Christian Hopp

The influence of socio-cultural environments on the performance of nascent entrepreneurs:community culture, motivation, self-efficacy and start-up success

The importance of informal institutions and in particular culture for entrepreneurship is a subject of ongoing interest. Past research has mostly concentrated on cross-national comparisons, cultural values and the direct effects of culture on entrepreneurial behaviour, but in the main found inconsistent results. We add a fresh perspective to this research stream by turning attention to community-level culture and cultural norms. We hypothesize indirect effects of cultural norms on venture emergence: Community-level cultural norms (performance-based culture and socially supportive institutional norms) impact important supply-side variables (entrepreneurial self-efficacy and entrepreneurial motivation) which in turn influence nascent entrepreneurs’ success in creating operational ventures (venture emergence). We test our predictions on a unique longitudinal dataset, tracking nascent entrepreneurs’ venture creation efforts over a five-year time span, and find evidence supporting them. Our research contributes to a more fine-grained understanding of how culture, in particular perceptions of community cultural norms, influences venture emergence. Based on these findings, we discuss how venture creation efforts can be supported. Our research highlights the embeddedness of entrepreneurial behaviour and its immediate antecedent beliefs in the local, community context.

What Drives Venture Capital Syndication

Using a sample of 1485 funded firms in Germany, we analyse the driving forces of Venture Capitalist (VC) syndication and try to disentangle the circumstances under which VCs engage in collaboration with partners. The results indicate that syndication is more pronounced for younger funded firms. For firms where products are far from commercialization, the risks that investors face are more severe. With respect to disentangling the role of diversification and managerial resource motives we analyse the impact of syndication activities on the industry concentration in VC portfolios. The results indicate that (all else equal) more syndication leads to more pronounced concentration on certain industries. These findings are in line with the argument that VCs involve partners to leverage upon their idiosyncratic skills and knowledge to either improve deal selection and/or provide a better quality of managerial advice to the funded firm rather than simply using syndication to diversify portfolios.

Do differences in institutional and legal environments explain cross-country variations in IPO underpricing?

We empirically analyse the determinants of Initial Public Offering (IPO) underpricing using panel data for 24 countries over the period 1988–2005. Our hypotheses stress the importance of institutional and legal factors in explaining cross-country variations. We find evidence that underpricing is higher in countries with stronger protection of outside investors, suggesting that incumbent managers try to use underpricing as a tool to safeguard their private benefits of control when going public. Moreover, the results show that underpricing is reduced when stronger law enforcement and the availability of accounting information reduce the value of private benefits of control.

A Signaling Perspective on Partner Selection in Venture Capital Syndicates

This paper analyzes the factors impacting partnering decisions in venture capital syndicates using a unique data set of 2,373 venture capitalist (VC) transactions in Germany. We employ a signaling perspective to partner–selection strategies within VC syndicates. By including time–varying information about industry experience and cooperation patterns, we explicitly take into account not only the changing social context for partner selection, but also the dynamic nature of signals sent and received. Our analysis documents that the informativeness of investment experience as a signal depends on the existence and frequency of previous joint deals with the lead VC. Experience becomes a much stronger signal if previous invitations to syndicates are bilateral rather than unilateral. The willingness to invite others to deals signals the ability to reciprocate through ones own deal flow. Moreover, we show how the value of signals erodes over time, that is, information from the previous year carries more informational value than signals from more distant years. In sum, the data reveal that different signals carry weight for lead VCs, and that the frequency of signals sent and the stage of development of the portfolio firm positively moderate the value and relevance of signaling behavior. While early stage investments are mainly characterized by need to diversify and to spread risks, value–added advice is necessary in later rounds, and hence, the strength of the signals sent and received gain in relevance and in value.

For Better or for Worse?—Nonprofit Experience and the Performance of Nascent Entrepreneurs

In the present study, we provide important insights into the knowledge and experience individuals gain when engaging in nonprofit and voluntary work. The article explores how applicable the acquired human capital is when put to work in environments that share some common elements. Using data from the second panel study of entrepreneurial dynamics (PSED 2), we find robust evidence that previous nonprofit experience significantly increases the chances to successfully found a new venture. Given the similarities in work environments that are plagued by uncertainty and ambiguity, the task-relatedness of human capital acquired through nonprofit work might provide a comparative advantage when creating a new venture. Practical implications and future research are discussed.

Collaborative team networks and implications for strategic HRM

Using longitudinal data from a graduate course (with 97 students grouped into 18 teams) we analyze the emergence of collaborative working patterns and the influence of personal traits on team performance and individual team member satisfaction. We find a positive effect of global centrality measures on individual satisfaction, while local centrality measures did not have a significant impact. Moreover, our results indicate that the aggregation of power within working teams is detrimental for team performance. When some individuals are in a position that allows them to exert power over others, the performance of teams suffers. On the contrary, betweenness centralization, which could enable some people to broker information across unconnected actors, could actually be beneficial for teams and increases overall performance. We conclude that combining information on team demographics and social networks might allow inferences into why certain teams perform better than others and into which areas human resource measures should be directed to improve team performance.

The evolution of inter-organizational networks in venture capital financing

Using a cross-section of Venture Capital (VC) transactions in Germany during the period 1995 to 2005, I analyse the origins of social networks in VC financing and document how they evolve over time. I focus specifically on the industry and investment experience of VCs as a resource to allow for better screening of business proposals and to provide a higher quality of managerial advice to the financed entrepreneur. The results show that forming relationships with partner VCs can represent a way to overcome the absence of relevant industry experience. Upon entering into new industries, and in the case of unsuccessful collaborations, lead investors in VC syndicates tend to explore new partnering opportunities resulting in network expansions. Moreover, with more experience within a given industry, lead investors tend to rely on existing partners.

The acquisition and utilization of market information in new venture development and the contingent nature of new venture organizing activities

Using data from the Second Panel Study of Entrepreneurial Dynamics, this study analyzes the role of information acquisition and utilization in new venture development. We employ competing risk analysis to make use of the longitudinal data structure in PSED II. Our results highlight the contingent nature of information acquisition in assisting the nascent entrepreneur in carrying out organizing activities. Our results show that marketing and business planning activities only create value when entrepreneurs also engage in information acquisition with potential customers. We empirically disentangle a contingent structure among organizing activities in new venture creation and highlight the interdependencies.

Erklärungsansätze für die Syndizierung von Venture Capital

Insbesondere die Syndizierung von Venture Capital (VC), also das Zusammenwirken von mehreren Venture CapitalGebern bei der Bereitstellung von Wagniskapital, steht vermehrt im Blickpunkt vieler Analysen. Syndizierung ist weit verbreitet unter amerikanischen und europäischen VC-Unternehmen. Nach Angaben der Europäischen Venture Capital-Vereinigung werden rund dreißig Prozent aller unternommenen Transaktionen im Verbund mehrerer Kapitalgeber abgewickelt. Dies erscheint zwar im Vergleich mit den USA mit einem Anteil syndizierter Investitionen von ca. sechzig Prozent aller VC-Transaktionen relativ gering, jedoch unterstreicht das Volumen von knapp 7 Mrd. Euro die Bedeutung der Syndizierung.