Ownership Structure, Horizontal Agency Costs and the Performance of High-Tech Entrepreneurial Firms
Massimo G. Colombo
Politecnico di Milano
Polytechnic University of Milan - Dipartimento di Economia e Produzione
Politecnico di Milano - School of Management; Polytechnic University of Milan - Dipartimento di Ingegneria Gestionale
March 18, 2013
Small Business Economics 42(2), 265-282
We use the lens of the resource-based view and horizontal agency cost theory to analyse the effect of the presence of different types of individual owners, i.e. owner-managers and non-manager individual shareholders, on the performance of high-tech entrepreneurial firms. Ownership enlargement may contribute to fill the resource gap faced by entrepreneurial firms and improve firm performance. However, whereas owner-managers engender low horizontal agency costs, non-manager individual shareholders generate high horizontal agency problems due to their limited managerial involvement. Our results on a sample of Italian high-tech entrepreneurial firms show that the number of owner-managers has a positive effect on firm performance, whereas the effect of the number of non-manager individual shareholders is negligible. This latter effect becomes more positive, even though still not statistically significant, when firms are highly leveraged, confirming the disciplining role of bank debt.
Number of Pages in PDF File: 34
Keywords: horizontal agency costs, high-tech entrepreneurial firms, productivity, ownership structure, bank debt
JEL Classification: G32, L26, M13
Date posted: October 22, 2010 ; Last revised: February 2, 2014
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