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Ownership Structure, Horizontal Agency Costs and the Performance of High-Tech Entrepreneurial Firms


Massimo G. Colombo


Politecnico di Milano

Annalisa Croce


Polytechnic University of Milan - Dipartimento di Economia e Produzione

Samuele Murtinu


Politecnico di Milano - School of Management; Polytechnic University of Milan - Dipartimento di Ingegneria Gestionale

March 18, 2013

Small Business Economics 42(2), 265-282

Abstract:     
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

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Date posted: October 22, 2010 ; Last revised: February 2, 2014

Suggested Citation

Colombo, Massimo G. and Croce, Annalisa and Murtinu, Samuele, Ownership Structure, Horizontal Agency Costs and the Performance of High-Tech Entrepreneurial Firms (March 18, 2013). Small Business Economics 42(2), 265-282. Available at SSRN: http://ssrn.com/abstract=1695125 or http://dx.doi.org/10.2139/ssrn.1695125

Contact Information

Massimo G. Colombo
Politecnico di Milano ( email )
Piazza Leonardo da Vinci, 32
20113 Milan
Italy
Annalisa Croce
Politecnico di Milano - Dipartimento di Economia e Produzione ( email )
Piazza Leonardo da Vinci, 32
Milan, 20133
Italy
Samuele Murtinu (Contact Author)
Politecnico di Milano - School of Management ( email )
Piazza L. Da Vinci 32
Milan, 20133
Italy
+390223992807 (Phone)
+390223992710 (Fax)
Politecnico di Milano - Dipartimento di Ingegneria Gestionale ( email )
Italy
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