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CONCLUSION

Hofer (1975) and DeCastro and Chrisman (1995) propose that researchers must investigate contingency relationships when studying strategy. Sandberg and Hofer (1987) analyses suggest there may be contingent relationships among criteria used by venture capitalists. This study used new venture strategy literature to develop a theory of contingent relationships between entry strategy variables in venture capitalists' assessment of profitability. The findings of this research are that while, on aggregate, timing-lead time, timing-educational capability and timing-key success factor stability interactions are significant in venture capitalists' decision making they are low in relative importance. These findings concur with social judgment theorists and decision making researchers such as Louviere (1988) who propose that, in general, main effects often explain 80% of the variance, two-way interactions rarely exceed 6 to 8%, 3-way interactions rarely exceed more than 2 to 3% and higher order interactions account for minuscule proportions of variance. However, while the significant interactions were low in relative importance their importance may be high in an absolute sense because of the high cost of an incorrect assessment.

Even the theoretical contingent relationships between entry strategy variables and new venture profitability proposed, but not found to be significant in this study, may still have explanatory and predictive ability of the actual performance of ventures. Therefore, could it be some venture capitalists are unable to conceptualize these more complex relationships? Are venture capitalists' decision policies optimal? Can venture capitalists' decision making be improved? Venture capitalists may be able to learn from the contingent based theory proposed in this study. Zacharakis and Meyer (1996) found venture capitalists have information processing limitations and that actuarial models improve venture capitalists' assessment decisions. The contingent theory of venture capitalists' decision making proposed in this research may form the basis of an actuarial model. Further research needs to be performed in developing and empirically testing an actuarial model that involves the new venture entry strategy theory proposed in this study. Further theoretical and empirical research also needs to performed into possible cognitive biases, errors and limitations of venture capitalists in order to ascertain possible sources for improving the accuracy of venture capitalists' assessments.

REFERENCES

Anderson, N. (1981) Foundations of information integration theory. NY: Academic Press.

Andrews, K. R. (1987) The Concept of Corporate Strategy. Homewood, Illinios: Irwin.

de Koning, A.J., & Muzyka, D.F. (1996) The convergence of good ideas: When and how do entrepreneurial managers recognize innovative business ideas. Presentation: Babson Entrepreneurship Research Conference 1996.

Karakaya, F., & Kobu, B. (1994) New product development process: An investigation of success and failure in high technology firms. Journal of Business Venturing, 9(1): 49-66.

Miller, A., & Camp, B. (1985) Exploring determinants of success in corporate ventures. Journal of Business Venturing, 1: 87-106.

Rogers, E. (1983) Diffusion of Innovations. 3rd edn. New York : Free Press.
Roure, J.B., & Keeley, R.H. (1990) Predictors of success in new technology based ventures. Journal of Business Venturing, 5(4): 201-220.

Sandberg, W.R., & Hofer, C.W. (1987) Improving new venture performance: The role of strategy, industry structure and the entrepreneur. Journal of Business Venturing, 2(1):5-28.

Schumpeter, J. (1975) Capitalism, Socialism and Democracy. New York: Harper and Row.

Tyebjee, T. T., & Bruno, A. V. (1984) A model of venture capitalist Investment activity. Management Science, 30: 1051-1066.

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