Schumpeterian entrepreneurial digital identity and funding from venture capital firms

in Journal of Technology Transfer (in press)

Schumpeterian entrepreneurs are considered agents of innovation and technology transfer. However, to fulfill this role, they need entrepreneurial finance. From the perspective of digital identity, we ... [more ▼]

Schumpeterian entrepreneurs are considered agents of innovation and technology transfer. However, to fulfill this role, they need entrepreneurial finance. From the perspective of digital identity, we examine the relationship between a Schumpeterian digital identity and venture capital (VC) funding. Because the VC industry celebrates innovative and visionary entrepreneurship, we posit that a founder’s digital identity as a Schumpeterian-type entrepreneur influences the venture’s chances of receiving VC funding. A quantitative analysis of the language used by 3313 founders in a large sample of Twitter messages, however, provides a mixed picture. While some dimensions of Schumpeterian entrepreneurship have a positive relationship with the acquisition of resources from VC firms (entrepreneurial vision and optimism), other dimensions seem to have no (uncertainty tolerance and rationality) or even a decreasing (achievement motivation) effect. The negative relationships observed can be explained by the particularities of the VC business model, which does not align with Schumpeterian entrepreneurship in all respects. Our study contributes to research on Schumpeterian entrepreneurship, the financing of technology transfer, and the link between entrepreneurial digital identity and entrepreneurial finance. From a practical perspective, the results of our study demonstrate the limits of VC with regard to the financing of technology transfer and highlight the need for public funding through governmental VC or agencies for (disruptive) innovation. [less ▲]

Monetary policy and venture capital markets

in Review of Corporate Finance (in press)

We assess the impact of monetary policy (i.e., central bank interest rates) on the activity of venture capitalists (VC). Using data from 31 countries from 2004 to 2019, we find that VC firms’ fundraising ... [more ▼]

We assess the impact of monetary policy (i.e., central bank interest rates) on the activity of venture capitalists (VC). Using data from 31 countries from 2004 to 2019, we find that VC firms’ fundraising activity increases when interest rates become negative. We explain this finding by referring to the principal-agent relationship between general and limited partners of VC firms in combination with behavioral finance arguments. Specifically, we identify three channels pertaining to a legal motivation (i.e., legislative hurdles and litigation risks), a liquidity motivation (i.e., substitution effect relative to other asset classes), and behavioral biases (i.e., mental accounting, conservatism, disposition effect, or prospect theory). [less ▲]

Artificial intelligence and entrepreneurship research

in Oxford Research Encyclopedia of Business and Management (2022)

Advances in Artificial Intelligence (AI) are intensively shaping businesses and the economy as a whole, and AIrelated research is exploding in many domains of business and management research. In contrast ... [more ▼]

Advances in Artificial Intelligence (AI) are intensively shaping businesses and the economy as a whole, and AIrelated research is exploding in many domains of business and management research. In contrast, AI has received relatively little attention within the domain of entrepreneurship research, while many entrepreneurship scholars agree that AI will likely shape entrepreneurship research in deep, disruptive ways. When summarizing both the existing entrepreneurship literature on AI and potential avenues for future research, the growing relevance of AI for entrepreneurship research manifests itself along two dimensions. First, AI applications in the real world establish a distinct research topic (e.g., whether and how entrepreneurs and entrepreneurial ventures use and develop AI-based technologies, or how AI can function as an external enabler that generates and enhances entrepreneurial outcomes). In other words, AI is changing the research object in entrepreneurship research. The second dimension refers to drawing on AI-based research methods, such as big data techniques or AI-based forecasting methods. Such AI-based methods open several avenues for researchers to gain new, influential insights into entrepreneurs and entrepreneurial ventures that are more difficult to assess using traditional methods. In other words, AI is changing the research methods. Given that, so far, human intelligence could not fully uncover and comprehend the secrets behind the entrepreneurial process that is so deeply embedded in uncertainty and opportunity, AI-supported research methods might achieve new breakthrough discoveries. We conclude that the field needs to embrace AI as a topic and research method more enthusiastically while maintaining the essential research standards and scientific rigor that guarantee the field’s well-being, reputation, and impact. [less ▲]

The effect of trademark breadth on IPO valuation and post-IPO performance: an empirical investigation of 1,510 European IPOs

in Journal of Business Venturing (2022), 37(5), 106237

Trademarks differ in breadth and can cover a wide range of categories of goods and services. We draw on real options theory and argue that greater trademark breadth constitutes a valuable real option that ... [more ▼]

Trademarks differ in breadth and can cover a wide range of categories of goods and services. We draw on real options theory and argue that greater trademark breadth constitutes a valuable real option that is associated with higher firm valuation and performance. We analyze a sample of 1510 firms that went public in Europe between 2002 and 2015 and find a positive effect of trademark breadth on initial public offering (IPO) valuation and post-IPO performance. We implement a contingency analysis to contrast real options and signaling theory and find stronger support for the real options perspective. [less ▲]

The CEO beauty premium: Founder CEO attractiveness and firm valuation in initial coin offerings

in Strategic Entrepreneurship Journal (2022), 16(3), 491-521

We apply insights from research in social psychology and labor economics to the domain of entrepreneurial finance and investigate how founder chief executive officers' (founder CEOs') facial ... [more ▼]

We apply insights from research in social psychology and labor economics to the domain of entrepreneurial finance and investigate how founder chief executive officers' (founder CEOs') facial attractiveness influences firm valuation. Leveraging the novel context of initial coin offerings (ICOs), we document a pronounced founder CEO beauty premium, with a positive relationship between founder CEO attractiveness and firm valuation. We find only very limited evidence of stereotype-based evaluations, through the association of founder CEO attractiveness with latent traits such as competence, intelligence, likeability, or trustworthiness. Rather, attractiveness seems to bear economic value per se, especially in a context in which investors base their decisions on a limited information set. Indeed, attractiveness has a sustainable effect on post-ICO performance. [less ▲]

Risk of burnout in French entrepreneurs during the COVID-19 crisis

in Small Business Economics (2022), 58(2), 717-739

The COVID-19 crisis presents manifest threats for entrepreneurs since their business survival is often directly at stake given the alarming economic downturn. This existential threat, together with their ... [more ▼]

The COVID-19 crisis presents manifest threats for entrepreneurs since their business survival is often directly at stake given the alarming economic downturn. This existential threat, together with their crucial role in the economy, is the reason for the plethora of public financial support schemes being implemented throughout the entire world. However, support schemes for mental health are lacking. We aim to investigate, first, whether burnout levels have increased during the crisis and, second, whether burnout levels during the COVID-19 crisis depend on the threat of becoming ill, having to stay at home due to the lockdown, and/or having to file for bankruptcy due to the economic downturn. We do so using seven data sets of French entrepreneurs with a temporal comparison of averages and two data sets of French entrepreneurs with a cross-sectional analysis of individuals. Our findings show that indeed, the risks of burnout have increased during the pandemic and that the threat of bankruptcy is the dominant threat. As an increasing number of studies in the entrepreneurship literature indicate that entrepreneurs’ mental health influences their activities, as well as the growth and sustainability of their ventures, our study is important and timely in its contribution, as it takes a close look at the perception of burnout in general and more specifically during the COVID-19 pandemic. [less ▲]

Trademarks as an indicator of regional innovation: evidence from Japanese prefectures

in Regional Studies (2022), 22(2), 190-209

Regional science has long been concerned with measuring the spatial distribution of innovation activity. We introduce trademarks as a new indicator for regional innovation and argue that they are ... [more ▼]

Regional science has long been concerned with measuring the spatial distribution of innovation activity. We introduce trademarks as a new indicator for regional innovation and argue that they are particularly useful to measure the ‘soft’ side of innovation that is difficult to capture with conventional indicators. We explore the spatial distribution of trademarks using a detailed and comprehensive dataset of 47 Japanese prefectures from 1999 to 2012. In addition to mapping differences in trademarking across regions, we identify correlates at the regional level that provide insights into determinants of regional innovation measured via trademarks. For example, regional trademark activity positively correlates with population density, income per capita, entrepreneurship rate, the number of universities, and strong private service and finance sectors. Overall, the results reveal associations unique to trademarks that other measures of innovation cannot uncover. Our findings contribute to research in regional science and the evolving literature on trademarks. [less ▲]

Beyond the bubble: will NFTs and digital proof of ownership empower creative industry entrepreneurs

in Journal of Business Venturing Insights (2022), 17

Non-fungible Tokens (NFTs) are blockchain-enabled cryptographic assets that represent proof-of-ownership for digital objects. The use of NFTs has been pioneered by creative industry entrepreneurs who have ... [more ▼]

Non-fungible Tokens (NFTs) are blockchain-enabled cryptographic assets that represent proof-of-ownership for digital objects. The use of NFTs has been pioneered by creative industry entrepreneurs who have sought to generate new revenue streams and modes of stakeholder engagement. Despite rapid growth in popularity, concerns have been raised around the legal ownership of NFT assets and the prevalence of speculation and fraud associated with NFT trading. In this rapid response article, we explore the value of NFTs for creative industry entrepreneurs. First, we examine the novel digital affordances of the technology; second, we analyse NFTs through the prism of the recent Initial Coin Offering (ICO) boom and bust; and finally, we take a longer-term historical perspective to consider how past speculative waves inform the present NFT economy. While we identify some potentially valuable artistic and financial opportunities for creative industry entrepreneurs, we conclude that NFTs should be approached with caution. [less ▲]

Learning from invention failure among research organizations: the role of top management team founding experiences and exposure to US culture

in Industry and Innovation (2021), 28(6), 704-724

Building on organisational failure learning and upper echelons theory, we examine the link between top management team (TMT) prior experiences and invention failure learning among research organisations ... [more ▼]

Building on organisational failure learning and upper echelons theory, we examine the link between top management team (TMT) prior experiences and invention failure learning among research organisations. Specifically, we develop theoretical arguments to suggest that TMT founding experience and exposure to US culture facilitate organisational learning from failure. We test our theoretical reasoning using a longitudinal data set comprising 550 organisation-year observations of the patenting activities conducted by 39 research institutes in Germany. In support of our theoretical arguments, we find that TMT founding experience and TMT exposure to US culture positively moderate the link between prior invention failure and subsequent invention performance. Pointing to TMT experiences as a crucial contingency for whether organisations learn from failure, the present study contributes to the literature on organisational failure learning and upper echelons. [less ▲]

Historical institutional differences and entrepreneurship: socialist legacy in Vietnam

in International Review of Entrepreneurship (2021), 19(4), 499-522

We study the case of Vietnam to assess the long-lasting role of institutional and historical legacy on entrepreneurial outcomes. In particular, we investigate the detrimental effect of socialist ... [more ▼]

We study the case of Vietnam to assess the long-lasting role of institutional and historical legacy on entrepreneurial outcomes. In particular, we investigate the detrimental effect of socialist institutions on entrepreneurship. Vietnam offers a unique quasi-experimental setting because the country was divided into the socialist North and the nonsocialist South for a relatively short period of two decades. After reunification, the South adopted the institutional framework conditions of the North. To assess the relationship between socialist history and entrepreneurship in this unique setting, we survey more than 3,000 North and South Vietnamese individuals more than four decades after the reunification of the country. We find that North Vietnamese respondents have lower entrepreneurship intentions, are less likely to select into entrepreneurship education programs, and are less willing to engage in a business takeover. These patterns indicate the persistence of historical differences in institutional framework conditions on entrepreneurship. We conclude by outlining the implications of a socialist legacy for entrepreneurship theory and policymakers. [less ▲]