Organizational Endowments and the Performance of University Start-ups

Abstract

The question of how initial resource endowments-the stocks of resources that entrepreneurs contribute to their new ventures at the time of founding-affect organizational life chances is one of significant interest in organizational ecology, evolutionary theory, and entrepreneurship research. Using data on the life histories of all 134 firms founded to exploit MIT-assigned inventions during the 1980-1996 period, the study analyzes how resource endowments affect the likelihood of three critical outcomes: that new ventures attract venture capital financing, experience initial public offerings, and fail. Our analysis focuses on the role of founders' social capital as a determinant of these outcomes. Event history analyses show that new ventures with founders having direct and indirect relationships with venture investors are most likely to receive venture funding and are less likely to fail. In turn, receiving venture funding is the single most important determinant of the likelihood of IPO. We conclude that the social capital of company founders represents an important endowment for early-stage organizations.Entrepreneurship, Social Capital, Financing

Vertical alliance networks: The case of university–biotechnology–pharmaceutical alliance chains

“…Some universities have also spawned startups to commercialize scientific discoveries. Shane and Stuart (2002), for example, analyzed a dataset with more than 130 startup companies founded in full or in part to exploit MIT-owned inventions. While MIT is admittedly an outlier, there has been an acrossthe-board increase in universities' commercialization efforts.…”

“…Here, our arguments lie at the intersection of an emerging literature on the social networks of entrepreneurs as important determinants of resource mobilization (e.g., Brittain and Freeman, 1986;Shane and Stuart, 2002;Maurer and Ebers, 2006), and the more general literature describing how social networks facilitate access to resources (Granovetter, 1973;Burt, 1992). We assert that the depth and the breadth of the networks of academic scientists affiliated with young technology firms influence companies' ability to identify and negotiate access to promising university science.…”

Management Characteristics and Corporate Risk-taking: An Overall Review

“…These could potentially include any psychological: overconfidence [49], optimism [50], hubris [28], narcissism [51], herd behavior [52], and culture heritage [53]. The literature on psychological characteristics and corporate risk-taking are shown in Table III. Behavioral decision theory suggests that hubris or overconfidence, as one type of cognitive bias, encourages decision makers to overestimate their own problem-solving capabilities [54], underestimate the resource requirements of risky initiatives [55], and underestimate the uncertainties facing their firms [56]. More importantly, people's psychological bias may generate the mode of thinking, the outlook on world, life and values which further influence one's decision-making and other behaviors.…”

Entrepreneurs as intermediaries

“…If smaller, entrepreneurial firms do not have a strong reputation, it is possible for them to team up with large firms as strategic alliances in order to enhance the legitimacy of the smaller firms (Zimmerman & Zeitz, 2002). 2 Another behavioral signal related to reputation is entrepreneurs' social ties (Ellis, 2003;Hsu, 2006;Shane & Stuart, 2002). Social ties would enable "the flow of information from entrepreneurs to stakeholders" including potential buyers and sellers (Wood & McKinley, 2010: 73).…”