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Ownership structure, horizontal agency costs and the performance of high-tech entrepreneurial firms

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  • Massimo Colombo
  • Annalisa Croce

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  • Samuele Murtinu

Abstract

We use the lens of the resource-based view and horizontal agency cost theory to analyse the effect of the presence of different types of individual owners, i.e., owner-managers and non-manager individual shareholders, on the performance of high-tech entrepreneurial firms. Ownership enlargement may contribute to fill the resource gap faced by entrepreneurial firms and improve firm performance. However, whereas owner-managers engender low horizontal agency costs, non-manager individual shareholders generate high horizontal agency problems because of their limited managerial involvement. Our results on a sample of Italian high-tech entrepreneurial firms show that the number of owner-managers has a positive effect on firm performance, whereas the effect of the number of non-manager individual shareholders is negligible. This latter effect becomes more positive, even though still not statistically significant, when firms are highly leveraged confirming the disciplining role of bank debt. Copyright Springer Science+Business Media New York 2014

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  • Massimo Colombo & Annalisa Croce & Samuele Murtinu, 2014. "Ownership structure, horizontal agency costs and the performance of high-tech entrepreneurial firms," Small Business Economics, Springer, vol. 42(2), pages 265-282, February.
    • Handle: RePEc:kap:sbusec:v:42:y:2014:i:2:p:265-282
    DOI: 10.1007/s11187-013-9483-y
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    3. Cumming, Douglas J. & Grilli, Luca & Murtinu, Samuele, 2017. "Governmental and independent venture capital investments in Europe: A firm-level performance analysis," Journal of Corporate Finance, Elsevier, vol. 42(C), pages 439-459.
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    7. Felipe Rojas & Elena Huergo, 2016. "Characteristics of entrepreneurs and public support for NTBFs," Small Business Economics, Springer, vol. 47(2), pages 363-382, August.
    8. Samuele Murtinu, 2015. "Debt Maturity, Ownership Concentration, and Firm Efficiency," Economics Bulletin, AccessEcon, vol. 35(4), pages 2610-2616.
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    More about this item

    Keywords

    Horizontal agency costs; High-tech entrepreneurial firms; Productivity; Ownership structure; Bank debt; G32; L26; M13;

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups

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