This is the accepted version of the paper.This version of the publication may differ from the final published version. Permanent repository link AbstractThis paper provides a comprehensive theoretical and empirical literature review of venture capital contracts. The paper outlines differences between theoretical and practical uses of contract designs, that is, (1) how does the choice of securities give rise to different adverse selection problems in terms of attracting different types of entrepreneurial companies; How does the choice of securities in conjunction with cash flow and control rights provisions affect (2) the effort levels by the entrepreneur and the investor; and (3) ultimately affect entrepreneurial outcomes. The paper highlights the major discrepancies between theory and practice and points out potential avenues for further research.3

This paper proposes a new theoretical framework for assessing the influence of risk in\ud shaping the governance form in biopharmaceutical inter-firm relationships. In particular,\ud we propose a multidimensional operationalization of relational and performance risk and,\ud by following Transaction Cost Economics (TCE) and Real Options (RO) theory constructs,\ud we hypothesize a relation between the aforementioned risk components and the choice of\ud governance form. Specifically, following TCE reasoning, we hypothesize that a high level of\ud relational risk leads towards more hierarchical governance forms, while, following RO\ud theory, we hypothesize that a high level of performance risk leads toward market-oriented\ud governance forms; finally, we hypothesize a moderating effect of each risk component on\ud the other. We empirically test our framework through the analysis of 353 inter-firm\ud relationships signed worldwide between pharmaceutical and biotech companies from\ud 2007 to 2010. The results show substantive support for our theoretical framework.\ud Furthermore, we find a significant moderating effect of the performance risk on the TCE\ud relation between relational risk and governance forms

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