IDEAS home Printed from https://ideas.repec.org/a/eee/jbvent/v40y2025i2s0883902624000533.html
   My bibliography  Save this article

Directors in new technology-based ventures: An empirical inquiry

Author

Listed:
  • Garg, Sam
  • Howard, Michael
  • Pahnke, Emily Cox

Abstract

In the emerging literature on venture boards, little research examines the association between different categories of venture directors and strategic firm outcomes. We conduct an empirical inquiry into how founder-directors, venture capitalist investor-directors and corporate venture investor-directors are related to inter-organizational alliances, innovation, and exits. In our longitudinal study based on hand-collected data on 156 medical device ventures in the US, we find that founder-directors are positively associated with patents and negatively associated with supply chain agreements. VC-directors are positively associated with exits but are negatively associated with R&D, supply chain agreements and patents. CVC-directors are negatively associated with patents and first product introductions. Adopting an abductive approach, we suggest potential mechanisms based on interviews with venture directors and CEOs and suggest future directions for venture boards scholarship.

Suggested Citation

  • Garg, Sam & Howard, Michael & Pahnke, Emily Cox, 2025. "Directors in new technology-based ventures: An empirical inquiry," Journal of Business Venturing, Elsevier, vol. 40(2).
    • Handle: RePEc:eee:jbvent:v:40:y:2025:i:2:s0883902624000533
    DOI: 10.1016/j.jbusvent.2024.106431
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0883902624000533
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jbusvent.2024.106431?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Natee Amornsiripanitch & Paul A Gompers & Yuhai Xuan, 2019. "More than Money: Venture Capitalists on Boards," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 35(3), pages 513-543.
    2. Christopher F Baum & Arthur Lewbel, 2019. "Advice on using heteroskedasticity-based identification," Stata Journal, StataCorp LLC, vol. 19(4), pages 757-767, December.
    3. Belderbos, René & Jacob, Jojo & Lokshin, Boris, 2018. "Corporate venture capital (CVC) investments and technological performance: Geographic diversity and the interplay with technology alliances," Journal of Business Venturing, Elsevier, vol. 33(1), pages 20-34.
    4. Fried, Jesse M. & Ganor, Mira, 2006. "Agency Costs of Venture Capitalist Control in Startups," Berkeley Olin Program in Law & Economics, Working Paper Series qt5rz3w67b, Berkeley Olin Program in Law & Economics.
    5. Walter Powell & Kenneth Koput & James Bowie & Laurel Smith-Doerr, 2002. "The Spatial Clustering of Science and Capital: Accounting for Biotech Firm-Venture Capital Relationships," Regional Studies, Taylor & Francis Journals, vol. 36(3), pages 291-305.
    6. Ting Yao & Hugh O'Neill, 2022. "Venture capital exit pressure and venture exit: A board perspective," Strategic Management Journal, Wiley Blackwell, vol. 43(13), pages 2829-2848, December.
    7. repec:diw:diwwpp:dp1732 is not listed on IDEAS
    8. Bottazzi, Laura & Da Rin, Marco & Hellmann, Thomas, 2008. "Who are the active investors?: Evidence from venture capital," Journal of Financial Economics, Elsevier, vol. 89(3), pages 488-512, September.
    9. Paul Gompers & Josh Lerner, 2000. "The Determinants of Corporate Venture Capital Success: Organizational Structure, Incentives, and Complementarities," NBER Chapters, in: Concentrated Corporate Ownership, pages 17-54, National Bureau of Economic Research, Inc.
    10. Konon, Alexander & Fritsch, Michael & Kritikos, Alexander S., 2018. "Business cycles and start-ups across industries: An empirical analysis of German regions," Journal of Business Venturing, Elsevier, vol. 33(6), pages 742-761.
    11. Lewbel, Arthur, 2018. "Identification and estimation using heteroscedasticity without instruments: The binary endogenous regressor case," Economics Letters, Elsevier, vol. 165(C), pages 10-12.
    12. Calder-Wang, Sophie & Gompers, Paul A., 2021. "And the children shall lead: Gender diversity and performance in venture capital," Journal of Financial Economics, Elsevier, vol. 142(1), pages 1-22.
    13. 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, February.
    14. Ming Piao & Edward J. Zajac, 2016. "How exploitation impedes and impels exploration: Theory and evidence," Strategic Management Journal, Wiley Blackwell, vol. 37(7), pages 1431-1447, July.
    15. Bart Clarysse & Mirjam Knockaert & Andy Lockett, 2007. "Outside Board Members in High Tech Start-ups," Small Business Economics, Springer, vol. 29(3), pages 243-259, October.
    16. Elisa Alvarez-Garrido & Gary Dushnitsky, 2016. "Are entrepreneurial venture's innovation rates sensitive to investor complementary assets? Comparing biotech ventures backed by corporate and independent VCs," Strategic Management Journal, Wiley Blackwell, vol. 37(5), pages 819-834, May.
    17. Shaker A. Zahra & Igor Filatotchev, 2004. "Governance of the Entrepreneurial Threshold Firm: A Knowledge‐based Perspective," Journal of Management Studies, Wiley Blackwell, vol. 41(5), pages 885-897, July.
    18. Ji Youn (Rose) Kim & Haemin Dennis Park, 2017. "Two Faces of Early Corporate Venture Capital Funding: Promoting Innovation and Inhibiting IPOs," Strategy Science, INFORMS, vol. 2(3), pages 161-175, September.
    19. Christopher F Baum & Mark E. Schaffer & Steven Stillman, 2007. "Enhanced routines for instrumental variables/generalized method of moments estimation and testing," Stata Journal, StataCorp LLC, vol. 7(4), pages 465-506, December.
    20. Kiviet, Jan F. & Pleus, Milan, 2017. "The performance of tests on endogeneity of subsets of explanatory variables scanned by simulation," Econometrics and Statistics, Elsevier, vol. 2(C), pages 1-21.
    21. Lerner, Josh, 1995. "Venture Capitalists and the Oversight of Private Firms," Journal of Finance, American Finance Association, vol. 50(1), pages 301-318, March.
    22. Knockaert, Mirjam & Bjornali, Ekaterina S. & Erikson, Truls, 2015. "Joining forces: Top management team and board chair characteristics as antecedents of board service involvement," Journal of Business Venturing, Elsevier, vol. 30(3), pages 420-435.
    23. Gan, Dennis & Erikson, Truls, 2022. "Venture governance as a syndicate," Journal of Business Venturing Insights, Elsevier, vol. 18(C).
    24. Han Jiang & Albert A. Cannella Jr. & Jun Xia & Matthew Semadeni, 2017. "Choose to Fight or Choose to Flee? A Network Embeddedness Perspective of Executive Ship Jumping in Declining Firms," Strategic Management Journal, Wiley Blackwell, vol. 38(10), pages 2061-2079, October.
    25. Christine M. Beckman & M. Diane Burton, 2008. "Founding the Future: Path Dependence in the Evolution of Top Management Teams from Founding to IPO," Organization Science, INFORMS, vol. 19(1), pages 3-24, February.
    26. Anna Nadolska & Harry G. Barkema, 2014. "Good learners: How top management teams affect the success and frequency of acquisitions," Strategic Management Journal, Wiley Blackwell, vol. 35(10), pages 1483-1507, October.
    27. Scott Shane & Toby Stuart, 2002. "Organizational Endowments and the Performance of University Start-ups," Management Science, INFORMS, vol. 48(1), pages 154-170, January.
    28. Melissa E. Graebner & Anne Marie Knott & Marvin B. Lieberman & Will Mitchell, 2023. "Empirical inquiry without hypotheses: A question‐driven, phenomenon‐based approach to strategic management research," Strategic Management Journal, Wiley Blackwell, vol. 44(1), pages 3-10, January.
    29. Hezun Li & Siri Terjesen & Timurs Umans, 2020. "Corporate governance in entrepreneurial firms: a systematic review and research agenda," Small Business Economics, Springer, vol. 54(1), pages 43-74, January.
    30. Robert J. Campbell & John R. Busenbark & Scott D. Graffin & Steven Boivie, 2021. "Retaining problems or solutions? The post‐acquisition performance implications of director retention," Strategic Management Journal, Wiley Blackwell, vol. 42(9), pages 1716-1733, September.
    31. J. Myles Shaver, 1998. "Accounting for Endogeneity When Assessing Strategy Performance: Does Entry Mode Choice Affect FDI Survival?," Management Science, INFORMS, vol. 44(4), pages 571-585, April.
    32. Don O'Sullivan & Leon Zolotoy & Qingliang Fan, 2021. "CEO early‐life disaster experience and corporate social performance," Strategic Management Journal, Wiley Blackwell, vol. 42(11), pages 2137-2161, November.
    33. Fried, Vance H. & Bruton, Garry D. & Hisrich, Robert D., 1998. "Strategy and the board of directors in venture capital-backed firms," Journal of Business Venturing, Elsevier, vol. 13(6), pages 493-503, November.
    34. Arthur Lewbel, 2012. "Using Heteroscedasticity to Identify and Estimate Mismeasured and Endogenous Regressor Models," Journal of Business & Economic Statistics, Taylor & Francis Journals, vol. 30(1), pages 67-80.
    35. Li Dai & Lorraine Eden & Paul W. Beamish, 2017. "Caught in the crossfire: Dimensions of vulnerability and foreign multinationals' exit from war-afflicted countries," Strategic Management Journal, Wiley Blackwell, vol. 38(7), pages 1478-1498, July.
    36. Ying Xie & David Giles, 2011. "A survival analysis of the approval of US patent applications," Applied Economics, Taylor & Francis Journals, vol. 43(11), pages 1375-1384.
    37. Rajshree Agarwal & Serguey Braguinsky & Atsushi Ohyama, 2020. "Centers of gravity: The effect of stable shared leadership in top management teams on firm growth and industry evolution," Strategic Management Journal, Wiley Blackwell, vol. 41(3), pages 467-498, March.
    38. Bengtsson, Ola & Sensoy, Berk A., 2011. "Investor abilities and financial contracting: Evidence from venture capital," Journal of Financial Intermediation, Elsevier, vol. 20(4), pages 477-502, October.
    39. Bengtsson, Ola & Hsu, David H., 2015. "Ethnic matching in the U.S. venture capital market," Journal of Business Venturing, Elsevier, vol. 30(2), pages 338-354.
    40. Dushnitsky, Gary & Yu, Lei, 2022. "Why do incumbents fund startups? A study of the antecedents of corporate venture capital in China," Research Policy, Elsevier, vol. 51(3).
    41. Kathleen M. Eisenhardt & Claudia Bird Schoonhoven, 1996. "Resource-based View of Strategic Alliance Formation: Strategic and Social Effects in Entrepreneurial Firms," Organization Science, INFORMS, vol. 7(2), pages 136-150, April.
    42. Jolien Roelandt & Petra Andries & Mirjam Knockaert, 2022. "The contribution of board experience to opportunity development in high-tech ventures," Small Business Economics, Springer, vol. 58(3), pages 1627-1645, March.
    43. Samila, Sampsa & Sorenson, Olav, 2010. "Venture capital as a catalyst to commercialization," Research Policy, Elsevier, vol. 39(10), pages 1348-1360, December.
    44. Noam Wasserman, 2017. "The throne vs. the kingdom: Founder control and value creation in startups," Strategic Management Journal, Wiley Blackwell, vol. 38(2), pages 255-277, February.
    45. Conti, Annamaria & Dass, Nishant & Di Lorenzo, Francesco & Graham, Stuart J.H., 2019. "Venture capital investment strategies under financing constraints: Evidence from the 2008 financial crisis," Research Policy, Elsevier, vol. 48(3), pages 799-812.
    46. Christopher F Baum & Arthur Lewbel & Mark E Schaffer & Oleksander Talavera, 2012. "Instrumental variables estimation using heteroskedasticity-based instruments," United Kingdom Stata Users' Group Meetings 2012 07, Stata Users Group.
    47. El-Awad, Ziad & Brattström, Anna & Breugst, Nicola, 2022. "Bridging cognitive scripts in multidisciplinary academic spinoff teams: A process perspective on how academics learn to work with non-academic managers," Research Policy, Elsevier, vol. 51(10).
    48. Forbes, Daniel P. & Korsgaard, M. Audrey & Sapienza, Harry J., 2010. "Financing decisions as a source of conflict in venture boards," Journal of Business Venturing, Elsevier, vol. 25(6), pages 579-592, November.
    49. Florin, Juan, 2005. "Is venture capital worth it? Effects on firm performance and founder returns," Journal of Business Venturing, Elsevier, vol. 20(1), pages 113-135, January.
    50. Karen Locke & Karen Golden-Biddle & Martha S. Feldman, 2008. "Perspective---Making Doubt Generative: Rethinking the Role of Doubt in the Research Process," Organization Science, INFORMS, vol. 19(6), pages 907-918, December.
    51. Elien Vandenbroucke & Mirjam Knockaert & Deniz Ucbasaran, 2016. "Outside Board Human Capital and Early Stage High–Tech Firm Performance," Entrepreneurship Theory and Practice, , vol. 40(4), pages 759-779, July.
    52. James D. Westphal & David H. Zhu, 2019. "Under the radar: How firms manage competitive uncertainty by appointing friends of other chief executive officers to their boards," Strategic Management Journal, Wiley Blackwell, vol. 40(1), pages 79-107, January.
    53. Jonas Gabrielsson, 2017. "Corporate governance and entrepreneurship: current states and future directions," Chapters, in: Jonas Gabrielsson (ed.), Handbook of Research on Corporate Governance and Entrepreneurship, chapter 1, pages 3-26, Edward Elgar Publishing.
    54. Donna Marie DeCarolis & David L. Deeds, 1999. "The impact of stocks and flows of organizational knowledge on firm performance: an empirical investigation of the biotechnology industry," Strategic Management Journal, Wiley Blackwell, vol. 20(10), pages 953-968, October.
    55. Sam Garg & Qiang (John) Li & Jason D. Shaw, 2018. "Undervaluation of directors in the board hierarchy: Impact on turnover of directors (and CEOs) in newly public firms," Strategic Management Journal, Wiley Blackwell, vol. 39(2), pages 429-457, February.
    56. Colombo, Massimo G. & Grilli, Luca & Piva, Evila, 2006. "In search of complementary assets: The determinants of alliance formation of high-tech start-ups," Research Policy, Elsevier, vol. 35(8), pages 1166-1199, October.
    57. Noam Wasserman, 2003. "Founder-CEO Succession and the Paradox of Entrepreneurial Success," Organization Science, INFORMS, vol. 14(2), pages 149-172, April.
    58. Megginson, William L & Weiss, Kathleen A, 1991. "Venture Capitalist Certification in Initial Public Offerings," Journal of Finance, American Finance Association, vol. 46(3), pages 879-903, July.
    59. Paul Gompers & Josh Lerner, 2001. "The Venture Capital Revolution," Journal of Economic Perspectives, American Economic Association, vol. 15(2), pages 145-168, Spring.
    60. Ozmel, Umit & Robinson, David T. & Stuart, Toby E., 2013. "Strategic alliances, venture capital, and exit decisions in early stage high-tech firms," Journal of Financial Economics, Elsevier, vol. 107(3), pages 655-670.
    61. Gompers, Paul A., 1996. "Grandstanding in the venture capital industry," Journal of Financial Economics, Elsevier, vol. 42(1), pages 133-156, September.
    62. Jonathan D. Arthurs & Lowell W. Busenitz, 2003. "The Boundaries and Limitations of Agency Theory and Stewardship Theory in the Venture Capitalist/Entrepreneur Relationship," Entrepreneurship Theory and Practice, , vol. 28(2), pages 145-162, March.
    63. Field, Laura & Lowry, Michelle & Mkrtchyan, Anahit, 2013. "Are busy boards detrimental?," Journal of Financial Economics, Elsevier, vol. 109(1), pages 63-82.
    64. Vladimir I. Ivanov & Fei Xie, 2010. "Do Corporate Venture Capitalists Add Value to Start‐Up Firms? Evidence from IPOs and Acquisitions of VC‐Backed Companies," Financial Management, Financial Management Association International, vol. 39(1), pages 129-152, March.
    65. Haemin Dennis Park & H. Kevin Steensma, 2012. "When does corporate venture capital add value for new ventures?," Strategic Management Journal, Wiley Blackwell, vol. 33(1), pages 1-22, January.
    66. Alicia DeSantola & Ranjay Gulati & Pavel I. Zhelyazkov, 2023. "External Interfaces or Internal Processes? Market Positioning and Divergent Professionalization Paths in Young Ventures," Organization Science, INFORMS, vol. 34(1), pages 1-23, January.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Rin, Marco Da & Hellmann, Thomas & Puri, Manju, 2013. "A Survey of Venture Capital Research," Handbook of the Economics of Finance, in: G.M. Constantinides & M. Harris & R. M. Stulz (ed.), Handbook of the Economics of Finance, volume 2, chapter 0, pages 573-648, Elsevier.
    2. Shin, Moonsik & Bae, Joonhyung & Ozmel, Umit, 2025. "Effect of venture capital investment horizon on new product development: Evidence from the medical device sector," Journal of Business Venturing, Elsevier, vol. 40(1).
    3. 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.
    4. Galloway, Tera L. & Miller, Douglas R. & Sahaym, Arvin & Arthurs, Jonathan D., 2017. "Exploring the innovation strategies of young firms: Corporate venture capital and venture capital impact on alliance innovation strategy," Journal of Business Research, Elsevier, vol. 71(C), pages 55-65.
    5. Ting-Kai Chou & Jia-Chi Cheng & Chin-Chen Chien, 2013. "How useful is venture capital prestige? Evidence from IPO survivability," Small Business Economics, Springer, vol. 40(4), pages 843-863, May.
    6. Anokhin, Sergey & Morgan, Todd & Schulze, William & Wuebker, Robert, 2022. "Is a reputation for misconduct harmful? Evidence from corporate venture capital," Journal of Business Research, Elsevier, vol. 138(C), pages 65-76.
    7. Diego Useche & Sophie Pommet, 2021. "Where do we go? VC firm heterogeneity and the exit routes of newly listed high-tech firms," Small Business Economics, Springer, vol. 57(3), pages 1339-1359, October.
    8. Dang, Viet Anh & Karpuz, Ahmet & Mohamed, Abdulkadir, 2023. "Venture capital directors and corporate debt structure: An empirical analysis of newly listed companies," Journal of Banking & Finance, Elsevier, vol. 157(C).
    9. Vincenzo Butticè & Massimo G. Colombo & Paola Rovelli, 2024. "Venture capital and the delegation of decision authority in startups: an exploratory study," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 51(4), pages 893-923, December.
    10. Grilli, Luca & Murtinu, Samuele, 2014. "Government, venture capital and the growth of European high-tech entrepreneurial firms," Research Policy, Elsevier, vol. 43(9), pages 1523-1543.
    11. Zabara, Tatiana, 2019. "Evolution of entrepreneurial teams in technology-based new ventures," Other publications TiSEM cc09d065-3811-47b6-9c93-8, Tilburg University, School of Economics and Management.
    12. Diego Useche & Sophie Pommet, 0. "Where do we go? VC firm heterogeneity and the exit routes of newly listed high-tech firms," Small Business Economics, Springer, vol. 0, pages 1-21.
    13. Rosenbusch, Nina & Brinckmann, Jan & Müller, Verena, 2013. "Does acquiring venture capital pay off for the funded firms? A meta-analysis on the relationship between venture capital investment and funded firm financial performance," Journal of Business Venturing, Elsevier, vol. 28(3), pages 335-353.
    14. Valérie Revest & Alessandro Sapio, 2012. "Financing technology-based small firms in Europe: what do we know?," Small Business Economics, Springer, vol. 39(1), pages 179-205, July.
    15. M. Knockaert & T. Vanacker, 2011. "The Association between Venture Capitalists’ Selection and Value Adding Behavior: Evidence from Early Stage High Tech Venture Capitalists," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 11/741, Ghent University, Faculty of Economics and Business Administration.
    16. Lohwasser, Todor S., 2020. "Meta-analyzing the relative performance of venture capital-backed firms," Discussion Papers of the Institute for Organisational Economics 4/2020, University of Münster, Institute for Organisational Economics.
    17. Manju Puri & Rebecca Zarutskie, 2012. "On the Life Cycle Dynamics of Venture-Capital- and Non-Venture-Capital-Financed Firms," Journal of Finance, American Finance Association, vol. 67(6), pages 2247-2293, December.
    18. Mirjam Knockaert & Tom Vanacker, 2013. "The association between venture capitalists’ selection and value adding behavior: evidence from early stage high tech venture capitalists," Small Business Economics, Springer, vol. 40(3), pages 493-509, April.
    19. Jeon, Euiju & Maula, Markku, 2022. "Progress toward understanding tensions in corporate venture capital: A systematic review," Journal of Business Venturing, Elsevier, vol. 37(4).
    20. Sun, Yue & Uchida, Konari & Matsumoto, Mamoru, 2013. "The dark side of independent venture capitalists: Evidence from Japan," Pacific-Basin Finance Journal, Elsevier, vol. 24(C), pages 279-300.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jbvent:v:40:y:2025:i:2:s0883902624000533. See general information about how to correct material in RePEc.

    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 CitEc recognized a bibliographic reference but did not link an item in RePEc 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/jbusvent .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.