The effect of venture capital backing on companies’ subsequent lobbying efforts

Ekin Alakent, Mine Ozer and M. Sinan Goktan

Journal of Entrepreneurship and Public Policy, 2019, vol. 8, issue 2, 241-253

Abstract: Purpose - The purpose of this paper is to explore the effect of venture capital (VC) funding as a form of ownership on lobbying strategies of venture-backed companies. Design/methodology/approach - The sample consists of venture-backed IPO companies between 1999 and 2014. The authors collected IPO data from the Thompson Securities Data Company (SDC) database. The authors collected VC data from SDC VentureXpert database and lobbying data from the Center for Responsive Politics database (opensecrets.org). Findings - Consistent with the hypotheses, the authors find that VC-backed companies spend less on lobbying compared to non-VC-backed counterparts. However, this relationship is moderated by companies’ R&D intensity. R&D intensive VC-backed companies choose to spend more on lobbying. Research limitations/implications - The research indicates that although VC backing has a negative impact on lobbying efforts, R&D intensity creates an incentive for VC-backed companies to spend more on lobbying in order to shape public policy to their benefit. The study consists of VC-backed companies that are public. The authors believe that future research can explore political strategies of VC-backed companies during their pre-IPO stage. Social implications - The authors believe that political strategies are powerful yet underutilized resources that VC-backed companies can rely on to shift industries and invest in innovative products that challenge norms and fight the status quo. Lobbying and other forms of political involvement can help them shape public policy. Originality/value - To the best of the authors’ knowledge, the study makes a unique contribution to the literature by exploring the political strategies of VC-backed companies.

Keywords: Venture capital; Ownership structure; Lobbying; Resource dependency; MSCI KLD (search for similar items in EconPapers)
Date: 2019
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.emerald.com/insight/content/doi/10.110 ... d&utm_campaign=repec (text/html)
https://www.emerald.com/insight/content/doi/10.110 ... d&utm_campaign=repec (application/pdf)
Access to full text is restricted to subscribers

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: https://EconPapers.repec.org/RePEc:eme:jepppp:jepp-07-2019-109

DOI: 10.1108/JEPP-07-2019-109

Access Statistics for this article

More articles in Journal of Entrepreneurship and Public Policy from Emerald Group Publishing Limited
Bibliographic data for series maintained by Emerald Support ().