Risk management in Indian venture capital and private equity firms: A comparative study

Smolarski, Jan; Verick, Hira; Foxen, Sarah; Kut, Can

doi:10.1002/tie.20063

Cited by 12 publications

(9 citation statements)

References 22 publications

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“…The global business environment involves high levels of risk and complexity, which is a necessary condition for future growth and development. In particular, managers have to cope with several types of risk, including technological, ( 1,2 ) financial, ( 3‐5 ) insurance‐related, ( 6 ) environmental safety, ( 7 ) and regulatory. ( 8 ) As a result, risk management is a critical consideration in many business areas, which impacts profitability, efficiency, and sustainability.…”

Section: Introductionmentioning

confidence: 99%

The Effectiveness of Risk Management: An Analysis of Project Risk Planning Across Industries and Countries

2010

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This article examines the effectiveness of current risk management practices to reduce project risk using a multinational, multi-industry study across different scenarios and cultures. A survey was administered to 701 project managers, and their supervisors, in seven industries and three diverse countries (New Zealand, Israel, and Japan), in multiple languages during the 2002-2007 period. Results of this study show that project context--industry and country where a project is executed--significantly impacts perceived levels of project risk, and the intensity of risk management processes. Our findings also suggest that risk management moderates the relationship between risk level and project success. Specifically, we found that even moderate levels of risk management planning are sufficient to reduce the negative effect risk levels have on project success.

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Section: Introductionmentioning

confidence: 99%

The Effectiveness of Risk Management: An Analysis of Project Risk Planning Across Industries and Countries

2010

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“…In short, actors’ tendency to sign formal contracts would be higher (a) the older they are; (b) the lower their hierarchical rank is; (c) the more horizontally individualist and horizontally collectivist they are; (d) the more ethically idealist they are; and (e) the lower their trust propensity is. These results can be understood under the overarching risk mitigation perspective (Das & Teng, ; Smolarski et al, ), which we adopt for the examination of negotiators’ attitudes toward formal contractual relationships. Specifically, older, low‐rank, horizontally individualistic‐collectivistic, and ethically idealistic employees as well as those prone not to trust others would tend more to sign formal contracts, in an effort to deter opportunism and mitigate risks deriving from the negotiated agreement, and as a safeguard for the implementation of the agreement.…”

Section: Discussionmentioning

confidence: 99%

“…Contracts detail terms and function as safeguards for the implementation of the terms of agreements (Gammelgaard et al, ; Lui & Ngo, ). Negotiators utilize contracts in order to minimize costs, curb opportunism, and mitigate risks or uncertainties associated with their business transactions (Das & Teng, ; Smolarski, Verick, Foxen, & Kut, ). The review of the literature provides theoretical indications that, at the individual level of analysis , negotiators’ cultural predisposition (Tiessen, ; Triandis et al, ), their ethical tendencies (Koehn, ), and their interpersonal trust propensity (Klein Woolthuis, Hillebrand, & Nooteboom, ; Mellewigt, Madhok, & Weibel, ) may influence their decision making regarding negotiation and, hence, business contracts.…”

Section: Introductionmentioning

confidence: 99%

Negotiators’ Attitudes toward Signing Business Contracts: Evidence from Greece and Israel

Stefanidis

Banai

Shetach

2015

Thunderbird Intl Bus Rev

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This study extends beyond negotiation process and styles, and focuses on negotiators' tendency to sign formal contracts. Drawing on a risk mitigation perspective, it examines the infl uence of businesspeople's levels of horizontal and vertical individualism-collectivism, ethical idealism, and trust propensity on their attitudes toward signing formal negotiated business contracts in Greece and in Israel. A survey questionnaire was translated from English to Greek and to Hebrew, and 649 responses were collected from employees who worked in industries such as banking, insurance, construction, manufacturing, retailing, and tourism in the Greek and Israeli private and public sectors. Our fi ndings suggest that higher levels of horizontal individualism, horizontal collectivism, and ethical idealism increase employees' tendency to sign formal contracts, whereas lower levels of general trust are associated with a higher propensity to sign formal contracts. Interestingly, employees' propensity to sign formal contracts was signifi cantly lower in Israel than in Greece. We argue that the propensity to sign formal contracts, and thus to mitigate potential agreement risks, is dependent on the individuals' cultural and personal attributes. The study provides practitioners with a set of cultural and individual attributes that can serve as predictors of negotiators' predisposition toward signing business contracts.

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“…; Smolarski et al . ; Suchard ; Tian ) . Among the various risk‐mitigation mechanisms highlighted above, the contract structure plays a crucial role in VC deals.…”

Section: Vc Contract and Security Designmentioning

confidence: 99%

“…Venture capitalists have developed a wide set of risk mitigation mechanisms to minimize investment risks and agency costs, such as: screening, monitoring, syndication, stage financing, control rights and specific financing mechanisms capable of affecting and properly incentivizing entrepreneurs and VCs (e.g. Campbell and Frye 2009;Chemmanur et al 2010;Cornelli and Yosha 2003;Cumming 2005aCumming ,b, 2006Cumming , 2007Gompers 1995;Gompers et al 2009;Hirsch and Walz 2013;Jääskeläinen 2012;Jääskeläinen et al 2008;Kaplan and Strömberg 2004;Krohmer et al 2009;Kut and Smolarski 2006;Lerner 1994Lerner , 1995Manigart et al 2006;Millson and Ward 2005;Sahlman 1990;Sapienza et al 1996;Smolarski et al 2005;Suchard 2009;Tian 2011). 4 Among the various risk-mitigation mechanisms highlighted above, the contract structure plays a crucial role in VC deals.…”

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confidence: 99%

‘If the Facts Don't Fit the Theory … ’: The Security Design Puzzle in Venture Finance

Zambelli¹

2014

Int J Management Reviews

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When confronting theory with evidence, divergent results surface with reference to the optimal securities that should be adopted in venture capital (VC) finance. The vast majority of the theoretical models on VC consistently predict that convertible securities, especially in the form of convertible preferred stocks, represent the optimal form of finance. While the theoretical literature seems to be supported by empirical studies in the US, the evidence outside the US shows the opposite results. Puzzling patterns emerge, especially when comparing the evidence from the US, Canada and Europe, and an intensive academic debate is under way. The evidence becomes even more challenging when considering the contrasting financing behaviour of US venture capitalists (VCs) investing in Canada. It has been documented that US VCs investing in Canada adopt a wide range of securities other than convertible stocks. If convertible securities truly represent the optimal form of VC finance, why would US VCs use different types of securities when investing in Canada? At present, researchers are still arguing about which factors would have the most significant impact on explaining the different financing behaviour of VCs around the world. The purpose of this paper is to shed some light on the ongoing international debate on the optimal security design and contracting behaviour in venture finance. With this review, the authors intend to contribute to the VC literature by identifying current trends, explanations and determinants underlying the puzzling empirical evidence on the financing structure adopted by VCs around the world.

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Risk management in Indian venture capital and private equity firms: A comparative study

Cited by 12 publications

References 22 publications

The Effectiveness of Risk Management: An Analysis of Project Risk Planning Across Industries and Countries

The Effectiveness of Risk Management: An Analysis of Project Risk Planning Across Industries and Countries

Negotiators’ Attitudes toward Signing Business Contracts: Evidence from Greece and Israel

‘If the Facts Don't Fit the Theory … ’: The Security Design Puzzle in Venture Finance

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