The impact of venture capital on family businesses: Evidence from Spain

Martí, José; Requejo, Susana Menéndez; Rottke, Olaf M.

doi:10.1016/j.jwb.2012.07.025

Cited by 42 publications

(6 citation statements)

References 61 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…Previous literature finds no conclusive evidence, adopting several theories and frameworks such as agency theory and SEW. Therefore, depending on the context and the framework employed, institutional investors might positively or negatively influence innovation activity in family firms (Calabr o et al, 2019;Cirillo et al, 2019;Gomez-Mejia et al, 2014;Mart ı et al, 2013). The same studies suggest moderating factors for the degree of innovation in family firms, such as the role of bank relationships and private equity.…”

Section: The Role Of Innovationmentioning

confidence: 95%

Capital structure in family firms: the role of innovation activity and institutional investors

Harasheh

Capocchi

Amaduzzi

2022

EMJB

View full text Add to dashboard Cite

PurposeThere is still an ongoing debate on the value relevance of capital structure and its determinants. Recently the issue has been explored in family firms after being explored in mature firms. This paper investigates the role of institutional investors and the firm's innovation activity in influencing the firm's decision and ability to acquire debt capital.Design/methodology/approachA large sample of 700 privately-held family firms in Italy from 2010 to 2019. Two analysis techniques are used: panel analysis and path analysis. The value of debt and the debt ratio are used as leverage measures. The value of patent (as a proxy for innovation) and institutional investor are the explanatory variables.FindingsThe results show that institutional investors have no relationship with financial leverage measures except when controlling for an interaction variable (Institutional investors × Lombardy region). The patent value is positively correlated with debt; however, the ratio patent-to-asset is negatively related to financial leverage indicating higher risk exposure. The nonlinearity test demonstrates a turning point when the relationship between patent value and debt inverts.Practical implicationsFirms should monitor their innovation activity since excessive innovation increases risk exposure and affects financing opportunities and value. The involvement of institutional investors does not always enhance value.Originality/valueExisting literature focuses separately on family firm innovations and financial leverage as outcome variables, emphasizing the role of institutional investors in both fields by adopting agency theory and socioemotional wealth framework. In this study, the authors go further by merging both relationships, investigating the dynamics of the institutional-family firm innovation relationship in influencing the firm's capital structure. The authors contribute to the ongoing debate by providing original findings on capital structure, governance and innovation, supported by rigorous methods to enhance family firms' decision-making.

show abstract

Section: The Role Of Innovationmentioning

confidence: 95%

Capital structure in family firms: the role of innovation activity and institutional investors

Harasheh

Capocchi

Amaduzzi

2022

EMJB

View full text Add to dashboard Cite

show abstract

“…Previous scholars acknowledge a relevant role of Private Equity and Venture Capitalists (PEVCs) in promoting firms' innovation. PEVCs are investors specialized in funding innovative, privately held companies (Gompers and Lerner, 2001), where asymmetric information is relevant (Martí et al ., 2013). PEVCs is a continuous variable and is calculated as the ratio of shares held by those investors to the amount of post-IPO shares outstanding.…”

Section: Data and Samplementioning

confidence: 99%

Are family firms really reluctant to innovate? Evidence from IPOs

Ossorio

2022

EJIM

View full text Add to dashboard Cite

PurposeThe aim of this paper is to explore the family firms' propensity to undertake R&D investments after going public, showing how it varies due to the ownership structure.Design/methodology/approachThe analysis is based on a sample of 132 French and Italian family and nonfamily IPOs in the period 2013–2018.FindingsThe empirical findings show a positive relationship between the quantity of post-IPO shares retained by family owners and R&D investments. Furthermore, the abovementioned relationship is negatively affected by the generational stage and positively by the presence of a lone founder.Practical implicationsOutside investors of family firms may be assured in buying shares of founding family firms after going public because they are stimulated to undertake R&D investments and therefore create overall value in the long term. Furthermore, external managers of lone-founder and first-generation family firms can adopt innovation investments without fear of being replaced as a consequence of a hostile takeover. Lastly, private equity should support later generation family IPOs, providing them with capital and managerial skills in order to generate value for shareholders.Originality/valuePast studies have mostly shown family firms' reluctance to undertake R&D investments; however, scholars have focused on private or public family firms, ruling out the analysis of family firms' innovation behaviour within the setting of an IPO. To the best of the author's knowledge, this study represents the first empirical attempt to investigate the relationship between family firms and post-IPO innovation investments, when the capital infusion relaxes the financial constraints of family firms.

show abstract

“…The empirical evidence shows conflicting results for the relationship between family involvement dimensions (e.g., ownership, management, governance and succession) and firm employment growth. The family ownership dimension is one of the main determinants affecting employment growth for listed family firms (Amore et al 2017), family-owned small and medium-sized enterprises (Becchetti and Trovato 2002), and venture capital-backed family firms (Martí et al 2013) in the United States, Italy, and Spain, respectively. However, the aforementioned relationship is negative for the case of family entrepreneurial start-ups in the context of Denmark (Coad and Timmermans 2014).…”

Section: Context By Samplingmentioning

confidence: 99%

Contextualizing employment outcomes in family business research: current findings and future research avenues

2021

View full text Add to dashboard Cite

The empirical evidence of family business phenomenon in terms of employment outcomes is contradictory highlighting the micro–macro gap in the existing research. To address this contradiction, our study disentangles the role of context in family firms’ employment outcomes. To do so, we conduct a systematic literature review of 67 articles focusing on three employment-related outcomes—namely, growth, downsizing, and quality of labour—published in peer-reviewed journals from 1980 to 2020. Based on a two-by-two framework to classify this extant research, we unpack what we know about family firms and employment outcomes and where we can go from here. We highlight three main findings. First, current research is context-less since has mainly focused on the firm level in one context (i.e., region or country) and there is a lack of studies comparing family firms’ employment outcomes in different contexts and explicitly measuring the effects of contextual dimensions on family firms’ employment outcomes. This context-less approach could explain the conflicting results and lack of theoretical predictability about the family effect on employment across contexts. Second, the lack of understanding of the context in which family firms dwell highlights the need for future research to focus on context by theorizing about employment outcomes—that is, measuring context and its interactions with family- and job-related variables. Third, there is a need to further explore, analyse, and theorize on the aggregate effect of family firms on employment outcomes at different level of analysis (e.g., local, regional, and national).

show abstract

The impact of venture capital on family businesses: Evidence from Spain

Cited by 42 publications

References 61 publications

Capital structure in family firms: the role of innovation activity and institutional investors

Capital structure in family firms: the role of innovation activity and institutional investors

Are family firms really reluctant to innovate? Evidence from IPOs

Contextualizing employment outcomes in family business research: current findings and future research avenues

Contact Info

Product

Resources

About