Yves Fassin

Growth patterns of the European venture capital industry

Abstract Although the European venture capital industry has become nearly as important as its American counterpart, little research has been done to describe its nature and importance. This study gives in the first place an overview of the importance of the venture capital industry in the major European countries. Thereafter, we look for funding and investment patterns in the different European countries. We hypothesize that there is a difference between countries in which the venture capital industry is just emerging, and those where the venture capital industry is since long established. The data are mainly, but not solely, taken from the yearly statistics of the European Venture Capital Association (EVCA) and cover the period 1984–1989. The characteristics we look at are: (1) the sources of the funds flowing into the industry, broken down with respect to investor type and geographical location of the investor; and (2) the investments, broken down with respect to investment stage (using the EVCA definitions of the different stages), geographical location, degree of syndication, and industrial sector of the investee companies. In Europe as a whole, the most important group of investors are the banks (28%), the pension funds (17%), and the insurance companies (12%). Banks dominate the Swiss industry (48%); corporate investors dominate the German, Swedish, and Portuguese industries, whereas these are nearly completely absent in Denmark (2%), Ireland (4%), and the United Kingdom (5%). Eighty percent of all venture capital funds are raised domestically, 7% in another European country, and the remaining 13% in a non-European country. Almost half of the European investments (44%) are made in the expansion stage; management buy-outs (MBOs) account for another 36%. Only 14% is invested in seed or start-up companies, much less than the 30% in the U.S. Half of the venture capital investments in the United Kingdom are buy-outs. The highest start-up investment activity takes place in Austria and Spain. On average, more than half (54%) of the invested amount in Europe is syndicated, but only 6% internationally, while 10% is invested internationally. We also search for similarities and dissimilarities in the characteristics of the sources of funds and of the investments. The hypothesis is that a growth pattern can be distinguished, determining the maturity of the venture capital industry in a particular country. The characteristics that we think would discriminate most among the different industry stages are the importance of government agencies, pension funds, and insurance companies (sources of funds); of start-up, later stages, or MBO investments; and the percentage of international and syndicated investments. Cluster analyses show that there is a growth pattern, but it is less clear than expected. Characteristics of mature industries are a bigger size, relative to the gross national product of the country, the presence of pension funds and insurance companies as investors in the industry, the syndication of the deals, and the absence of the government as an investor, in the 1980s, investments in management buy-outs are mainly done by the mature industries. No pattern can be distinguished for the investments in early or later stages. The major implication from this study is the fact that the European venture capital industry cannot be approached as a single, undifferentiated industry. Each country has its own structures, institutions, and policies, which make the venture capital industries in the different countries have unique characteristics. Moreover, the European venture capital industry has different characteristics than the American industry; this has to be taken into account when comparing both industries.

Corporate Governance in the Debate on CSR and Ethics: Sensemaking of Social Issues in Management by Authorities and CEOS

Research Question/Issue: The aim of the present exploratory cognitive study is to uncover how opinion leaders, i.e. CEOs and other authorities in the domain of social issues in management, understand and differentiate the various concepts pertaining to corporate governance, CSR and business ethics. The present study with the Repertory Grid Technique (RGT) extends the sensemaking analysis, to the whole spectrum of social issues in management. For this research 41 RGT interviews were conducted in Belgium with top experts and CEOs of the Belgian economy and civil society. Research Findings/Insights: Both, authorities and CEOs pragmatically and rather clearly differentiate the various concepts related to corporate governance, CSR and business ethics. Our findings partially reject the confusion in terminology noticed in recent academic literature and in corporate communication, emphasizing increased vagueness and overlapping of the concepts around corporate governance, CSR and business ethics. Theoretical/Academic Implications : While CSR is seen as the best candidate for an umbrella term, no unified paradigm has yet be achieved in the business and society field. Three basic concepts of corporate responsibility, corporate governance and business ethics emerge as being complementary. Corporate governance has acquired an important place in the hierarchy of business and society concepts. Practitioner/Policy Implications: Corporations cannot restrict their actions and communication regarding social issues in management to one single domain. Several complementary issues have to be addressed simultaneously. This combined multi-dimensional approach will result in mutual reinforcements of the message.

The hypocrisy‐sincerity continuum in corporate communication and decision making: A model of corporate social responsibility and business ethics practices

Purpose – The disconnect between the corporate social responsibility (CSR) rhetoric and the practical reality experienced within companies calls for improved CSR evaluation systems that take into account the hypocrisy content of the firms communication. The aim of this article is to contribute to the conceptual underpinning of a sincerity/hypocrisy index that positions an organization on a continuum from idealism to cynicism.Design/methodology/approach – Starting with the analysis of the reasons for the dissonance between message and reality, the drivers of ethical corporate behavior, the intention of the actors and the intensity of effort and of corporate communication were analysed.Findings – The analysis of the reasons for dissonance between message and reality sheds light on the role of communication in the perception of hypocrisy. An underlying model of a sincerity/hypocrisy index is proposed to position the firm on a continuum from idealism to hypocrisy in function of the degree of congruence or di...

Innovation and Ethics Ethical Considerations In the Innovation Business

In our global economy knowledge-based industry is takingmore importance. Recent years have seen the success of anincreasing number of start-up companies, most technology-basedenterprises financed by private persons or companies, or through venture capital funds and public offering. In manyyears, those companies are faced at certain critical momentswith matters involving intellectual property rights, insiderinformation and raising money. These facts all have an ethicaldimension. There is an increasing need for ethical behaviourfrom all parties involved. A code of conduct of all partiesshould be applied. This paper describes the growth processof a company and the valuation of an innovation project. Itwill overview a number of ethical issues, at different stagesin the innovation business, and in the lifetime of a start-upcompany, such as the problems of intellectual property, theconfidentiality of information, the negotiation processbetween the entrepreneur and the financier, the marketingof raising funds and of an IPO, and finally the informationand insider trading. The paper concludes with aplea for increased ethical ethical behaviour and the needfor rules of best practice for all parties: the inventor,the entrepreneur, the financial investor, and other stakeholders.

Balancing competing logics in for-profit social enterprises: a need for hybrid governance

Abstract This paper reports a case study of a for-profit award-winning social enterprise that faced bankruptcy two years after founding. The findings show that the firms overemphasis on the social employment logic and the increasing disregard of the commercial market logic led to the failure. This imbalance in response to the two competing logics was fuelled by the entrepreneurs’ strong social values, stakeholder reinforcement, and lack of appropriate governance. This study shows that hybrid organizations need to pay attention to the governance of the tension between competing demands inside as well as outside the organization. Hybrid organizations therefore require a hybrid governance model. By presenting a case of failure of a social enterprise, the paper counterbalances the dominance of optimistic idealism in social entrepreneurship literature.

The Impact of Internal Corporate Social Responsibility on Organizational Commitment: Evidence from Vietnamese Service Firms

ABSTRACT This study examines the relationship between internal corporate social responsibility (CSR) and organizational commitment in the service sector in Vietnam. Results from a survey of 256 employees indicate that internal CSR has a positive and significant correlation with organizational commitment. More specifically, labor relations, health and safety, and training and education had a significant effect on organizational commitment whereas work–life balance and social dialogue have no significant association with organizational commitment. The authors also provide implications, limitations, and recommendations for future research.

Smart money for social ventures: an analysis of the value-adding activities of philanthropic venture capitalists

Philanthropic venture capitalists (PhVCs) provide social entrepreneurs with financial and nonfinancial resources. This paper studies how and why PhVCs engage in value-adding activities. Employing an inductive case study method, our study shows that value-adding activities engaged in by PhVCs are similar to the activities carried out by traditional venture capitalists. Further, we find self-efficacy and goal setting theories to be particularly relevant in studying why PhVCs engage in value-adding activities. Concretely, PhVCs engage in value-adding activities that are in line with their efficacy beliefs and that facilitate the achievement of lower-order goals related to professionalization, self-sustainability, and expansion. As such, they aim at reaching the higher-end goal of scaling the social venture.

Complementarities Between Stakeholder Management and Participative Management: Evidence From the Youth Care Sector:

This article analyzes how stakeholder management is applied in the case of special youth guidance homes in Belgium. It describes a specific situation in which a major stakeholder—adolescents in the homes—is part of the process. Our research illustrates the different organizational roles and the complementarities between stakeholder management and participative management. Although stakeholder management is important for strategic decision making, participation is more important on an operational management level. Our cases illustrate that important stakeholders, for example, the customers—the adolescents and their parents—as well as employees in the homes evaluate participation on an operational level as being more important than participation in the board or in strategic management decision making in the organization. By disentangling the distinction between the operational level and the policy level of stakeholder management, our research links participative management and stakeholder management while clarifying the application of stakeholder management in the nonprofit sector.

When David Beats Goliath: Two Case-Studies in the Brewery Sector

We analyze two exceptional episodes of two multinational breweries who, independently from each other, decided to close a small niche brewery in a small town, namely Pedavena in Italy (part of the Heineken group) and Hoegaarden in Belgium (part of the InBev group). In both cases, the initial decision of plant closing was ultimately reversed through actions supported by an alliance of stakeholders. We develop and apply three different conceptual lenses to analyze the cases—described as Amoral Managerial (Model 0); Applied Business Ethics (Model I) and Bounded Business Ethics (Model II), respectively—showing how with the integration of stakeholder theory in business ethics research (Model II) we can enrich our understanding of the implications of stakeholder engagement in the value creation process that can be otherwise denied (Model 0) or overlooked (Model I). Our two cases also show that when managers are missing opportunities for value creation, or destroying elements of the value creation process, stakeholder alliances can repair such a stakeholder equilibration failure.