Frontiers of Entrepreneurship Research
1997 Edition

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THE IMPACT OF POST–FUNDING INVOLVEMENT BY VENTURE CAPITALISTS ON LONG–TERM PERFORMANCE OUTCOMES

Lowell W. Busenitz, University of Houston

Douglas D. Moesel, Lehigh University

James O. Fiet, University of the Pacific


INTRODUCTION

The Venture Capital Option: Positive Involvement or Overinvolvement?

Measuring Long–Term Entrepreneurial Venture Performance

DETERMINANTS OF LONG-TERM VENTURE PERFORMANCE

Learning Assistance Theory and VC Assistance

Business Management Advice

New Venture Team Dismissals

Effects of Fairness in the VCs-NVT Relationship

METHODS

Independant Variables

Control Variables

RESULTS

CONCLUSIONS AND IMPLICATIONS

REFERENCES

TABLE 1

TABLE 2

 

ABSTRACT

This study examined the long–term effect of various forms of venture capitalist managerial involvement on the status of their investee firms. Operational assistance and strategic management advice were not significantly related to a venture’s status. The dismissal of new venture team members did have a significantly negative impact on venture status, whereas procedural justice had a significantly positive impact on venture status. We suspect that perceptions of fair treatment by venture capitalists encourage greater respect, trust, and adaptability in dealing with venture problems and opportunities.

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