Venture capital, control rights, and family enterprise growth

Xianjun, Pang; Liu, Liping

doi:10.1371/journal.pone.0256318

Cited by 2 publications

(1 citation statement)

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“…For example, a BA EFM might face a moral hazard risk, where the business owners/management team of the investee business redirects funds provided for the business for personal gains (Hoyos et al, 2017). On the other hand, and from the perspective of the funded firms there is the fear that using certain EFMs to finance their business could lead to the managers and business owners losing control over their investments (Pang, et al, 2021;.…”

Section: Agency Theory and Entrepreneurial Finance Modelsmentioning

confidence: 99%

Entrepreneurial finance models for born-global SMEs in Nigeria

Nwankwo

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The main aim of this research is to critically analyse the impact of entrepreneurial finance models (EFM) on the outcome and performance of Born-global Small and Medium Enterprises (BG SMEs). The study questions the impact of EFMs obtained on the profitability, social return on investment, and firm structure of BG SMEs in Nigeria. This research focuses on a unique type of SMEs described as BG SMEs. Using a positivist philosophical approach that is centred on objectivity and a quantitative methodology, the research collected data using questionnaires. A total of 1100 SMEs were contacted, and 237 BG SMEs were identified from that list which has been used as the representative sample size of this research. The data collected through the survey was analysed using Ordinal Logistic Regression (OLR) and Confirmatory Factor Analysis (CFA). The research presents five (5) key findings: 1. Independent venture capital (IVC), Philanthropic Venture Capital (PhVC), Corporate Venture Capital (CVC), Government Grant (GG), Bank, Business Angels (BA), Crowdfunding and Accelerators have a positive impact on one or more metrics of BG SMEs’ profitability; 2. Crowdfunding, Banks, Government Venture Capital (GVC), GG, Accelerators, PhVC, CVC, and BA have a statistically significant impact on the firm structure of BG SMEs leading to a change in their management and board compositions; 3. Management experience has a moderating positive influence on the relationship of IVC, PhVC, CVC, Banks, GG, and Accelerators and one or more metrics of BG SMEs’ profitability, whilst also having a moderating influence on Crowdfunding, Accelerators, GVC, CVC, and GG interactions with BG SMEs’ firm structure leading to their change in management and board compositions; 4. Firm Size has a moderating positive effect on EFMs (Crowdfunding, IVC, PhVC, CVC, Bank, GG, and Accelerators) relationship with BG SMEs' profitability whilst also influencing the relationship between EFMs (Crowdfunding, GVC, CVC, Accelerators, and IVC) and the firm structure of BG SMEs; and 5. The findings support the research hypotheses, and it was seen that different EFMs had different levels of impact on BG SMEs which was consistent with the research expectations. All BG SMEs analysed in this research do not measure their SROI despite 46% of the sample size creating some form of social value. The study contributes to knowledge by combining the agency theory with the human capital theory to identify the elements, value additions, impact, and influence of the different EFMs on BG SMEs. The results show the important interrelations between both theories and how BG firm performance could be improved by addressing the underlying ideas of the theories. The outcome of this research thesis has implications for policy and practice. The findings in this research indicate that the type of EFM obtained can impact the profitability and firm structure of BG SMEs in Nigeria. Business owners can address their external funding requirements by utilizing the right finance. Accessing the right EFM can help BG SMEs be more sustainable, thus, reducing the failure rate of these firms. The application of the findings in this study can directly and indirectly lead to the success of the BG SMEs which could invariably lead to economic growth in the region. The more businesses that are successful the more sustainable jobs are created, tax remittance to the government is maintained/improved, and the innovations as outputs of these BG SMEs will support their local communities and other businesses.

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Section: Agency Theory and Entrepreneurial Finance Modelsmentioning

confidence: 99%