Research

Divide and Conquer: Investor-Type Diversity and Power Dependence in Technology Ventures - with Tom Vanacker and Sophie Manigart

Abstract: Equity investors provide essential resources for technology ventures, but the dependencies they create expose founders to potentially problematic investor behavior. Building on power-dependence theory, we argue that simultaneous investor-type diversity in a venture's initial financing round structurally limits investors’ collective capacity for influence. Divergent goals, time horizons, and exit strategies across investor types erode their ability to coordinate pressure on the founder. Using IV regressions and matched sample analyses on 2,388 early-stage UK technology ventures, we find that ventures with a diverse investor base, a “divide-and-conquer” configuration, are 52 percent less likely to experience founder-CEO replacement while more likely to raise follow-on equity funding. Ventures with greater pre-investment cash holdings and founders with prior diverse co-investment experience are more likely to attract a heterogeneous investor base. This provides a direct empirical test of Emerson's foundational propositions on the structural determinants of dependence. Our study extends power-dependence theory by introducing the internal heterogeneity of the power-holding coalition as a third dimension of dependence that dyadic frameworks cannot accommodate, and advances understanding of proactive dependence management.

The Family Office Effect: How Ownership Style Shapes Portfolio Firm Strategy - with Cristina Cruz and Juan Santalo

Abstract: We examine how ownership conditions shape investors' value-creation logics, and what that means for portfolio companies. Family offices' (FOs) ownership conditions in terms of investment horizons, capital structures, and external accountability distinctively channel the value-creation paths they promote. We introduce ownership style to capture this goal-aligned orientation and predict that FOs differ from private equity (PE) and venture capital (VC) investors in what, when, and how they own. In a double-matched sample of 1,482 FO and 2,772 PE/VC investments, FOs hold portfolios 18% more distinctive and investments 33% longer than traditional investors, while FO-backed firms exhibit 12% higher profitability and 21% lower growth. Our findings introduce ownership conditions as a driver of investor heterogeneity and connect ownership to the profitability–growth trade-off in strategic entrepreneurship.

Family Ownership and Worker-Level Productivity Shocks - with Luc Renneboog

Abstract: We examine how family ownership shapes labor outcomes following employee health shocks using Dutch matched employer–employee administrative data, capturing 1,462 distinct diagnoses. Following a health shock, employees at family firms experience 2.2 percentage points larger earnings losses per year than employees at nonfamily firms, driven by reductions in working hours and wage adjustments rather than job separation. These losses are concentrated among female, younger, geographically distant (from the firm), native, and low-earning workers. At the extensive margin, family firm employees are as likely to leave their employer as nonfamily firm employees, but those who do switch do so later, and disproportionately move to another family firm. A key question is whether family firms shift the risk of productivity loss onto the employee (coercive flexibility toward part-time employment) or absorb this risk by accommodating employee preferences (elective flexibility). Eight complementary tests find no support for employer exploitation. The evidence is instead consistent with family firms offering a richer implicit contract: beyond income smoothing, they extend a flexibility option that workers can exercise at the cost of reduced earnings, a pattern most pronounced among financially unconstrained employees. Results hold when exploiting within-firm ownership transitions and restricting to exogenous health conditions.

Socioemotional Wealth and the Social Behavior of Family Firms - with Luc Renneboog

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.

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.

Practices of European Venture Capitalists - with Anna Söderblom and Benjamin Le Pendeven. Article Link

Abstract: The European venture capital (VC) market picked up and proliferated after the 2008 economic breakdown, but faced a sharp slowdown in the second half of 2022 and 2023. Starting the recovery from the impact of the COVID-19 pandemic, Russia’s invasion of Ukraine elevated geopolitical tensions and caused a global economic slowdown. As for many other industries, the increasing macroeconomic volatility, with rising inflation and supply disruptions, has severely affected the venture capital market. At the same time, groundbreaking changes are taking place in society, not least the emergence of new technologies, which create opportunities for VC investors. Artificial intelligence, blockchain, and deep-tech are just a few. The investor landscape for startups is also changing rapidly, with new types of investors entering the scene, such as new forms of corporate VCs, special purpose acquisition companies (SPACs), and super business angels. To get a better understanding of the VC landscape, leading European business schools and universities have joined their efforts and conducted a broad study of VC practices in Europe. In this report, we present our findings on how European venture capitalists select, value, and structure investment deals, what type of value-added activities they provide, and how successful they are with their investments. We highlight similarities and differences among various types of VCs, of different sizes, investment focuses, and locations. For thorough statistical analysis as well as elaborate discussions and academic explanations behind the results, we refer to the research papers being developed based on the data from this study.

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

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.