications, patents, and the market for university inventions," Journal of Economic Behavior & Organization, Elsevier, vol. 63(4), pages 688-715, August.
  26. Nöldeke, Georg & Schmidt, Klaus M., 1997. "Sequential Investments and Options to Own," CEPR Discussion Papers 1645, C.E.P.R. Discussion Papers.
  27. Grossman, Sanford J. & Hart, Oliver D., 1986. "The Costs and Benefits of Ownership: A Theory of Vertical and Lateral Integration," Scholarly Articles 3450060, Harvard University Department of Economics.
  28. Davila, Toni & Foster, George, 2005. "Startup firms' growth, management control systems adoption and performance," IESE Research Papers D/603, IESE Business School.
  29. Schmidt, Klaus M., 2003. "Convertible Securities and Venture Capital Finance," Munich Reprints in Economics 19769, University of Munich, Department of Economics.
  30. Christian Keuschnigg, 2002. "Start-Up Investment With Scarce Venture Capital Support," University of St. Gallen Department of Economics working paper series 2002 2002-03, Department of Economics, University of St. Gallen.
  31. Lerner, Josh, 1995. " Venture Capitalists and the Oversight of Private Firms," Journal of Finance, American Finance Association, vol. 50(1), pages 301-18, March.
  32. Paul Gompers & Josh Lerner, 2001. "The Venture Capital Revolution," Journal of Economic Perspectives, American Economic Association, vol. 15(2), pages 145-168, Spring.
  33. Klaus Schmidt, 1999. "Convertible Securities and Venture Capital Finance," CESifo Working Paper Series 217, CESifo Group Munich.
  34. Mike Wright & Ajay Vohora & Andy Lockett, 2004. "The Formation of High-Tech University Spinouts: The Role of Joint Ventures and Venture Capital Investors," The Journal of Technology Transfer, Springer, vol. 29(3_4), pages 287-310, 08.
  35. Rogerson, William P, 1985. "The First-Order Approach to Principal-Agent Problems," Econometrica, Econometric Society, vol. 53(6), pages 1357-67, November.
  36. Dean A. Shepherd, 1999. "Venture Capitalists' Assessment of New Venture Survival," Management Science, INFORMS, vol. 45(5), pages 621-632, May.
  37. Steven N. Kaplan & Per Stromberg, 2001. "Venture Capitalists As Principals: Contracting, Screening, and Monitoring," NBER Working Papers 8202, National Bureau of Economic Research, Inc.
  38. Admati, Anat R & Pfleiderer, Paul, 1994. " Robust Financial Contracting and the Role of Venture Capitalists," Journal of Finance, American Finance Association, vol. 49(2), pages 371-402, June.
  39. Tsoulouhas, Theofanis, 1999. "Renegotiation-Proof Labour and Credit Contracts with Worker Mobility," Economica, London School of Economics and Political Science, vol. 66(264), pages 433-54, November.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Erik Lehmann, 2004. "Does Venture Capital Syndication Spur Employment Growth and Shareholder Value? : evidence from German IPO Data," Working Papers of the Research Group Heterogenous Labor 04-11, Research Group Heterogeneous Labor, University of Konstanz/ZEW Mannheim.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:knz:hetero:0403. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Gerald Eisenkopf).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.