Investor type and new-venture governance:cognition vs. interest alignment

Christophe Bonnet () and Peter Wirtz ()
Additional contact information
Christophe Bonnet: Grenoble Ecole de Management

Working Papers FARGO from Université de Bourgogne - Leg (laboratoire d'économie et de gestion)/Fargo (Research center in Finance,organizational ARchitecture and GOvernance)

Abstract: We study the specific rationale governing entrepreneur-investor relations in young ventures which raise equity capital from different investor types in pursuit of a strong growth strategy. Special emphasis is put on the governance process through which investors and entrepreneurs interact in a complex setting, where an entrepreneur faces at least two distinct investor types (business angels and venture capitalists). We do so in an effort to capture the specific role and impact of each for venture dynamics, trying to reach beyond static descriptions of entrepreneurs’ and investors’ characteristics. To this end, we set up a prospective case study (Bitektine, 2008). We actually use the case of a young growth venture in the process of raising external equity from angel investors and venture capitalists to test the relevance of two conflicting theories of venture governance. The study design has been set up to answer the following question: What is the dominant logic behind the governance of entrepreneur-investor interactions at an early stage in the growth process? Is it mainly driven by considerations of personal interest, as agency theory would have it, or does entrepreneurial and investor cognition play a dominant role?

Keywords: business angel; venture capital; governance; agency theory; cognition; prospective case study. (search for similar items in EconPapers)
JEL-codes: G30 G38 (search for similar items in EconPapers)
Date: 2010-07
References: View complete reference list from CitEc
Citations Track citations by RSS feed

Downloads: (external link)
http://leg2.u-bourgogne.fr/wp/1100704.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:dij:wpfarg:1100704

Ordering information: This working paper can be ordered from
Gérard Charreaux, Fargo-Leg, Université de Bourgogne 2 Bd Gabriel, BP 26611, 21066 Dijon Cedex, France

Access Statistics for this paper

More papers in Working Papers FARGO from Université de Bourgogne - Leg (laboratoire d'économie et de gestion)/Fargo (Research center in Finance,organizational ARchitecture and GOvernance)
Address: 2 Bd Gabriel, BP 26611, 21066 Dijon Cedex, France
Series data maintained by Gérard Charreaux ().