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A Property Rights Perspective on Venture Capital Investment Decisions

Author

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  • Dimo Dimov
  • Eric Gedajlovic

Abstract

To understand how ownership differences influence specific types of strategic decisions, we examine the investment decisions of venture capital (VC) firms, for which a variety of property rights arrangements exist. We describe how VC firms are characterized by important differences in how and to whom various property rights are allocated. On this basis, we develop a series of hypotheses regarding differences in the range and types of investment opportunities pursued by private, corporate, and bank affiliated VC firms. Evaluating our hypotheses using data on investments carried out by 3557 firms, we find that these types of firm perform distinct roles in the ecology of VC financing.

Suggested Citation

  • Dimo Dimov & Eric Gedajlovic, 2010. "A Property Rights Perspective on Venture Capital Investment Decisions," Journal of Management Studies, Wiley Blackwell, vol. 47(7), pages 1248-1271, November.
    • Handle: RePEc:bla:jomstd:v:47:y:2010:i:7:p:1248-1271
    DOI: 10.1111/j.1467-6486.2009.00905.x
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    Cited by:

    1. Mohammadi, Ali & Shafizadeh, Mohammadmehdi & Johan, Sofia, 2014. "A Signaling Theory Of Entrepreneurial Venture’S Valuation: Evidence From Early Termination Of Venture Capital Investment," Working Paper Series in Economics and Institutions of Innovation 349, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
    2. Colombo, Massimo G. & D’Adda, Diego & Pirelli, Lorenzo H., 2016. "The participation of new technology-based firms in EU-funded R&D partnerships: The role of venture capital," Research Policy, Elsevier, vol. 45(2), pages 361-375.
    3. Lei Zhang, 2019. "Founders Matter! Serial Entrepreneurs and Venture Capital Syndicate Formation," Entrepreneurship Theory and Practice, , vol. 43(5), pages 974-998, September.
    4. Poonam Khanna & Lemaro Thompson & Michael Mcdonald, 2015. "Research On Venture Capital Firms’ ‘Investment Behavior A Review’," Working Papers 0197mgt, College of Business, University of Texas at San Antonio.
    5. Massimo G. Colombo & Douglas Cumming & Ali Mohammadi & Cristina Rossi-Lamastra & Anu Wadhwa, 2016. "Open business models and venture capital finance," Industrial and Corporate Change, Oxford University Press, vol. 25(2), pages 353-370.
    6. Relativo, Jona Princess & Sumayang, Mildred & Diasana, Sarah Jean & Murcia, John Vianne, 2016. "Capital Investment Decisions of Micro, Small and Medium Enterprises: The Case of Digos City," MPRA Paper 79574, University Library of Munich, Germany, revised 07 Jun 2017.
    7. Colombo, Massimo G. & D’Adda, Diego & Quas, Anita, 2019. "The geography of venture capital and entrepreneurial ventures’ demand for external equity," Research Policy, Elsevier, vol. 48(5), pages 1150-1170.
    8. Fabio Bertoni & Massimo G. Colombo & Anita Quas, 2019. "The Role of Governmental Venture Capital in the Venture Capital Ecosystem: An Organizational Ecology Perspective," Entrepreneurship Theory and Practice, , vol. 43(3), pages 611-628, May.
    9. Thomas Standaert & Sophie Manigart, 2018. "Government as fund-of-fund and VC fund sponsors: effect on employment in portfolio companies," Small Business Economics, Springer, vol. 50(2), pages 357-373, February.
    10. Li, Emma & Mao, Mike Qinghao & Zhang, Hong Feng & Zheng, Hao, 2023. "Banks’ investments in fintech ventures," Journal of Banking & Finance, Elsevier, vol. 149(C).
    11. A. G. Kalacheva, 2017. "Practical use of a method of accelerated assessing the investment attractiveness of an industrial enterprise," Russian Journal of Industrial Economics, MISIS, issue 4.
    12. Massimo G. Colombo & Samuele Murtinu, 2017. "Venture Capital Investments in Europe and Portfolio Firms' Economic Performance: Independent Versus Corporate Investors," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 26(1), pages 35-66, February.
    13. Fabio Bertoni & Massimo Colombo & Anita Quas, 2015. "The patterns of venture capital investment in Europe," Small Business Economics, Springer, vol. 45(3), pages 543-560, October.
    14. Gedajlovic, Eric & Cao, Qing & Zhang, Hongping, 2012. "Corporate shareholdings and organizational ambidexterity in high-tech SMEs: Evidence from a transitional economy," Journal of Business Venturing, Elsevier, vol. 27(6), pages 652-665.
    15. Fabio Bertoni & Massimo G. Colombo & Anita Quas & Francesca Tenca, 2019. "The changing patterns of venture capital investments in Europe," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 46(2), pages 229-250, June.
    16. Jeon, Euiju & Maula, Markku, 2022. "Progress toward understanding tensions in corporate venture capital: A systematic review," Journal of Business Venturing, Elsevier, vol. 37(4).
    17. Patrick Röhm, 2018. "Exploring the landscape of corporate venture capital: a systematic review of the entrepreneurial and finance literature," Management Review Quarterly, Springer, vol. 68(3), pages 279-319, August.
    18. Eric Gedajlovic & Benson Honig & Curt B. Moore & G. Tyge Payne & Mike Wright, 2013. "Social Capital and Entrepreneurship: A Schema and Research Agenda," Entrepreneurship Theory and Practice, , vol. 37(3), pages 455-478, May.

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