Reward‐based crowdfunding platforms – in which campaigns exchange rewards for financial backing to develop a product or service – are one of the fastest‐growing segments of the crowdfunding industry. We use an extension of social exchange theory (SET) called the resource theory of social exchange (RTSE) to examine resource exchanges through rewards on Kickstarter. A resource exchange occurs when a project backer and project creator exchange money (ie, financial backing) for a reward (eg, a thank you or a t‐shirt). A project creator can develop a reward portfolio that contains various types of resources, which in the RTSE are categorised as love, status, information, money, goods and services. Our study provides a comprehensive examination of resource exchange on a major reward‐based crowd funding platform, answering the call to investigate the effects of a key element of such platforms – rewards. We find that the types of resources project creators include in the reward portfolios they offer should be carefully considered. Specifically, our results indicate it is more beneficial to offer rewards that contain universal and concrete resources (eg, goods, services) than resources that are particularistic and symbolic (eg, love, status). However, the positive effect of offering universal and concrete resources as rewards is diminished as the fundraising goal is increased, which suggests that the optimal design of the reward portfolio is contingent on other characteristics of the campaign. Moreover, our findings reveal that while it is advantageous to offer more rewards, it is disadvantageous to offer too many different types of resources across those rewards. Overall, our study adds depth to the understanding of resource exchange in reward‐based crowdfunding and provides practical insight into how to design reward portfolios.

This study examines factors that influence the likelihood that founders hold executive level positions in firms at the point of Initial Public Offering (IPO). Our model is conceptually more comprehensive than existing work, as we develop theory that examines founder involvement across executive positions beyond the often-studied chief executive officer (CEO). We examine our hypotheses using a database that contains virtually all IPOs spanning an 11-year period when the IPO market was active. Our empirical evidence indicates that a surprising number of founders hold leadership positions in firms at IPO. The research shows that factors that predict founder succession differ across executive positions.

This study examines how the interplay between home and host country regulatory institutions affects the investment strategy of private equity (PE) firms in an emerging market context. To answer this question, we consider three different mechanisms: (1) the institutional hazard avoidance effect, (2) the institutional escapism effect, and (3) the dysfunctional institutions effect. Contrary to conventional wisdom, we argue that regulatory institutional differences between home and host countries can sometimes have a positive rather than a negative effect on investment likelihood. Our findings show that when a host emerging market has a strong regulatory institutional system relative to other emerging markets, it is more likely that this country will attract PE investments from firms based in home countries with very strong and very weak institutional systems. The empirical analyses, based on a polynomial specification and a dataset covering more than 300 PE firms that made close to 1500 investment transactions in Latin America during 1996–2011, are consistent with our main theoretical arguments.

Manuscript Type Empirical Research Question/Issue While corporate governance research is the beneficiary of advances in research methodologies and statistical techniques, less attention has been placed on variable measurement. This paper draws into question the conceptualization and measurement of CEO duality by highlighting its largely unrecognized instability and the challenges instability imposes on measuring dichotomous variables. CEO duality is widely used in corporate governance research and frequently operationalized dichotomously as a dummy variable. We present examples of the frequent changes in duality within organizations which challenge our current view of CEO duality. We quantify the sensitivity of CEO duality to measurement error and find that statistical associations are highly sensitive to it. We find that an instability level of 12% reduces the variance explained on performance outcomes by more than one third at the r = .50 level. To assess the scope of the issue, we compare the longitudinal pattern of CEO duality within a sample of 407 firms from 14 countries across five continents over a decade to the measures used by governance researchers in these settings. This data set is available from the lead author and the CGIR website. Research Findings/Insights We find that the instability of CEO duality in practice varies considerably at both the national and within-firm levels. We find that a mismatch exists between the current conceptualization of CEO duality, actual patterns of data, and the measures used by governance researchers. The paper draws attention to the limits of conceptualizing and measuring what is seemingly dichotomous data, reviews these in research and in practice, and provides examples, recommendations and assessments of alternate ways existing data can be used. Theoretical/Academic Implications Our results draw into question the reliance on a simple dichotomous conceptualization and operationalization of CEO duality in governance research. Data limitations of corporate governance research may be alleviated by directly assessing stability of duality within firms and reimagining concepts in ways that can be measured using existing data. Practitioner/Policy Implications CEO duality, a legal but discouraged governance structure, may be changed intentionally or result from a variety of temporary firm-level factors. Assessing the longitudinal patterns in duality and underlying causes for temporary changes in duality should be incorporated into evaluations of firm governance structures.

The literature about the impact of formal institutions on cross-border investments has usually focused on either (a) institutional distance between countries or (b) institutional quality in the destination country. We introduce a new construct-- institutional saliency--to integrate both perspectives in the context of cross-border investments in emerging markets. An emerging market is institutionally salient when it has strong institutions relative to other emerging markets. We argue that institutionally-salient countries particularly capture the interest of investors located in institutionally distant countries: (1) investors located in countries with very strong institutional settings can take advantage of investment opportunities of an emerging-market nature while still enjoying a strong institutional setting for emerging market standards; and (2) investors located in countries with very weak institutions can

With emphasis on a venture's institutional environment and its stage of development, the authors develop theory to explain how the quality of a nation's legal system and the level of political hazards affect venture capital (VC) investment strategies in developing countries. The data set consists of 433 VC investment transaction rounds occurring in 13 Latin American countries over the period 1995 to 2003. Different from previous research on the likelihood of investment occurrence, the authors consider the size of an investment transaction as a dependent variable. The authors find a negative relationship between investment size and the political hazards risk and that larger investments are associated with ventures operating in lower quality legal systems. The authors also propose the moderating role of these institutional dimensions in the relationship between a venture's stage of development and investment size. Findings indicate that in lower quality legal systems, conventional VC-staging strategies are not apparent, where middle and later stage ventures receive the largest investments, but with improvements to the legal system, increasingly larger investments go to early stage ventures. Regarding the stage interaction with political hazards, the authors find that the positive relationship between the venture's stage of development and investment size weakens as the level of political hazards increases, and when political hazards are high, conventional VC-staging similarly does not occur. In uncovering the unique impact of these institutional dimensions with respect to developing country entrepreneurship, these findings shed light on the acute challenges faced by developing country ventures seeking VC funding at varying stages of development.

This paper focuses on how the change of ownership structure at the time of initial public offering (IPO) will raise governance problems and affect the firm’s long-term performance after IPO. More specifically, we argue that for high-tech firms, founders and venture capitalists (VCs) selling equity at IPO will reduce the firms’ performance after IPO due to weakened incentive mechanisms and information asymmetry. We further identified psychological ownership and technical specialized knowledge as two moderators of these relationships for founders and VCs selling. High psychological ownership of founders will mitigate the negative impact of founders selling, but as the firm depends more on technical specialized knowledge, the negative impact of VCs selling will be even worse. Our analysis of high-tech companies that went public from 1992 to 2002 provides support for most of our hypotheses. The results of this paper extend knowledge in the IPO, governance and entrepreneurship literatures. This paper also has implications for entrepreneurs and shareholders in managing their ownership structure and public investors in making their investment decisions.

CEO duality describes the governance structure when a firm’s chief executive officer also holds the position of chairman of the board. Duality is central to theoretical perspectives on corporate governance and top management, yet duality’s relationship with numerous outcomes is characterized by nonsignificant coefficients and bivariate correlations hovering near zero. We argue and present evidence that CEO duality represents a “dummy construct”—an intentionally pejorative assessment on the widespread use of binomial categorical “dummy” variables to represent complex constructs. While we highlight CEO duality, the use of dummy variables as constructs is common in research. We review CEO duality as a construct and assess typical approaches to its measurement. When compared to actual patterns of duality within organizations, we find that current operationalizations are lacking due to a lack of attention to temporal considerations. This raises questions about the construct validity of current conceptualizations of CEO duality. Actual patterns suggest constructs and theoretical perspectives not previously considered. We present a taxonomy of CEO duality archetypes and offer suggestions on the incorporation of time for studies using dummy variables.

Emerging markets are becoming a popular destination for private equity (PE) investments from around the world, including investments originated in both advanced economies and other emerging markets. In this context, how are PE investments affected by the institutional distance and geographic distance between the country where the PE firm is located and the emerging market where the company receiving a potential investment is located? Using a novel dataset covering investments by more than 300 PE firms in nine Latin American countries during the period 1996-2011, we find that (i) a PE firm is less likely to invest in a company located in a Latin American nation with a weak institutional system; (ii) if a company is located in a Latin American nation with a strong institutional system, a PE firm is more likely to invest when the institutional distance between the PE firm’s country and the company’s country is high; and (iii) if a company is located in a Latin American nation with a strong institutional system, a PE firm is more likely to invest when the geographic distance between the PE firm’s country and the company’s country is low. These results show that institutional distance and geographic distance have a higher impact on PE investment decisions when the target company is located in an emerging market that has a strong institutional system relative to other emerging markets.

Focusing on a firm's signaling of social capital through their alliances, we explore how socially constructed signals convey legitimacy and enable greater initial public offering (IPO) proceeds. We examine the concepts of absolute and relative social capital signals with a sample of 266 biotechnology IPOs from 1980 through 2006. Leveraging a dynamic framework, we uncover that the interpretations of quality signals vary over time and are nonadditive; rather, affiliating with prestigious underwriters limits the positive reward of signaling alliance–based social capital. These relationships vary according to whether social capital is evaluated relative to the industry norms and according to the alliance's vertical position.

CEO duality describes the governance condition when a firm’s chief executive officer also holds the position of chairman of the board. Volumes of research have examined duality, yet definitive conclusions as to its effect remain elusive. The relationship of duality with numerous outcomes is characterized by empirical models with non-significant coefficients and bivariate correlations hovering near zero. Still, research attention remains focused on CEO duality. We argue and present evidence that CEO duality represents a “dummy construct” – an intentionally pejorative assessment on the widespread use of binomial categorical “dummy variables” to represent complex constructs. While we highlight CEO duality, the use of dummy variables is common in the strategic management literature. In this paper we review CEO duality as a construct and assess typical approaches to its measurement. When compared to actual patterns of duality within organizations, we find that current operationalizations result in substantial measurement error. Actual patterns suggest theoretical perspectives not previously considered and the need for alternative measures. We conclude with a call for reassessing dummy variables in the literature and provide suggestions for improving their measurement.

Drawing on the theories of entrepreneurial opportunity and information asymmetry, we hypothesized that industrial factor (what entrepreneurs are doing) matters for the outcomes of entrepreneurship. Building on the theory of economic geography, we argued that regional factor (where entrepreneurs are doing) helped young firms to achieve a millstone such as initial public offering (IPO). We also theorized that the regional factor plays moderating role on the relation between industrial factor and entrepreneurial outcomes. We used SDC Platinum VentureXpert database that included all VC transactions from 1980 to 2002 to test our theory. Our empirical results provide some support for our theory. Specifically, we found strong evidence that the industry factor is an important determinant for emerging firms to achieve IPO. Key words: regional technical intensity, geographic economic, venture capital, entrepreneurial performance

This study examines factors that influence the likelihood that founders hold executive level positions in firms at the point of Initial Public Offering (IPO). Our model is conceptually more comprehensive than existing work, as we develop theory that examines founder involvement across executive positions in addition to the often studied Chief Executive Officer (CEO). We examine our hypotheses using a database that contains virtually all IPOs spanning an 11 year period. Our empirical evidence indicates that a surprising number of founders hold leadership positions in firms at IPO. Further, the research shows that some factors that predicting founder succession differ across executive positions.

I show that entrepreneur and early private investor liquidity in initial public offerings is limited commensurate with the importance of underlying specialized knowledge. I employ dependent variables (secondary shares in IPOs) previously not used in the literature, and utilize data from all industrial IPOs from 1988-2002. Evidence is stark that the greater the importance of specialized knowledge the fewer secondary shares are allowed, and the less likely that any are allowed at all, as seen in tobit and logit/probit regressions, respectively. The results contribute to a greater under-standing of monitoring, particularly in an entrepreneurial or high technology setting.

This paper utilizes an understudied but often utilized aspect of initial public offerings (IPOs), secondary shares, to examine whether the knowledge conditions of firms give rise to agency problems that limit the ability of founders and venture capitalists to sell equity at IPO. In an analysis of 2,190 IPOs spanning from 1992 through 2002, we find that private owners are less likely to be observed selling their equity at IPO in ventures that are highly dependent on technical specialized knowledge as measured by the count of individuals with Ph.D.s in the top management team and board of directors. However, we find that this limit on the financial liquidity of founders and venture capitalists is alleviated when the venture's output has received greater market acceptance. Hence, the findings suggest that the financial liquidity of individuals involved in entrepreneurship is likely to be influenced by the knowledge conditions of their venture.

This study examines how private enterprises in emerging economies politically respond to government bureaucracy they face. With an emphasis on two political responses, engagement and influence, we propose that private enterprises react to bureaucracy differently, depending on their entrepreneurial traits, and this leads to different susceptibilities to bureaucracy. Our analysis of 9,123 private enterprises in 72 emerging economies suggests that political engagement and influence are positively associated with bureaucracy for all firms, but the levels of political engagement and influence vary according to a firm's entrepreneurial type (new vs. established venture; venture of entrepreneurial origin vs. other private) and governance (family vs. nonfamily; with vs. without government or foreign ownership). Firms in different groups of emerging economies also display some different propensities to political engagement and influence. Copyright © 2008 Strategic Management Society.

Venture capitalists that specialize in providing funds to privately held firms generate their greatest returns from firms that go public. However, we argue that the technology regime of an industry affects the extent of knowledge asymmetries between different types of owners and subsequently the mode of exit for venture capitalists. More specifically, we suggest that the degree of technological diversification and technological cumulativeness of an industry will have a positive effect on the likelihood that a venture capital firm will exit its investment in a technology firm via a merger or an acquisition as opposed to taking it public.

This work has implications for managers, investors and entrepreneurs in times of breakthrough innovation at the firm or industry level. The work shows that the marketplace understands the importance of retaining and motivating critical specialized knowledge. By analyzing initial public offerings during the biotechnology discovery wave I find evidence that a dramatic decrease in the ability to include secondary shares (liquidity for early investors and entrepreneurs) in biotechnology IPOs corresponds with the radical increase in the importance of specialized knowledge in that industry, at the time of the rDNA breakthrough discovery and development.