Volume 8, Issue 3 -

Drawing on the dominant logic perspective, this study argues that entrepreneurial orientation (EO) can generate an entrepreneurial dominant logic among new ventures that facilitate making and implementing decisions to experiment with entrepreneurial initiatives. Yet, the decisions are associated with high uncertainty. Since new ventures cannot endure high levels of uncertainty, to harness the potential of EO they should put in place proper control systems to reduce uncertainty associated with EO. This study examines the moderating role of output control, behavior control, and input control in the relationship of EO to new venture performance. It finds that both output control and behavior control have positive moderating effects but input control plays a negative moderating role. The findings enrich our knowledge on the EO–performance linkage. Moreover, this study represents one of the first attempts to adopt the dominate logic perspective to illustrate EO phenomena, laying down a solid threshold over which to introduce the perspective to the EO literature. And, by combining EO and control systems in a moderating model this study responds to appeals for extending control systems into entrepreneurship studies and thereby contributes to research on control systems.

The co-existence of angel, independent venture capital (IVC), and corporate venture capital (CVC) in the entrepreneurial finance market raises a natural question of why a start-up finances its projects from one source over another. This question becomes more complicated to address because a start-up grows or declines dynamically. Using a life cycle theory of entrepreneurial finance, which suggests that a start-up uses several financing sources as it reaches certain thresholds in its life cycle accordingly, I explore this selection issue with my dataset on 113 biopharmaceutical start-ups. I find that these start-ups tend to finance their projects mostly from solely IVCs or CVCs rather than angels and syndicated investors combining IVCs and CVCs when they have more preclinical and phase I products in their R&D pipelines; and from CVCs or syndicated investors rather than angels and IVCs when they do more phase II and phase III products.

How the entrepreneurship rate changes with age and the business cycle has been theoretically and empirically studied. On the other hand, cohort effects have been mostly neglected in the literature. Cohort effects are intrinsic generation characteristics that follow individuals over their lifetime and the business cycles. We propose a methodology to differentiate between age, time (business cycle) and cohort effects in entrepreneurship. We find that time effects are highly correlated with GDP growth. Age effects show and inverse U shaped with maximum between 40 and 50 years. In Brazil, Mexico and Uruguay we find decreasing entrepreneurship in younger cohorts, and almost no change in Peru and Chile.

Previous studies have established that venture capitalists (VCs) adjust their investment decisions according to the economic outcome of their cooperation with entrepreneurs. However, investment decisions made by VCs are embedded in social interaction and influenced by information from third parties. Therefore, research studies on interpersonal trust in the disciplines of economics, psychology and neuroscience were integrated in this paper to explore how the trust cognition of VCs in entrepreneurs’ behavior consistency affects their investment decision-making. First, behavioral consistency is the criterion used by VCs to assess the credibility of entrepreneurs. Second, a trust game was designed for VCs and entrepreneurs, during which EEG (electroencephalogram) of the VCs was recorded. Finally, a learning model was developed on each participant’s behavior and showed the process of investment decision-making. The results indicated that investment decisions of VCs are significantly affected by trust cognition and rewards of cooperation, VCsʼ investment decisions are guided by their trust cognition in the behavioral consistency of entrepreneurs and investment experiences have a significant impact on investment decisions when VCs are cooperating with entrepreneurs with a moderate level of behavioral consistency. One explanation for these findings may be a result of the fact that the neutral information is ambiguous and uncertain; thus, VCs preferred to rely on the outcome of cooperation to adjust their investment decisions.