Ulrich Hommel

Venture capitalists' decision to syndicate

Financial theory, access to deal flow, selection, and monitoring skills are used to explain syndication in venture capital firms in six European countries. In contrast with U.S. findings, portfolio management motives are more important for syndication than individual deal management motives. Risk sharing, portfolio diversification, and access to larger deals are more important than selection and monitoring of deals. This holds for later stage and for early stage investors. Value adding is a stronger motive for syndication for early stage investors than for later stage investors, however. Nonlead investors join syndicates for the selection and value–adding skills of the syndicate partners.

Contracting, monitoring, and exiting venture investments in transitioning economies: A comparative analysis of Eastern European and German markets

This paper analyses investment practices in the private equity markets of transitioning economies in Central and Eastern Europe (CEE). Using a proprietary set of survey data and non-parametric tests, the study compares findings for the Czech Republic, Hungary and Poland to those for the more established German private equity market. The analysis also highlights the specificities of early-stage and later-stage investors in truly emerging venture-capital markets. The CEE firms surveyed display investment practices on a par with firms in established private equity markets. The more extensive investment risks faced by CEE private equity firms are largely reflected in their financial contracting and monitoring practices. Several factors hinder the further development of private equity markets in CEE, notably the supply of attractive investment and the lack of viable exit channels other than trade sales. Transformation-related issues impact the private equity markets surveyed only in restricting the level of debt financing used.

Financial versus operative hedging of currency risk

Abstract Corporate risk management may employ financial or operative means to reduce the exposure to unexpected currency fluctuations. This article utilizes a real options framework to establish that operative hedging through the creation of operational flexibility represents a strategic complement to any variance-minimizing financial hedge. In addition, operational flexibility creates an asymmetric exposure profile and, as a result, alters the composition of the financial hedge portfolio. It alters the number of symmetric hedge contracts employed as well as their contractual rate and provides an economic argument for the use of (exotic) currency options. Operational flexibility acts as a value driver and may therefore be utilized, independent of its usefulness for risk management. The analysis further shows that operative hedging entails an implicit opportunity cost in the form of foregone option value.

Venture Capital Contracting in Theory and Practice: Implications for Entrepreneurship Research

This article provides a comprehensive theoretical and empirical literature review of venture capital contracts. This outlines the differences between theoretical and practical uses of contract designs; that is, (1) how does the choice of securities give rise to different adverse selection problems in terms of attracting different types of entrepreneurial companies; how does the choice of securities in conjunction with cash flow and control rights provisions affect (2) the effort levels by the entrepreneur and the investor; and (3) ultimately affect entrepreneurial outcomes. This article highlights the major discrepancies between theory and practice and points out potential avenues for further research.

Moving beyond the rhetoric of responsible management education

Purpose – Business schools appear to be slow adopters of responsible management education (RME), though the rhetoric of RME is visible throughout the sector. The purpose of this paper and the accompanying ones in this Special Issue is to address this apparent gap between substance and image by analysing the barriers to RME adoption and potential ways of overcoming them. The contributions offer insights from a range of different perspectives that will help encourage an informed debate on how to make RME more of a reality in management education. Design/methodology/approach – This paper analyses the problem within the dominant institutional logic of the business school sector, which is shaped by entrepreneurialism, operational for-profit orientation and externally validated reputation creation. It sets the stage for the other contributions to this Special Issue, which use alternative approaches to analyse the limited progress of RME adoption. Findings – This paper identifies five potential barriers to RME a...

25 Years Real Options Approach to Investment Valuation: Review and Assessment

During recent years, real options have emerged as one of the most actively researched topics in finance and related fields. A quarter of a century since the first appearence of the term, this article sets out to review the main contributions to real options theory and assess their impact on our understanding of managerial behavior in an environment characterized by economic uncertainty and flexibility. Next to the option pricing foundations, the article emphasizes the role of real options for the extraction and commercialization of natural resources, research and development, corporate risk management and foreign direct investment, production flexibilities, as well as game-theoretic treatments of corporate investment decisions. In addition, the authors discuss reasons for the reluctance of corporate practitioners to employ real option analysis in their capital budgeting decisions and ways in which the underlying concerns have been addressed in the literature so far.

The emergence of risk‐based regulation in higher education : Relevance for entrepreneurial risk taking by business schools

Purpose – Business schools are increasingly positioning themselves as entrepreneurial risk‐takers. In doing so, they are front‐runners of a marketization trend affecting the entire higher education sector. In response, governments have begun to subject higher education sectors to systems of risk‐based regulation. The purpose of this paper is to study the likely impact of regulatory change on business school behaviour.Design/methodology/approach – The article focuses on the financial dimension of institutional performance and draws on the corporate risk management literature to derive general design principles for managing risk‐taking in business schools. These are matched with a review of the regulation literature to evaluate regulatory effectiveness.Findings – Business schools are facing a double‐hurdle test when managing their risk position. They need to protect their financial solvency with the maintenance of properly functioning risk management systems. At the same time, they will increasingly be subj...

Innovation and international corporate growth

Introduction: Managing Innovation in Turbulent Times.- Introduction: Managing Innovation in Turbulent Times.- Innovation and International Strategy.- R&D, Innovation and Growth: Performance of the Worlds Leading Technology Corporations.- Technology Strategy for the Corporate Research Center of a Diversified Global Enterprise.- R&D Internationalization in Multinational Corporations: Some Recent Trends.- The Chemical Industry Drives Innovation also in Times of Crisis: BASF as an Example.- The Innovation Premium: Managing for High Return on Innovation.- Innovation in the Interplay of Organization and Culture: The TRUMPF Story.- Growth and Internationalization: Renewable Energy and New Technology-Based Firms.- Efficiency of Innovation Processes in International Enterprises.- Determinants for Failure and Success in Innovation Management.- Innovation Generating and Evaluation: The Impact of Change Management.- Implementing Change Management Successfully - Reinventing an Innovative Corporation: The Bayer Case.- Ambidextrous Leadership in the Innovation Process.- Innovation Through Market Pull and Technology Push in the Heavy Equipment Business: The Voith Case.- Principles of Collaborative Innovation: Implementation of Open and Peer-to-Peer Innovation Approaches.- Managing Open Innovation Networks in the Agriculture Business: The K+S Case.- Capital Markets, Finance and Innovation Performance.- Modern Valuation Approaches for Corporate Innovation Activities.- Value-Based Management of the Innovation Portfolio.- Innovation Performance Measurement.- Accounting for Innovation: Lessons Learnt from Mandatory and Voluntary Disclosure.- Integrated Financing Strategies for Innovation-Based Growth.- Corporate Venture Capital.- Knowledge-Based Financing Strategies for Innovation Output.- The Value Impact of R&D Alliances in the Biotech Industry.- Are Family-Owned Businesses Better Innovators?.

Die Bewertung von Investitionsprojekten mit dem Realoptionsansatz — Ein Methodenüberblick

Um im unternehmerischen Planungs- und Budgetierungsprozess eine okonomisch sinnvolle Auswahl und Steuerung miteinander konkurrierender Investitionsvorhaben zu gewahrleisten, bedarf es Bewertungsmethoden, die alle relevanten Projektcharakteristika nachvollziehbar und konsistent erfassen. Wahrend man traditionelle, Cash-Flow-orientierte Verfahren vor allem in stabilen und gut vorhersehbaren Situationen einsetzen kann, eignen sich Optionspreismodelle insbesondere fur die Quantifizierung von Flexibilitat und Unsicherheit. Der vorliegende Beitrag gibt einen Uberblick uber die gangigen Verfahren der Investitionsrechnung, diskutiert ihre Starken und Schwachen und gibt Entscheidungshilfen fur die Verfahrenswahl. Besondere Berucksichtigung finden dabei die Klassifikation und Einordnung der verschiedenen Optionspreismethoden.

Sanierung der betrieblichen Unternehmenskrise

„One of the best ways to understand the world is to change it“, konstatierte der Organisationsforscher Kurt Lewin einst. Beim Transfer dieser Erkenntnis auf erwerbswirtschaftlich ausgerichtete Unternehmen, wird der grose Stellenwert der Analyse des organisatorischen Wandels unmittelbar deutlich. Nachhaltige Konzentrationstendenzen in vielen Branchen, plotzliche Einbruche von Kapitalmarkten, erhohter Verdrangungswettbewerb durch Substitutionsprodukte sowie gestiegene Bedeutung innovativer Technologien markieren nur einige Ursachen dafur, dass Unternehmen sich permanent anpassen sollten. Uber die Unternehmensfuhrung wird versucht die Anpassungskapazitat zu sichern und das soziale System Unternehmung generell fur Veranderungen und Neuausrichtungen offen zu halten. Erfolgreiche Unternehmen lassen sich daher als wandlungsfahige Gebilde klassifizieren.