Venture capitalist-entrepreneur conflicts: An exploratory study of determinants and possible resolutions

International Journal of Conflict Management

Volumn 19, Issue 3, 2008, Pages 262-292

  Yitshaki, Ronit ^a  

^a BAR ILAN UNIVERSITY   (Israel)

Author keywords

Channel relationships; Conflict; Conflict resolution; Entrepreneurs; Israel; Venture capital

Indexed keywords

EID: 46749155100     PISSN: 10444068     EISSN: None     Source Type: Journal    
DOI: 10.1108/10444060810875813     Document Type: Article

References (92)

1. Aldrich, E.H. (1999), Organizations Evolving, Sage, London.
2. Aldrich, H. and Zimmer, C. (1986), "Entrepreneurship through social networks", in Sexton, D.L. and Smilor, R.W. (Eds), The Art and Science of Entrepreneurship, Ballinger, Cambridge, pp. 3-23.
3. Amani, K.B., Wallace, N.D. and Fayez, A.A. (2002), "Role of venture capitalists in IPO corporate governance and operating performance", Quarterly Journal of Business and Economics, Vol. 41 Nos 3/4, pp. 71-82.
4. Amason, A.C. (1996), "Distinguishing the effects of functional and dysfunctional conflict on strategic decision-making: resolving a paradox for top management teams", Academy of Management Journal, Vol. 39 No. 1, pp. 123-48.
5. Amason, A.C. and Sapienza, H.J. (1997), "The effects of top management team size and interaction norms on cognitive and affective conflict", Journal of Management, Vol. 23 No. 4, pp. 495-516.
6. Amit, R., Glosten, L. and Muller, E. (1990), "Entrepreneurial ability, venture investments, and risk sharing", Management Science, Vol. 36 No. 10, pp. 1232-45.
7. Amit, R., Brander, J. and Christoph, Z. (1998), "Why do venture capital firms exist? Theory and Canadian evidence", Journal of Business Venturing, Vol. 13, pp. 441-66.
8. Amit, R., Glosten, L. and Muller, E. (1993), "Challenges to theory development in entrepreneurship research", Journal of Management Studies, Vol. 30 No. 5, pp. 815-34.
9. Aragon-Correa, J.A. and Sharma, S. (2003), "A contingent resource-based view of proactive corporate environmental strategy", Academy of Management Review, Vol. 28 No. 1, pp. 71-88.
10. Astley, W.G. and Van de Ven, A.H. (1983), "Central perspectives and debates in organization theory", Administrative Science Quarterly, Vol. 28, pp. 245-73.
11. Barki, H. and Hartwick, J. (2004), "Conceptualizing the construct of interpersonal conflict", International Journal of Conflict Management, Vol. 15 No. 3, pp. 216-44.
12. Barney, J.B., Busenitz, L. and Fiet, J. (1994), "The relationship between venture capitalists and managers in new firms: determinants of contractual covenants", Managerial Finance, Vol. 20, pp. 19-30.
13. Berg, B.L. (1998), Qualitative Research Methods for the Social Sciences, 3rd ed., Allyn and Bacon, Needham Heights, MA.
14. Birmingham, C. (2006), "Effects of venture capital social advice networks on escalation of commitment", PhD dissertation, The University of Oklahoma, Norman, OK.
15. Bruton, G., Fried, V. and Hisrich, R.D. (1997), "Venture capitalist and CEO dismissal", Entrepreneurship: Theory and Practice, Vol. 21 No. 3, pp. 41-54.
16. Bruton, G.D., Fried, V.H. and Hisrich, R.D. (2000), "CEO dismissal in venture capital-backed firms: further evidence from an agency perspective", Entrepreneurship: Theory and Practice, Vol. 24 No. 4, pp. 69-77.
17. Busenitz, L.W., Fiet, J.O. and Moesel, D.D. (2004), "Reconsidering the venture capitalists' 'value added' proposition: an interorganizational perspective", Journal of Business Venturing, Vol. 19, pp. 787-807.
18. Cable, D.M. and Shane, S. (1997), "A prisoner's dilemma approach to entrepreneur-venture capitalist relationships", Academy of Management Review, Vol. 22, pp. 142-76.
19. Cassell, C. and Symon, G. (1994), Qualitative Methods in Organizational Research, Sage, London.
20. Chua, J.H. and Woodward, R.S. (1993), "Splitting the firm between the entrepreneur and the venture capitalist with the help of stock options", Journal of Business Venturing, Vol. 8, pp. 43-58.
21. Creswell, J.W. (1994), Research Design: Qualitative & Quantitative Approaches, Sage, Thousand Oaks, CA.
22. Dahrendorf, R. (1959), Class and Class Conflict in Industrial Society, Stanford University Press, Stanford, CA.
23. Daily, C.M., McDougall, P.P., Covin, J.G. and Dalton, D.R. (2002), "Governance and strategic leadership in entrepreneurial firms", Journal of Management, Vol. 28 No. 3, pp. 287-412.
24. Das, T.K. and Teng, B.S. (1998), "Between trust and control: developing confidence in partner cooperation in alliances", Academy of Management Review, Vol. 23, pp. 491-512.
25. De Clercq, D. and Sapienza, H.J. (2001), "The creation of relational rents in venture capitalists-entrepreneur dyads", Venture Capital, Vol. 3 No. 2, pp. 107-27.
26. De Clercq, D. and Sapienza, H.J. (2005), "When do venture capital firms learn from their portfolio companies?", Entrepreneurship Theory and Practice, July, pp. 517-35.
27. De Clercq, D. and Sapienza, H.J. (2006), "Effects of relational capital and commitment on venture capitalists' perception of portfolio company performance", Journal of Business Venturing, Vol. 21 No. 3, pp. 326-47.
28. De Noble, A.F., Moore, T. and Weaver, R.R. (1994), "After the cash arrives: a comparative study of venture capital and private investor involvement in entrepreneurial firms", Journal of Business Venturing, Vol. 9, pp. 67-82.
29. Eisenhardt, K.M. (1989), "Building theories from case study research", Academy of Management Review, Vol. 14 No. 4, pp. 532-50.
30. Fiet, J.O. (1995), "Reliance upon informants in the venture capital industry", Journal of Business Venturing, Vol. 10, pp. 195-223.
31. Fiet, J.O., Busenitz, L.W., Moesel, D.D. and Barney, J.B. (1997), "Complementary theoretical perspectives on the dismissal of new venture team members", Journal of Business Venturing, Vol. 12, pp. 347-66.
32. Floyd, S.W. and Lane, P.J. (2000), "Strategizing throughout the organization: managing role conflict in strategic renewal", Academy of Management Review, Vol. 25, pp. 154-77.
33. Flynn, D. and Forman, A.M. (2001), "Life cycles of new venture organizations: different factors affecting performance", Journal of Developmental Entrepreneurship, Vol. 6, pp. 41-58.
34. Fried, J.M. and Ganor, M. (2006), "Agency costs of VC control in startups", New York University Law Review, Vol. 81 No. 3, pp. 967-1025.
35. Gartner, W.B. (2001), "Is there an elephant in entrepreneurship? Blind assumptions in theory development", Entrepreneurship: Theory and Practice, Vol. 25 No. 4, pp. 27-39.
36. Gifford, S. (1997), "Limited attention and the role of the venture capitalist", Journal of Business Venturing, Vol. 12, pp. 459-82.
37. Gomez-Mejia, L.R., Balkin, D.B. and Welbourne, T.M. (1990), "Influence of capitalists on high tech management", Journal of High Technology Management Research, Vol. 1, pp. 103-18.
38. Gompers, P. and Lerner, J. (1996), "The use of covenants: an empirical analysis of venture partnership agreements", Journal of Law and Economics, Vol. 39, October, pp. 463-98.
39. Gorman, M. and Sahlman, W.A. (1989), "What do venture capitalists do?", Journal of Business Venturing, Vol. 4, pp. 231-8.
40. Gupta, A.K. and Sapienza, H.J. (1992), "Determinants of venture capital firms' preferences regarding the industry diversity and geographic scope of their investments", Journal of Business Venturing, Vol. 7, pp. 347-62.
41. Higashide, H. and Birley, S. (2002), "The consequences of conflict between the venture capitalist and the entrepreneurial team in the United Kingdom from the perspective of the venture capitalist", Journal of Business Venturing, Vol. 17, pp. 59-81.
42. Hillman, A.J., Cannella, A.A. and Paetzold, R.L. (2000), "The resource dependence role of corporate directors: strategic adaptation of board composition in response to environmental change", Journal of Management Studies, Vol. 37 No. 2, pp. 235-55.
43. Jehn, K.A. (1995), "A multimethod examination of the benefits and detriments of intragroup conflict", Administrative Science Quarterly, Vol. 40, pp. 256-82.
44. Jehn, K.A. (1997), "A qualitative analysis of conflict types and dimensions in organizational groups", Administrative Science Quarterly, Vol. 42, pp. 530-57.
45. Jehn, K.A. and Mannix, E.A. (2001), "The dynamic nature of conflict: a longitudinal study of intragroup conflict and group performance", Academy of Management Journal, Vol. 44 No. 2, pp. 238-51.
46. Katz, D. and Kahn, R.L. (1978), The Social Psychology of Organizations, 2nd ed., Wiley, New York, NY.
47. Korsgaard, M.A., Forbs, D.P. and Sapienza, H.J. (2005), "Effects of board processes on decision quality in venture capital-backed firms", paper presented at the Academy of Management Conference, Hawaii.
48. Kusztal, I.L. (2002), "Discourses in the use and emergence of organizational conflict", Conflict Resolution Quarterly, Vol. 20 No. 2, pp. 231-47.
49. Labianca, G., Brass, D.J. and Gray, B. (1998), "Social networks and perceptions of intergroup conflict: the role of negative relationships and third parties", Academy of Management Journal, Vol. 41 No. 1, pp. 55-67.
50. Larson, A. (1992), "Network dyads in entrepreneurial settings: a study of the governance of exchange relationships", Administrative Science Quarterly, Vol. 37, pp. 76-104.
51. Levin, D.Z., Whitener, E.M. and Cross, R. (2006), "Perceived trustworthiness of knowledge source: the moderating impact of relationship length", Journal of Applied Psychology, Vol. 9 No. 5, pp. 1163-71.
52. Macmillan, I.C. and Katz, J.A. (1992), "Idiosyncratic milieus of entrepreneurial research: the need for comprehensive theories", Journal of Business Venturing, Vol. 7, pp. 1-8.
53. Macmillan, I.C., Kulow, D.M. and Khoylian, R. (1988), "Venture capitalists' involvement in their investments: extent and performance", Journal of Business Venturing, Vol. 4, pp. 27-47.
54. Mintzberg, H. (1983), Power in and Around Organizations, Prentice-Hall, Englewood Cliffs, NJ.
55. Morris, M.H., Watling, J.W. and Schindehutte, M. (2000), "Venture capitalists involvement in portfolio companies: insights from South Africa", Journal of Small Business Management, Vol. 38, pp. 68-77.
56. Nahapiet, J. and Ghoshal, S. (1998), "Social capital, intellectual capital and the organizational advantage", Academy of Management Review, Vol. 23 No. 2, pp. 242-66.
57. Nelson, R.E. (1989), "The strength of strong ties: social networks and intergroup conflict in organizations", Academy of Management Journal, Vol. 32 No. 2, pp. 377-401.
58. Oliver, A.L. and Ebers, M. (1998), "Networking network studies: an analysis of conceptual configuration in the study of inter-organizational relationships", Organization Studies, Vol. 19 No. 4, pp. 549-83.
59. Parhankangas, A. and Landstrom, H. (2003), Responses to Psychological Contract Violations in the Venture Capitalist-entrepreneur Relationship: An Exploratory Study, paper presented at the Babson Kauffman Entrepreneurship Research Conference, Boston, MA.
60. Pelled, L.H., Eisenhardt, K.M. and Xin, K.R. (1999), "Exploring the black box: an analysis of work group diversity, conflict and performance", Administrative Science Quarterly, Vol. 44, pp. 1-28.
61. Pfeffer, J. (1972), "Merger as a response to organizational interdependence", Administrative Science Quarterly, Vol. 17, pp. 382-94.
62. Pfeffer, J. (1981), Power in Organizations, Pitman, Marshfield, MA.
63. Pfeffer, J. and Salancik, G.R. (1978), The External Control of Organizations: A Resource Dependence Perspective, Harper & Row, New York, NY.
64. Rahim, A. (2002), "Toward a theory of managing organizational conflict", International Journal of Conflict Management, Vol. 13, pp. 206-35.
65. Rahim, A. and Bonoma, T.V. (1979), "Managing organizational conflict: a model for diagnosis and intervention", Psychological Reports, Vol. 44, pp. 1323-44.
66. Ring, P.S. and Van de Ven, A. (1994), "Developmental processes of cooperative interorganizational relationships", Academy of Management Review, Vol. 19, pp. 90-118.
67. Rosenstein, J., Bruno, A.V., Bygrave, W.D. and Taylor, N.T. (1993), "The CEO, venture capitalists and the board", Journal of Business Venturing, Vol. 8, pp. 99-113.
68. Ruhnka, J.C. and Young, J.E. (1991), "Some hypotheses about risk in venturing capital investing", Journal of Business Venturing, Vol. 6, pp. 115-33.
69. Sapienza, H.J. (1992), "When do venture capitalists add value?", Journal of Business Venturing, Vol. 7, pp. 9-27.
70. Sapienza, H.J. and Gupta, A.K. (1994), "Impact of agency risks and task uncertainty on venture capitalists-CEO interaction", Academy of Management Journal, Vol. 37 No. 4, pp. 1618-32.
71. Sapienza, H.J. and Korsgaard, M.A. (1996), "Procedural justice in entrepreneur-investor relations", Academy of Management Journal, Vol. 39 No. 3, pp. 544-74.
72. Sapienza, H.J., Manigart, S. and Vermeir, W. (1996), "Venture capitalist governance and value added in four countries", Journal of Business Venturing, Vol. 11, pp. 439-69.
73. Schmidt, S.M. and Kochan, T.A. (1972), "Conflict: toward conceptual clarity", Administrative Science Quarterly, Vol. 17, pp. 359-70.
74. Shane, S. and Venkataraman, S. (2000), "The promise of entrepreneurship as a field of research", Academy of Management Review, Vol. 25, pp. 217-26.
75. Shepherd, D. and Zacharakis, A. (2001), "The venture capitalists-entrepreneur relationship: control, trust and confidence in co-operative behavior", Venture Capital, Vol. 3 No. 2, pp. 129-49.
76. Shepherd, D.A. (1999), "Venture capitalists' introspection: a comparison of 'in use' and 'espoused' decision policies", Journal of Small Business Management, Vol. 37 No. 2, pp. 76-87.
77. Sheppard, B.H. and Sherman, D.M. (1998), "The grammars of trust: a model and general implications", Academy of Management Review, Vol. 23, pp. 422-37.
78. Smith, D.G. (2005), "The exit structure of venture capital", UCLA Law Review, Vol. 53 No. 2, pp. 315-56.
79. Sobrero, M. and Schrader, S. (1998), "Structuring inter-firm relationships: a meta-analytic approach", Organization Studies, Vol. 19 No. 4, pp. 585-615.
80. Strauss, A. and Corbin, J. (1994), "Grounded theory methodology", in Denzin, N.K. and Lincoln, Y.S. (Eds), Handbook of Qualitative Research, Sage, Thousand Oaks, CA, pp. 273-85.
81. Thomas, K.W. (1992), "Conflict and negotiation processes in organizations", in Dunnette, M.D. and Hough, L.M. (Eds), Handbook of Industrial and Organizational Psychology, 2nd ed., Vol. 3, Consulting Psychologists, Palo Alto, CA, pp. 631-717.
82. Tsai, W. and Ghoshal, S. (1998), "Social capital and value creation: the role of interfirm networks", Academy of Management Journal, Vol. 41, pp. 464-76.
83. Uzzi, B. (1997), "Social structure and competition in interfirm networks: the paradox of embeddedness", Administrative Science Quarterly, Vol. 42, pp. 35-67.
84. Weber, C. and Göbel, M. (2005), "Economic exchange reciprocity or social obligation reciprocity? Exchange modalities of interorganizational relations in Germany", paper presented at the Babson Kaufman Entrepreneurship Research Conference, Boston, MA.
85. Williams, D.R., Duncan, W.J. and Ginter, P.M. (2006), "Structuring deals and governance after IPO: entrepreneurs and venture capitalists in high tech start-ups", Business Horizons, Vol. 49, pp. 303-11.
86. Yin, R.K. (1994), Case Study Research: Design and Methods, 2nd ed., Sage, Thousand Oaks, CA.
87. Yitshaki, R. (2003), "Relationships between venture capitalists and entrepreneurs: managerial interventions in high technology companies", unpublished PhD dissertation, Ramat-Gan: Bar Ilan University (Hebrew).
88. Yoshikawa, T., Phan, P.H. and Linton, J. (2004), "The relationship between governance structure and risk management approaches in Japanese venture capital firms", Journal of Business Venturing, Vol. 19, pp. 831-49.
89. Zacharakis, A.L. and Meyer, G.D. (1998), "A lack of insight: do venture capitalists really understand their own decision process?", Journal of Business Venturing, Vol. 13, pp. 57-76.
90. Zacharakis, A.L., Meyer, G.D. and DeCastro, J. (1999), "Differing perceptions of new venture failure: a matched exploratory study of venture capitalists and entrepreneur", Journal of Small Business Management, Vol. 37 No. 3, pp. 1-14.
91. Cooper, M.A. (1986), "Entrepreneurship and high technology", in Sexton, D.L. and Smilor, R.W. (Eds), The Art and Science of Entrepreneurship, Ballinger, Cambridge, pp. 153-68.
92. McDonough, E.F. and Barczak, G. (1992), "The effects of cognitive problem-solving orientation and technological familiarity on faster new product development", The Journal of Product Innovation Management, Vol. 9, pp. 44-52.