Outside board members in the high-tech start-ups
AbstractBoard composition in large organizations has been subject to much empirical research, however, little attention has been focused on board composition in start-ups, and more specifically high tech start-ups. This lack of research is surprising given that many high tech start-ups have multiple equity stakeholders such as venture capitalists or public research organizations, such as universities. Given that high tech start-ups are commonly resource-poor these external stakeholders may play an important role in accessing critical external resources. Drawing on agency theory, resource dependence theory and social network theory we examine the tensions that exist between the founding team and external equity stakeholders in determining the presence of outside board members. In particular we focus on whether or not the outside board members have either complementary or substitute human capital to the founding team. We test our model on a sample of 140 high tech start-ups in Flanders. Our results indicate that high tech start-ups with a public research organization as an external equity stakeholder are more likely to develop boards with outside board members with complementary skills to the founding team. Conversely, in high tech start-ups where the founding team has had autonomy, or where a venture capitalist is an external equity stakeholder, the board tends to consist of outside board members with similar or substitute human capital to the founding team. Our findings the presence of an external equity stakeholder does not guarantee that outside board members have complementary human capital to the founding team.
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Bibliographic InfoPaper provided by Vlerick Leuven Gent Management School in its series Vlerick Leuven Gent Management School Working Paper Series with number 2006-34.
Length: 37 pages
Date of creation: 04 Oct 2006
Date of revision:
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-02-17 (All new papers)
- NEP-ENT-2007-02-17 (Entrepreneurship)
- NEP-INO-2007-02-17 (Innovation)
- NEP-NET-2007-02-17 (Network Economics)
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- Ekaterina Bjørnåli & Magnus Gulbrandsen, 2010. "Exploring board formation and evolution of board composition in academic spin-offs," The Journal of Technology Transfer, Springer, vol. 35(1), pages 92-112, February.
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