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The relationship conflict between VCs and entrepreneur

The relationship conflict between VCs and entrepreneur. Tahsen Alqatawn i. Synthesis (1 of 2) .

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The relationship conflict between VCs and entrepreneur

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  1. The relationship conflict between VCs and entrepreneur Tahsen Alqatawni

  2. Synthesis(1 of 2) The positive relationship between the venture capitalist and entrepreneur are very significant, which make both of them mutually symbiotic, and trying their best to maximize the firm value. in addition, the positive relation raising the development of high growth businesses that create jobs and generate wealth that potential to contribute to the economy.

  3. Synthesis(2 of 2) The relationship dilemma result of an expected conflict between VCs and entrepreneur, as disagreement can be helpful for the venture performance, unfortunately, the conflict as personal disagreement is negatively associated with entrepreneur’s performance.

  4. The Entrepreneur(1 of 2) In 1755, the earliest definition of entrepreneurship wrote by Irish economist Richard Cantillon, used it as an economic title give the details of the process of carrying the risk of buying at known prices and selling at unknown prices (Aspromourgos, 2012). The entrepreneur word derived from the French verb entreprendre, which mean, “to undertake” (Dana, 2011).

  5. The Entrepreneur (2 of 2) The later definitions by Schultz (1980) that the person who has the ability to deal with imbalance rather than the ability to deal with uncertainty. In addition, the modern entrepreneur is the person who holds a high position, in executives level of operation decision, take charge of the right of operation decision and get hold of on the entrepreneur’s risk in the business can be seen entrepreneur(Mao, 2010)

  6. Venture Capital VC(1 of 2) The venture capital is an important equity financing resource that addresses the funding necessary of entrepreneurial businesses in particular in environments of uncertainty (Rosenbusch, 2012). Venture capital is one the most influential factor underlying the economic growth of some regions within the United States (Samila, 2011).

  7. Venture Capital VC(2 of 2)  The classical definition of VCs is a wealthy person or progressive financial institution that is willing to provide sufficient risk capital to appraise the specific opportunity and provide financial backing for its introduction to the market place(Charpie,1967).

  8. Literature Gap Based on a review of the literature study covering the entrepreneur and venture capital, related domains of research into relationships. there is a significant gap in research into negative impact the whole economy result of relationships conflict between entrepreneur and venture capital.

  9. The venture capital and entrepreneur relationship  negative impact (1 of 2) The dilemma of VCs and entrepreneur relation conflict leave negative impact beyond both partners to the whole economy. • In 2012, Lim study result showed a direct relationship has no significant effect on conflict between the VC and entrepreneur; indirect relationship has a greater level of conflict between the VC and entrepreneur.

  10. The venture capital and entrepreneur relationship  negative impact (2 of 2) • The probability of conflict escalation could be causing a negative business outcome such as failure or another form of forced exit, which present the darker sides of the relationship between VCs and entrepreneurs (Collewaert, 2013) • the negative impact of relationship conflict may impede any positive influence of task conflict from happening. however, the relationship conflict may not only harm the perspicacity value but also business performance (Brettel, 2013).

  11. Background (1 of 1) There is a critical relationship between the entrepreneurs and venture capitalists, which could be a meeting of minds or clash of heads (Proimos, 2006).  Zacharakis, Erikson, and George (2010), stated the current study finds relation conflict between venture capitalist and entrepreneur leads to reduced confidence in partner cooperation while the classical study views task conflict favorably.  However, the VCs – entrepreneur partnership involve conflicts, due to different goals and objectives towards the business.  In addition, “the venture capital partnership often suffers from lacking communication from either or both parties, which could start or worsen the conflict” (Li, 2011).

  12. Annotated Bibliography(1 of 10) Rosenbusch, N., Brinckmann, J., & Müller, V. (2012). Does acquiring venture capital pay off for the funded firms? A meta-analysis on the relationship between venture capital investment and funded firm financial performance.Journal of Business Venturing. http://dx.doi.org.ezp.waldenulibrary.org/10.1016/j.jbusvent.2012.04.002 Rosenbusch, Brinckmann, and Müller examined the theoretical proposals that the VC is an important source to develop the performance of funded firms, particularly in environments of uncertainty. In addition, the authors synthesized 76 experimental samples on 36,567 firms. Conversely, the found a small positive performance influences of VC backing on funded firm performance. However, the effect disappears if researchers control the business selection impacts. In addition, the study hypothesis focused on the relationship between VC backing and funded firm.

  13. Annotated Bibliography(2 of 10) Zacharakis, A., Erikson, T., & George, B. (2010). Conflict between the VC and entrepreneur: the entrepreneur's perspective. Venture Capital, 12(2), 109- 126. doi:10.1080/13691061003771663 Zacharakis, Erikson, and George discussed the conflict between the venture capitalists and entrepreneurs, and the impacts of conflict on confidence in a business partnership were explored. The authors collected the data based on a survey of 57 entrepreneurs, who received the venture capital investments. The study found the relationship conflict had negatives prevail on to lower overall performance, whereas past research finds that venture capitalists view task conflict favorably.

  14. Annotated Bibliography(3 of 10) Lim, K., & Cu, B. (2012). The effects of social networks and contractual characteristics on the relationship between venture capitalists and entrepreneurs. Asia Pacific Journal of Management, 29(3), 573- 596.doi:10.1007/s10490-010-9212-x Lim and Cu examined the relationship between venture capitalists and entrepreneurs. The authors collected the data from private entrepreneurial firms in the United States and Singapore. However, the study result showed a direct relationship has no significant effect on conflict between the VC and entrepreneur; indirect relationship has a greater level of conflict between the VC and entrepreneur.

  15. Annotated Bibliography(4 of 10) Samila, S., & Sorenson, O. (2011). Venture capital, entrepreneurship, and economic growth. The Review of Economics and Statistics, 93(1), 338-349. doi:10.1162/REST_a_00066 Samila and Sorenson examined the significant effect on economic growth related to a degree of relationship between the venture capital and entrepreneurship. the researchers Used a panel of U.S. metropolitan areas to measure that a rise in the supply of venture capital positively affect entrepreneurs starts, employment, and aggregate income

  16. Annotated Bibliography(5 of 10) Brettel, M., Mauer, R., & Appelhoff, D. (2013). The entrepreneur's perception in the entrepreneur–VCF relationship: the impact of conflict types on investor value. Venture Capital, (ahead-of-print), 1- 25.doi:10.1080/13691066.2013.782625 Brettel, Mauer, and Appelhoff examined the effect of perceived task conflict and relationship conflict between the entrepreneur and venture capital. the authors analyzed survey data of 152 ventures in Germany. however, the study found the relationship conflict to be harmful for perceived investor value. in addition, the negative impact of relationship conflict may impede any positive influence of task conflict from happening. However, the relationship conflict may not only harm the perspicacity value but also business performance.

  17. Annotated Bibliography(6 of 10) Collewaert, V., & Fassin, Y. (2013). Conflicts between entrepreneurs and investors: The impact of perceived unethical behavior. Small Business Economics, 40(3), 635-649. doi: http://dx.doi.org/10.1007/s11187-011-9379-7 Collewaert and Fassin examined the impact of seen unethical behavior by entrepreneurs, venture capitalists, and angel investors on their conflict manner. However, the authors used a case study design to analyzed 11 conflict situations for any seen unethical behavior. However, the study found the probability of conflict escalation could be causing a negative business outcome such as failure or another form of forced exit, which present the darker sides of the relationship between VCs and entrepreneurs.

  18. Annotated Bibliography(7 of 10) Li, J., & Abrahamsson, J. T. (2011). New money, new problems: A qualitative study of the conflicts between venture capitalists and entrepreneurs in Sweden(Doctoral dissertation, Umeå University). Retrieved from   http://umu.divaportal.org/smash/record.jsf?pid=diva2:426612 Li and Abrahamsson discovered a gap of knowledge regarding conflicts between entrepreneurs and venture capitalists in Sweden. Subsequently, the authors proposed a qualitative study of the conflicts between entrepreneurs and venture capitalists by interviews with four venture capital managers and another four entrepreneurial CEOs.  However, the study found that the venture capital partnership often suffers from lacking communication from either or both parties, which could start or worsen the conflict.

  19. Annotated Bibliography(8 of 10) Zhang, J. (2011). The advantage of experienced start-up founders in venture capital acquisition: Evidence from serial entrepreneurs. Small Business Economics, 36(2), 187-208. doi: 10.1007/s11187-009-9216-4 Zhang examined the advantage of experiencing start-up founders in venture capital acquisition. However, the study used 5,972 entrepreneurs and their founders to examine experienced founders' access to venture capital. In addition, the study found all entrepreneurs with previous experience; appear too raised more by venture capital.

  20. Annotated Bibliography(9 of 10) Lahti, T. (2012). The value-added contribution of advisors in the process of acquiring venture capital. International Small Business Journal.doi:10.1177/0266242612453932 Lahti examined in his study the determinants of the value added giving offered by advisors to entrepreneurs seeking VCs funding. In addition, The study developed seven hypotheses derived from agency theory used quantitative data from questionnaire answers was given by entrepreneurs, which used advisors to get venture capital. However, the study found showed that advisor value added giving are valuable when entrepreneurs have a lack of experience in dealing with VCs. Other determinants are degree of venture growth, level of entrepreneur’s innovation and experience.

  21. Annotated Bibliography(10 of 10) Yitshaki, R. (2008). Venture capitalist-entrepreneur conflicts: An exploratory study of determinants and possible resolutions. International Journal of Conflict Management, 19(3), 262- 292. doi:10.1108/10444060810875813 RonitYitshak examined the inherent and real conflicts between venture capitalists and entrepreneurs, as well as the potential resolutions of these conflicts. In addition, the author used the semi-structured interviews to 42 VCs and entrepreneurs in Israel. However, the study found that conflict is essential in VCs, and entrepreneurs' relationships as both parties have several thoughts of the venture and the contractual arrangements.

  22. References(1 of 6) Aspromourgos, T. (2012). Entrepreneurship, risk and income distribution in Adam Smith. The European Journal of the History of Economic Thought, (ahead-of-print), 1-20.doi:10.1080/09672567.2012.683025 Brettel, M., Mauer, R., & Appelhoff, D. (2013). The entrepreneur's perception in the entrepreneur–VCF relationship: the impact of conflict types on investor value. Venture Capital, (ahead-of-print), 1-25.doi:10.1080/13691066.2013.782625

  23. References(2 of 6) Charpie, R. A. (1967). Technological Innovation and Economic Growth. Applied Science and Technological Progress: A Report to the Committee on Science and Astronautics, US House of Representatives, 357. Collewaert, V., & Fassin, Y. (2013). Conflicts between entrepreneurs and investors: The impact of perceived unethical behavior. Small Business Economics, 40(3), 635-649. doi:http://dx.doi.org/10.1007/s11187-011- 9379-7

  24. References(3 of 6) Li, J., & Abrahamsson, J. T. (2011). New money, new problems: A qualitative study of the conflicts between venture capitalists and entrepreneurs in Sweden(Doctoral dissertation, Umeå University). Retrieved from  http://umu.divaportal.org/smash/record.jsf?pid=diva2:426612 Lim, K., & Cu, B. (2012). The effects of social networks and contractual characteristics on the relationship between venture capitalists and entrepreneurs. Asia Pacific Journal of Management, 29(3), 573-596.doi:10.1007/s10490-010-9212-x

  25. References(4 of 6) MAO, H. Y., & Ge, H. (2010). The situation and existent problem of entrepreneur group construction of China. Management Science and Engineering, 2(2), 31-35.Ritravid from http://www.cscanada.net/index.php/mse/article/view/836 Rosenbusch, N., Brinckmann, J., & Müller, V. (2012). Does acquiring venture capital pay off for the funded firms? A meta-analysis on the relationship between venture capital investment and funded firm financial performance. Journal of Business Venturing. http://dx.doi.org/10.1016/j.jbusvent.2012.04.002

  26. References(5 of 6) Proimos, A., & Murray, W. (2006). Entrepreneuring into venture capital. The Journal of Private Equity, 9(3), 23-34. doi: 10.3905/jpe.2006.635426 Samila, S., & Sorenson, O. (2011). Venture capital, entrepreneurship, and economic growth. The Review of Economics and Statistics, 93(1), 338-349. doi:10.1162/REST_a_00066 Dana, L. P. (2011). World Encyclopedia of Entrepreneurship. Edward Elgar Publishing.

  27. References(6 of 6) Schultz, T.W. (1980): Investment in entrepreneurial ability, Scandinavian Journal of Economics 82, pp. 437-448. Retrieved from http://www.jstor.org/discover/10.2307/3439676?uid=3739864&uid=2 134&uid=2&uid=70&uid=4&uid=3739256&sid=21102231552401 Zacharakis, A., Erikson, T., & George, B. (2010). Conflict between the VC and entrepreneur: the entrepreneur's perspective. Venture Capital, 12(2), 109-126. doi:10.1080/13691061003771663

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