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The impact of venture capital on family businesses: Evidence from Spain

Author

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  • Martí, José
  • Menéndez-Requejo, Susana
  • Rottke, Olaf M.

Abstract

We analyzed growth in family and non-family Spanish venture capital-backed firms. When the venture capital (VC) firm does not hold a majority stake, the usual risk aversion attitudes in family firms may lead to conflicts between the management cultures of the existing and new shareholders, which may affect growth. We found lower firm growth after the initial round in family firms only when the investor holds a minority stake. Our results may explain the under-representation of family firms in VC portfolios and highlight the need to align the objectives of family managers and VC investors before the initial VC round.

Suggested Citation

  • Martí, José & Menéndez-Requejo, Susana & Rottke, Olaf M., 2013. "The impact of venture capital on family businesses: Evidence from Spain," Journal of World Business, Elsevier, vol. 48(3), pages 420-430.
  • Handle: RePEc:eee:worbus:v:48:y:2013:i:3:p:420-430 DOI: 10.1016/j.jwb.2012.07.025
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    References listed on IDEAS

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    Cited by:

    1. Felix K. Thiele, 2017. "Family businesses and non-family equity: literature review and avenues for future research," Management Review Quarterly, Springer;Vienna University of Economics and Business, vol. 67(1), pages 31-63, February.
    2. Arturo Haro-de-Rosario & María del Carmen Caba-Pérez & Leonardo Cazorla-Papis, 2016. "The impact of venture capital on investee companies: evidence from Spain," Review of Managerial Science, Springer, vol. 10(3), pages 577-600, July.
    3. Annalisa Croce & José Martí, 2017. "Financial constraints in family firms and the role of venture capital," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 44(1), pages 119-144, March.
    4. Paglia, John K. & Harjoto, Maretno A., 2014. "The effects of private equity and venture capital on sales and employment growth in small and medium-sized businesses," Journal of Banking & Finance, Elsevier, vol. 47(C), pages 177-197.
    5. Zhang, Jing & Pezeshkan, Amir, 2016. "Host country network, industry experience, and international alliance formation: Evidence from the venture capital industry," Journal of World Business, Elsevier, vol. 51(2), pages 264-277.

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