Dynamic Capabilities and Venture Performance: The Effects of Venture Capitalists

Posted: 9 Nov 2009

See all articles by Jonathan D. Arthurs

Jonathan D. Arthurs

Washington State University

Lowell W Busenitz

affiliation not provided to SSRN

Date Written: 2006

Abstract

Explores the value that is added by venturecapitalists to a venture after the initial public offering (IPO).Theresource-based model is used to differentiate between dynamic capabilities andentrepreneurial capabilities.Data used in the analysis consisted of 268firms (134 matched pairs) that had completed their public offerings between1990 and 1994. The results indicate that ventures with venture capitalist backingdemonstrate greater dynamic capabilities with respect to product risk andmanagement-related risk than those ventures without backing.Conversely,the results demonstrate that such backing does not lead to greater dynamiccapabilities in the areas of legal liability-related risk and governmentregulation-related risk. Further analysis of those firms with venture capital backing and either aproduct-related risk factor or a management-related risk factor (62 firms) wascompleted to determine the impact of a venture capitalist's impact on aventure's one-year performance. The venture capitalist's experience and reputation are both shown to besignificantly and positively associated with this performance though the effectvaries based on the venture capitalist that is involved.The results ofthe study indicate that venture capitalists provide value beyond the capitalfunds that they contribute. (SRD)

Keywords: Resource model, Dynamic capabilities, Venture capitalists, Initial public offerings (IPO), Risk management, Firm performance

Suggested Citation

Arthurs, Jonathan D. and Busenitz, Lowell W, Dynamic Capabilities and Venture Performance: The Effects of Venture Capitalists (2006). Journal of Business Venturing, Vol. 21, Issue 2, p. 195-215 2006. Available at SSRN: https://ssrn.com/abstract=1501587

Jonathan D. Arthurs (Contact Author)

Washington State University ( email )

Wilson Rd.
College of Business
Pullman, WA 99164
United States

Lowell W Busenitz

affiliation not provided to SSRN

No Address Available

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