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The association between venture capitalists’ selection and value adding behavior: evidence from early stage high tech venture capitalists

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  • Mirjam Knockaert

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  • Tom Vanacker

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Abstract

Building upon self-efficacy and collective effort theories, we study the association between the selection behavior of venture capitalists and their involvement in value adding activities. We argue that investors, who prioritize different characteristics of a business proposal during selection, will be more or less confident of their own abilities and the abilities of entrepreneurial teams to effectively add value to portfolio companies and hence will be more or less involved in providing value adding activities. In order to test this claim, we use a stratified sample comprising 68 European early stage high tech venture capitalists. Results show that venture capitalists, who focus on entrepreneurial team characteristics or financial criteria during selection, are less involved in value adding activities compared to their peers, who focus on technological criteria. We discuss these findings from a theoretical and practical perspective. Copyright Springer Science+Business Media, LLC. 2013

Suggested Citation

  • 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.
  • Handle: RePEc:kap:sbusec:v:40:y:2013:i:3:p:493-509
    DOI: 10.1007/s11187-011-9378-8
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    Cited by:

    1. Massimo G. Colombo & Douglas J. Cumming & Silvio Vismara, 2016. "Governmental venture capital for innovative young firms," The Journal of Technology Transfer, Springer, vol. 41(1), pages 10-24, February.
    2. repec:kap:sbusec:v:50:y:2018:i:2:d:10.1007_s11187-016-9831-9 is not listed on IDEAS
    3. Tommaso Minola & Silvio Vismara & Davide Hahn, 2017. "Screening model for the support of governmental venture capital," The Journal of Technology Transfer, Springer, vol. 42(1), pages 59-77, February.

    More about this item

    Keywords

    Venture capital; Value adding behavior; Selection behavior; Self-efficacy theory; Collective effort theory; G24; L26; O32; D81;

    JEL classification:

    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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