Jeroen Verbouw

Working papers

• Divide and Conquer: Equity Investor Type Diversity as a Defense Mechanism in Technology Ventures - with Tom Vanacker and Sophie Manigart
  Latest version available upon request

Abstract: Past studies show that dependence on partners for resources also exposes firms to possible problematic partner behavior, against which firms try to defend themselves. We extend our understanding of resource dependence in entrepreneurial ventures by developing and testing a novel framework on how and which ventures can defend themselves in their first interaction with equity investors when established defenses are usually unavailable. We theorize and show that ventures with greater resource stocks (i.e., higher ex-ante cash holdings and prior experience with multiple investor types) defend themselves by pursuing a "divide and conquer"-strategy in which they attract first-round investments from different types of equity investors. This strategy also facilitates follow-on fundraising. Overall, we extend resource dependence theory by focusing on a novel "divide and conquer"-defense strategy, which limits the power of any individual investor type, and by presenting a dynamic view on resource dependence in which entrepreneurs employ this defense at a stage where they are more powerful because they still hold greater resource stocks.

• Institutions and the Real Effects of Private Equity Buyouts: A Meta-analysis - with Miguel Meuleman and Sophie Manigart
  Revise and Resubmit at Strategic Entrepreneurship Journal - Latest version available upon request

Abstract: This study reviews four decades of fragmented and contradictory empirical literature on the real effects of private equity (PE) buyouts on portfolio companies, differentiating between efficiency and growth outcomes. We hypothesize how institutional forces, including regulatory, cognitive, and normative institutions explain heterogeneity in post-buyout efficiency and growth across time and countries. We argue that competition and population-level learning have shifted the cognitive frame underlying value creation in buyouts from financial engineering toward operational engineering and strategic entrepreneurship. Using meta-analysis, we find support for several of our hypotheses using samples from 66 empirical studies across the finance, management, economics, and entrepreneurship disciplines.

• Socioemotional Wealth and the Social Behavior of Family Firms - with Luc Renneboog - Latest version available upon request

Abstract:  This study explores how socioemotional wealth (SEW) heterogeneity guides family firms’ social behavior. Drawing from behavioral agency and social capital theories, we argue that family firms invest in social capital according to the SEW dimensions they value most. Survey evidence from over 900 private family firms reveals that internal SEW considerations drive longer employee tenures but lower governance, while external SEW considerations drive higher community contributions and product introductions. Resource availability and risk-taking do not moderate these patterns. Embracing a multidimensional SEW perspective, our research contributes to unraveling the intricate and heterogeneous role of SEW in shaping family firm strategy.

• A Survey of the Decision-making and Investment Practices of European Venture Capitalists - with Benjamin Le Pendeven, Anna Söderblom, Massimo Colombo, Massimiliano Guerini, José Martí Pellón, Sophie Manigart, and Christian Fisch

Abstract: Venture capital (VC) markets, shaped by different institutional contexts, have experienced disparate growth globally. While existing literature predominantly associates institutions with VC activity, we have a limited understanding of their influence on VC practices. We provide valuable new insights by comprehensively surveying 611 Continental European VC managers. Comparing their practices with US counterparts, we unveil significant heterogeneity, particularly in investment selection, valuation methods, and perceived drivers of investment performance. These findings underscore the pivotal role of institutions in shaping VC practices, offering crucial insights into this less-explored dimension of the global VC landscape. Implications further extend to investors, entrepreneurs, and policymakers.

Industry report - Method paper - Belgian press article (De Tijd)

• The Family Firm: A Synthesis, Stylized Facts, and Future Research Directions - with Daniel Kárpáti and Luc Renneboog
  Forthcoming in Annals of Corporate Governance

Abstract: In acknowledging and exploiting the substantial heterogeneity between family firms, scholars are increasingly stepping away from the dichotomization of family influence to better understand critical nuances that explain how, why, and when family firms differ from their nonfamily counterparts. This study pushes the literature further and argues that various sources of heterogeneity might be correlated and that not taking this into account sustains empirical indeterminacies and limits theoretical advancements. We, therefore, take on a family-level perspective and show how heterogeneous family values interact with more traditional factors that received ample scholarly attention such as succession, firm strategies, ownership and governance, and financial policies. Specifically, we present an extensive synthesis of the recent and topical literature on each topic and then provide stylized facts on how diversity in family values correlates with other sources of family firm heterogeneity based on survey data on over 900 family firms. Lastly, we delineate a research agenda to push the field forward.

Oxford Business Law Blog

Work in progress

• Working for the Family: Blessing or Curse? - with Luc Renneboog

Abstract: The ubiquity of family firms and the many people they employ have instigated growing scholarly inquiry into the employment consequences of family ownership. This paper advances this literature by exploring health and well-being as crucial yet overlooked employment outcomes and by contextualizing the analysis through disruptive employee life events and the moderating role of family values. Based on the population of Dutch employees, we find no overall difference in employee health or well-being between family and nonfamily firms. However, family firm employees earn less after severe health shocks and childbirth but benefit from greater job security. Detailed survey data uncover higher salaries and lower antidepressant use in family firms valuing social ties and family character. These findings highlight the nuanced effects of family ownership on stakeholder outcomes and offer important scholarly and practical insights.

• Unpacking Ownership Competence in Private Equity: Insights from Family Office Investments - with Cristina Cruz and Juan Santalo

Abstract: In parallel with the growing prominence of private equity (PE), scholarly interest in the strategic contributions of PE investors has surged. However, the literature often treats PE investors as a homogeneous group, overlooking the inherent ownership diversity among them. This paper addresses this gap by examining the distinct ownership competences of family offices (FOs), entities managing business family wealth, as PE investors. We conduct a comparative analysis of target choices and post-investment outcomes of FO and PE investors, utilizing a sample of 4,254 investments. Our findings reveal that FOs invest in less innovative, more geographically distant companies with higher asset durability and lower past growth rates than PE investors. Furthermore, FO-backed companies exhibit higher profitability and lower failure rates post-investment. This study contributes to the strategic ownership literature by highlighting the unique competences of FO owners and their impact on firm performance, providing the first quantitative evidence of FO investment outcomes.

• Navigating the Aftermath: Equity Investors and the Trajectory of Failed Ventures

Objective: Most ventures that receive equity funding eventually fail. Despite substantial scholarly focus on the impact of equity investors during the investment period and their role in influencing failure probabilities, we have a limited understanding of how, to what extent, and under what circumstances investors shape the post-failure path of funded entrepreneurs. Leveraging data from 70,000 funded European ventures meticulously paired with non-funded counterparts based on pre-failure characteristics over time, this study offers a timely and more holistic perspective on the role of equity investors. It seeks to illuminate their influence beyond the investment period, shedding light on the comprehensive dynamics of funded ventures post-failure.

• Health Shocks and the Survival of the Entrepreneurial Firm - with Daniel Kárpáti and Luc Renneboog

Objective: We investigate the impact of entrepreneurial health shocks on firm performance and entrepreneur outcomes. This is important as it addresses the significant yet underexplored effects of health crises on entrepreneurial venture survival and growth. Using population-level data and a matched sample of entrepreneurial ventures, comparing those whose entrepreneurs experience health shocks with similar firms whose entrepreneurs remain healthy, we analyze key outcomes such as revenue growth, asset growth, employee numbers, and survival rates. This research offers valuable insights into the resilience of entrepreneurial ventures and the broader economic implications of health shocks on entrepreneurs.

Practice-based projects

• Financing Intangibles: Is There a Market Failure? - with Sophie Manigart, Tom Vanacker, and Mirjam Knockaert

Abstract: Intangible assets improve firms’ performance because of increasing absorptive capacity as well as the ability to innovate, use of new technologies, more flexible market adaptation, and higher productivity. While intangible assets are important for most growth companies, it is argued that intangible asset-based funding is not readily available due to the low perceived market value and tradability of these assets. Hence, the financing of intangibles might pose significant difficulties for growth companies. In this article, we present a method to assess whether European growth companies suffer from a debt-financing gap for their investments in intangible assets.