Government, venture capital and the growth of European high-tech entrepreneurial firms

The nature and sources of international variation in formal institutions related to initial coin offerings: preliminary findings and a research agenda

As prior researchers have suggested, a firm's success in an international market depends on how well its strategy fits the nonmarket environment, such as formal institutions. This paper examines the determinants of formal institutions around new areas of economic activities. Specifically, we propose a framework for understanding how the quality of formal institutions in promoting entrepreneurship drives the focus of such institutions concerning initial coin offering (ICO), which is emerging as a popular fundraising method. The paper uses inductive analysis to examine how nonmarket factors-such as a jurisdiction's tax haven nature, regulators' perceptions of ICOs as threats to national or political interests, and trade and industry associations-might moderate the relationship between the quality of institutions and the focus of such institutions regarding ICOs. One of this study's key findings is that an economy's quality of entrepreneurship-related institutions, perceived threats to national/political interests, and tax haven nature lead to different policy orientations. Consequently, regulators assign different importance when promoting crypto-entrepreneurship and dealing with associated risks. Regulators focusing mainly on promoting crypto-ventures have taken measures to enrich the blockchain ecosystem and provided tax and non-tax incentives to attract such ventures. Regulators focusing mainly on dealing with crypto-venture risks rely on a regulatory sandbox and close regulatory monitoring of such ventures.

Financial constraints, government subsidies, and corporate innovation

To investigate the relationships between financial constraints, government subsidies, and corporate innovation, a semi-logarithmic fixed-effect panel model and mediation effect test were applied, based on the data of Chinese listed companies from 2007 to 2017. We find that (1) financial constraints suppress corporate innovation. (2) Government subsidies are targeted at bailing out firms facing financial constraints. (3) Government subsidies promote corporate innovation (4) Government subsidies partially offset the suppression of financial constraints on innovation. We contribute to the fields of public finance, corporate finance, and corporate innovation by: (1) justifying the government subsidies target strategy as a bailout of corporate financial constraints, (2) verifying the corporate-innovation promotion of government subsidies, thus justifying the efficiency of government subsidies, and (3) showing that different types of innovation benefit differently from subsidies, thus justifying subsidies as a structural innovation engine.

Disentangling Crowdfunding from Fraudfunding

Fraud in the reward-based crowdfunding market has been of concern to regulators, but it is arguably of greater importance to the nascent industry itself. Despite its significance for entrepreneurial finance, our knowledge of the occurrence, determinants, and consequences of fraud in this market, as well as the implications for the business ethics literature, remain limited. In this study, we conduct an exhaustive search of all media reports on Kickstarter campaign fraud allegations from 2010 through 2015. We then follow up until 2018 to assess the ultimate outcome of each allegedly fraudulent campaign. First, we construct a sample of 193 fraud cases, and categorize them into detected vs. suspected fraud, based on a set of well-defined criteria. Next, using multiple matched samples of non-fraudulent campaigns, we determine which features are associated with a higher probability of fraudulent behavior. Second, we document the short-term negative consequences of possible breaches of trust in the market, using a sample of more than 270,000 crowdfunding campaigns from 2010 through 2018 on Kickstarter. Our results show that crowdfunding projects launched around the public announcement of a late and significant misconduct detection (resulting in suspension) tend to have a lower probability of success, raise less funds, and attract fewer backers.

SUPPLEMENTARY INFORMATION

The online version contains supplementary material available at 10.1007/s10551-021-04942-w.

Supply chain capabilities and competitiveness of high-tech manufacturing start-ups in India

Purpose

The purpose of this paper is to understand the practices and policies unique to high-tech manufacturing start-ups in emerging economies, such as India. The study analyzes the main features and challenges of the high-tech manufacturing sector, and the way in which enabling environment including policy making, supply chain capability and related technologies through Industry 4.0 could be leveraged to foster growth.

Design/methodology/approach

The paper undertakes an exploratory approach through in-depth semi-structured interviews conducted with high-tech manufacturing firms in various stages of their growth. The paper provides evidence of the challenges that high-tech manufacturing firms face in India, the strategies they adopt and highlights the role of institutional structures and policies.

Findings

Findings show that high-tech manufacturing start-ups in India face various challenges in the upstream, production and downstream supply chain processes. Further, issues related to availability of quality material, quality suppliers, contracts, funding and access to markets remain. Results also show that enabling operational and financial levers could be created by policy makers and other stakeholders to help the high-tech manufacturing start-ups scale faster and create value.

Originality/value

This paper contributes to the R&D intensive industry and high-tech manufacturing literature in the context of emerging economies, such as India, and provides a rigorous overview of the start-up ecosystem in high-tech manufacturing.

Sustainable Investments in Responsible SMEs: That’s What’s Distinguish Government VCs from Private VCs

Researchers question the impact of governmental venture capitalists (GVC) compared to private venture capitalists (PVC), but we know little about why this difference occurs and if this criticism is justified. We observed a group of GVCs and developed a new model that describes the way that GVCs process signals pre- and post-decisions. Certain macro level factors severely undermine micro level performance, causing GVCs to financially underperform with respect to PVCs. This helped us to understand that GVCs do not make investment decisions in the same way as PVCs, and what undermines the performance of GVCs’ decision-making processes. The main goals of GVCs are to promote investments in responsible SMEs, mobilizing societal impact. We discuss that the criticism of GVC needs to be more nuanced, as they have a different role than PVC in the financial system as providers of sustainable investments in responsible SMEs.

The “Dobry Czas Na Biznes” (“Good Time for Business”) Program as a Form of Support for Self-Employment in Poland. A Case Study of the Sub-Regions of the Małopolskie Province

The main goal of public intervention is to amend market imperfections. However, public agencies may also have other goals in supporting entrepreneurship and promotion of self-employment. The aim of the paper is to analyze the impact of the funding granted by the Małopolska Agency for Regional Development (Małopolska Agencja Rozwoju Regionalnego SA, MARR S.A.) dedicated to beneficiaries from the Tarnow subregion and the Krakow Metropolitan Area. The research goals were defined as follows: (1) To verify if the basic assumptions of the program are correct and to demonstrate that it is an important element motivating the professionally inactive to take up employment as sole entrepreneur. (2) To verify if the program participant structure (both applicants and beneficiaries), with subdivision into place of residence, gender, age and the labor market status, is correct. (3) To verify if the abovementioned variables (gender, age, place of residence) significantly differentiate the applicants’ chance of obtaining a grant. The results are of key importance and should be used in formulating assumptions, regulations and guidelines for subsequent program editions. Due to the demonstrated diversity of the target group in the respective regions, it should be decided whether to differentiate the criteria for participation in the project depending on the region.

Evaluating the Performance of the Government Venture Capital Guiding Fund Using the Intuitionistic Fuzzy Analytic Hierarchy Process

The performance evaluation of the government venture capital guiding fund (GVCGF) has come into focus in the field of venture capital. Most of the existing studies, such as whether the GVCGF has guided social capital to start-up enterprises and has played its due role in the process of enterprise growth and innovation, are all based on relevant work under the framework of econometric analysis. Unlike in these existing studies, we construct the performance analysis model of the GVCGF from four dimensions, including the standardization development of the guidance fund, the risk control ability, and the leverage and the support effects under the framework of a multi-attribute decision-making analysis. Taking a GVCGF project in Ningbo City, China, as an example, we comprehensively evaluate the development performance of the GVCGF using the intuitionistic fuzzy analytic hierarchy process (IFAHP). The results show that the development performance of the GVCGF is at a “relatively high” level. Compared with the traditional analytic hierarchy process (AHP), the IFAHP effectively avoids the false, enlarged influence caused by data subjectivity and evaluation uncertainty. This study provides a feasible analytical framework for the application of the IFAHP in other project performance evaluations.

The impact of digital start-up founders' higher education on reaching equity investment milestones

This paper builds on human capital theory to assess the importance of formal education among graduate entrepreneurs. Using a sample of 4953 digital start-ups the paper evaluates the impact of start-up founding teams' higher education on the probability of securing equity investment and subsequent exit for investors. The main findings are: (1), teams with a founder that has a technical education are less likely to remain self-financed and are more likely to secure equity investment and to exit, but the impact of technical education declines with higher level degrees, (2) teams with a founder that has doctoral level business education are less likely to remain self-financed and have a higher probability of securing equity investment, while undergraduate and postgraduate business education have no significant effect, and (3) teams with a founder that has an undergraduate general education (arts and humanities) are less likely to remain self-financed and are more likely to secure equity investment and exit while postgraduate and doctoral general education have no significant effect on securing equity investment and exit. The findings enhance our understanding of factors that influence digital start-ups achieving equity milestones by showing the heterogeneous influence of different types of higher education, and therefore human capital, on new ventures achieving equity milestones. The results suggest that researchers and policy-makers should extend their consideration of universities entrepreneurial activity to include the development of human capital.