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This study explores the potential benefits and costs of bank entry into venture capital investing. Data are obtained from a survey of banking organizations regarding their perceptions of the effects of such venture capital investing. Also, evidence on the portfolio diversification effects of such investments is provided using stock price data. These data are consistent with the existence of net benefits from bank entry into this industry. The implications for entrepreneurs are also discussed. Venture capital firms (professionally managed organizational investors) and business angels (private individual investors) invest in new and growing businesses. Their aim is to maximize their risk‐adjusted return on investment through the ex ante assessment of risk and the ex post monitoring of their client entrepreneurs. Because they invest in businesses that are inherently newer and smaller, often without substantial collateral, their deals are riskier than the loan packages that are funded by commercial banks. However, by investing in risk‐ reducing information and sharing it among coinvestors, these venture capitalists often generate returns that are the envy of many bankers. Many venture capitalists expect to earn more than 30% annually on their investments. At a time when banks have been experiencing earning problems, particularly those located in the West and Southwest, there are at least four possible benefits that could come to them and also to entrepreneurs from the entrance of banking organizations into venture capital financing. First, if banks were able to manage the increased risk, they might be successful in improving their earnings. The increased earnings would contribute to the elimination of the capital deficiency facing the banking industry. Second, if they funded entrepreneurs, the total supply of venture capital would increase and it could become much easier to locate seed money. Third, participation by banks would also contribute to the elimination of the widely reported capital gap that may exist for funding new ventures. Fourth, in the long run, if they provided venture capital, they might find that they were providing start‐up financing for future customers, customers that would not otherwise exist. This study contemplates a future role for commercial banks as a potentially huge source of funding for new ventures. It explores the possibility that under certain conditions commercial banks may be able to effectively manage the greater risk associated with venture capital investing. It concentrates on the potential effects of bank entry into venture financing on the risk of failure of the bank, a concern that underlies the existing prohibition for U.S. banks. The proposal to allow U.S. commercial banking organizations to enter the arena of venture capital investments may seem somewhat questionable in a period of massive numbers of bank failures. Yet there are reasons to believe that the potential effects of these activities may not be risk‐increasing as often argued and may, under certain circumstances, even be risk‐reducing. To understand this view, consider the reaction of commercial banks to the changes in their external environment that accompanied financial deregulation during the 1980's. The elimination of deposit rate ceilings that accompanied deregulation increased sharply the cost of bank funds. Banking organizations reacted to that increase in costs by reaching for higher‐risk loans. But, in the United States, these banks were unable through regulatory and market constraints to obtain complete compensation for the increased risk. If these banks had been able to take equity positions in venture capital investments, the upside potential from these commitments of funds to more risky undertakings could be realized, a potential that is impossible with the conventional loan contract. If commercial banks become major players in the market for venture capital, it seems likely that they will rely upon different strategies for controlling risk than those used by venture capital firms and business angels. Basic differences in their approaches to risk management could be a reflection of their costs of access to risk‐reducing information, their visibility in the community, and their tendencies to coinvest with similar types of investors. This study examines the possibility that the size of a bank will largely determine whether it views venture capital investing as a prudent means of doing business. This expectation is based on the assumption that the larger a bank, the more likely it will be to hold a portfolio of diversified venture capital investment. Thus, we would expect to find greater enthusiasm for venture capital investing among large banks than among small banks. If commercial banks were to be permitted to make venture capital investments in the United States, such a move could be so influential that no entity that depends upon this market for its survival would be unaffected. Business angels and venture capital firms could be overshadowed by the resources that banks would have at their disposal, while entrepreneurs and public policy makers would find it difficult to ever again suggest that there was insufficient capital available to fund deserving ventures. This study reviews the roles of venture capital firms and business angels and compares them to the role that could be played by banks. It also compares the perceptions of large bankers (assets >$1 billion) and small bankers (assets <$1 billion) regarding their institution's competence in managing different types of risk. This research will first examine how venture capital firms and business angels emphasize managing different types of risk. Hypotheses related to bank strategies for reducing venture capital risk will be proposed and tested. Finally, implications for entrepreneurs and public policy makers will be discussed.

Although succession planning can be important for the continuity of family firms, not all family business have the opportunity to engage in this planning. Sometimes, these organizations face crisis events that may trigger an intra-family succession. However, what happens when there is an unplanned succession? Are family businesses doomed to fail? This project aims to explore unplanned successions that are triggered by crisis and the impact that this can have on post-succession financial performance. The authors also examine the moderating role of successor characteristics (i.e. education and previous work experience) on this relationship.

The ideas were tested using data from 151 publicly listed family firms in China.

The findings indicate that having a crisis driven intra-family succession does not always result in lower post-succession performance. It is only successions that are triggered by market crises that negatively impact financial performance after the unplanned succession. In these instances, the education and previous experience of the successor moderate the negative relationship between market crisis succession and financial performance such that having more experience and a college education diminishes these negative effects on performance.

The results point to the importance of the preparation of the next generation in helping family firms navigate unplanned successions. The findings indicate that education and previous work experience of the successor can help a family firm manage a crisis.

This study continues to build the understanding about unplanned successions and the important role that successor preparation can have for the success of the family firm.

The use of covariance structure modeling is explored as a means of moving toward a resolution of the debate over the antecedents of executive compensation. The major strength of this methodology is that it enables researchers to measure the effects of unobserved factors on measured variables. It is suggested that covariance structure modeling is a promising way of studying the effect of institutional isomorphism on executive compensation. The popular business press has questioned repeatedly the justification for and the performance effects of prevailing executive compensation systems (Crystal, 1988; Loomis, 1982; Patton, 1985). These articles argue that executives are more interested in creating wealth for themselves than for stockholders. They also underscore the absence of an obvious link between executive compensation and firm performance. Recent academic research on executive compensation adopts an agency perspective that emphasizes potential conflicts of interest between managers and stockholders. It contends that, in the absence of effective disciplining and monitoring systems, executive compensation plans may direct managers' efforts toward personal wealth enhancement to the detriment of firm value (Baumol, 1958; Berle & Means, 1932). In response, scholars have urged that executive compensation plans contain monetary incentives that only accrue to executives when shareholder wealth is maximized (Kerr, 1985; Rappaport, 1983; Tehranian & Waegelein, 1985). However, designing compensation systems that effectively align the interests of managers and stockholders requires a knowledge of the role and effect of relevant driving forces on compensation. Statistical research on executive compensation has been guided predominantly by a search for tangible, observable determinants (Ciscel & Carroll, 1980), examples of which have been firm size or growth rate (Baumol, 1967; Marris, 1963), inter‐firm and inter‐in‐dustry differences (Coughlan & Schmidt, 1985), and performance (Murphy, 1986). The emphasis on such tangible explanations is not surprising given the overwhelming use of econometric techniques, such as ordinary least squares regression (Ciscel & Carroll, 1980; Finkelstein & Hambrick, 1988), logistic regression (Walking & Long, 1984), time series analysis (Murphy, 1985), and event studies (Brickley, Bhagat & Lease, 1985; Coughlan & Schmidt, 1985; Tehranian & Waegelein, 1985). This paper argues that the focus on tangible, observable variables by compensation researchers is a methodologically ‐ driven practice that constrains theory building and testing. As a result, we may have ignored interesting and relevant theoretical frameworks for the study of executive compensation. We also have overlooked the use of analytical techniques that allow us to examine the role of potentially relevant latent constructs. In this paper, we will describe and illustrate the use of covariance structure modeling for the study of institutional pressures on executive compensation.

Entrepreneurship is a source of innovation, job creation, and vibrancy for local and regional economies. As a direct result, there is a profound interest in creating an infrastructure that effectively encourages entrepreneurship and incubates entrepreneurial endeavors. Western State University has responded to this call by developing the Harvey Entrepreneurship Program, which is integrated in the Enterprise Residential College.The Harvey program provides a socially embedded experiential learning approach to entrepreneurial education. Faculty, students, entrepreneurs, and technical experts are drawn together in an environment that provides space for business incubators and an entrepreneurially focused curriculum. In this article, we present a case study in which we use qualitative research methods to explore the benefits and challenges of creating such a program.The delivery model that Enterprise Residential College provides for entrepreneurial education is examined through the perspectives of program administrators, faculty, and students. The findings reveal evidence that a residential college can form a powerful nexus of formal instruction, experiential learning, socialization, and networking to influence entrepreneurship. We discuss relevant findings that may aid others considering similar endeavors.

Entrepreneurship has been widely recognized as having greatly influenced the United States. Its influence has especially been documented over the past 20 years. Paralleling our societal interest in entrepreneurship has been increasing interest in entrepreneurship education. While our interest in entrepreneurship education has grown considerably over the past two decades, this field of study continues to have critics both within and outside of schools and colleges of business (Kuratko 2004). In spite of these criticisms, some researchers suggest that the United States is still far ahead of other regions of the world in terms of entrepreneurial education (Solomon et al. 1998).

Using entrepreneurship education in the United States as a point of departure, this article uses a case study to analyze the efforts of a private university in Bogota, Colombia, to create a new program in entrepreneurship. The Colombian Legislature passed Law 590 in July 2000 as a means to promote and develop entrepreneurship in the nation. Shortly thereafter a private university in Bogota started a new program in entrepreneurship. At the university's invitation, a small number of faculty from U.S. universities participated in the school's “kick-off” efforts. The paper offers analysis and recommendations based on five criteria: 1) What is taught, 2) Why it is taught, 3) How it is taught, 4) How well it works, and 5) Leadership support. In addition, rather than simply adopting a U.S. or European model of entrepreneurship education, the authors propose that they should develop a center that integrates lessons from other models with elements that are relevant to the local situation.

As two essential styles of firm decision-making, the relationships among effectuation logic, causation logic and firm performance are unclear. It is helpful to deepen the understanding of reasoning theory and the process of decision-making. The purpose of this paper is to explore the relationship between effectuation logic, causation logic and firm performance.

Based on 31 independent empirical studies (including 11,600 samples) published by predecessors, meta-analysis is used to systematically integrate the impact of two decision-making styles on firm performance and explore the potential factors affecting their relationship.

The results show a positive correlation between two decision-making styles and firm performance and the influence of effectuation decision-making style in firm performance is slightly stronger. However, the application environment is different: in the emerging market, the causation decision-making style is more effective for firm performance management. When the firm chooses the effectuation decision-making style, it is more effective for performance management in the emerging market. In addition, the industry type, firm performance evaluation tools, national development level and firm scale and firm age can significantly moderate the impact of two decision-making styles on firm performance.

Both decision-making logics are possible ways for firm to success. Still, the future needs to dig deeper into the black box that can unlock the decision-making styles to achieve firm performance or competitive advantage based on other factors of the decision-behavior-outcome business model, more longitudinal data and experiments.

To the best of the authors’ knowledge, this is the first study to explore the impact of decision-making styles (effectuation logic and causation logic) on firm performance using a meta-analysis.

As the developing nations grow and experience rapid institutional transformation, research has begun to investigate the roles of culture, cognition and institutional context on entrepreneurship and innovation. This chapter aims to advance the entrepreneurial cognition literature by juxtaposing entrepreneurial effectuation, domain-specific expertise and ambiguity. By conducting a qualitative study of Chinese high-tech domestic and returnee entrepreneurs, the authors propose a spectrum between causation and effectuation and argue that the entrepreneur’s perceived level of ambiguity may better explain differing logic orientations among entrepreneurs, contributing to our understanding of entrepreneurial cognition. The authors theorize that (1) individual actors and the level of institutional development jointly comprise the entrepreneur’s logic orientation; (2) the level of perceived ambiguity mediates the strategy adopted by high-tech entrepreneurs; (3) the entrepreneur’s logic orientation can be regarded as a continual spectrum from effectuation to causation. Finally, the logic orientation concept is applied to the context of cross-border mergers and acquisitions (M&A) from a process perspective and the implications and fit of logic orientation with the stages of cross-border M&A are discussed.

Purpose: Entrepreneurial teams are one of the most crystallized forms of collaboration in the generically collective dynamics underpinning social entrepreneurship. Despite their quantitative prevalence, social entrepreneurial teams (SETs) remain quite absent from the scholarly literature. This chapter aims to develop a research agenda addressing this gap. Methodology/Approach: This chapter first reviews the scarce literature dealing with this subject and develops an operationalizable definition of SETs. Next, it confronts current knowledge on entrepreneurial teams with the specific context of social entrepreneurship to introduce and discuss main topics of investigation on SETs. Findings: Six topics are suggested to have a high potential for developing knowledge on SETs: formation, size and extended team, gender, decision-making and leadership, identity, and turnover. Research Implications: This chapter frames these research avenues within a developmental stages perspective with the aim to contribute to help form and maintain effective SETs. Originality/Value of Chapter: This research has implications for scholars as it defines SETs as a distinct object for research, which allows extending knowledge on collaborative dynamics in social entrepreneurship, but also on entrepreneurial teams in general. The suggested research agenda and its orientation toward the development of effective SETs should be a springboard for future research on this subject.