The Legitimacy Challenge: Understanding the Impact of Gender Congruent Legitimacy Judgments on Startup Valuations – with Theresa Veer
Job Market Paper – Latest version available upon request
This paper explores the intersection of gender roles and new venture legitimacy, offering novel and nuanced insights into legitimacy mechanisms for female-led ventures. Specifically, we draw on gender role congruity theory to delve into the challenges faced by female founder-CEOs, highlighting how gendered expectations can influence audience judgment. We test our theoretical framework within the context of startup valuations by equity investors. After controlling for startup performance, startups led by a male founder-CEO receive higher valuations than those with a female founder-CEO. Yet, our findings also identify mechanisms that female founder-CEOs can utilize to increase their ventures' valuations. These include the presence of previous equity investors, a reputable customer, and a social business orientation. Intriguingly, active fundraising reduces the valuation of female-led ventures. Our findings underline the multifaceted interplay of gender roles and new venture legitimacy, with implications for entrepreneurs, policy makers, and investors.
Digging Deep: The Roots of Gender Discrimination Biases in Decision Making - The Case of Patent Examination – with Theresa Veer, Alexandra Zaby
Latest version available upon request
We analyze gender biases and their underlying mechanisms in decision making in the context of the US patent examination process. Using United States Patent and Trademark Office [USPTO] data on 1,501,985 single inventor patent applications and their respective examiners between 1991 and 2021, we are able to identify biases against female inventors (compared to male inventors) and trace these biases back to two decision heuristics: representativeness and availability. It is important to differentiate representativeness and availability heuristics because they affect the outcome of decision making in different directions. Taking the dynamically changing individual decision context of the examiners into account, we find that representa- tiveness heuristics are impacted by examiners’ prior exposure to female inventor patent applications: gender biases decrease with increasing exposure. Additionally, we look at the effects of examiners’ workload on the reliance of decision-making heuristics. We conclude by suggesting that the duality of ”minority” group ex- posure and balanced workload in organizations is a promising avenues for more gender equality in decision outcomes.
The Notorious “Jockey and Horse Debate” Revisited: The Importance of Timing – with Theresa Veer
Latest version available upon request
Understanding what drives startup survival is of high interest for entrepreneurship research. We develop a dynamic model of early entrepreneurship that includes key input factors of nascent firms, namely the entrepreneurial founding team (EFT), en- trepreneurial opportunity, and external financing. Based on a hand-collected sample of 2670 observation on 538 early stage ventures from both Europe (252) and Latin America (286) we jointly analyze the effect of EFT and entrepreneurial opportunity quality and external financing on startup survival. Further, we explore external fi- nancing by venture capitalists as a mediator mechanism through which EFT and en- trepreneurial opportunity influence startup survival. Our paper contributes to the individual-opportunity nexus theory by disentangling the effect of both actor and non- actor part of the entrepreneurship nexus and to the entrepreneurial process perspective by analyzing the influence over time. Our findings show that the relevance of EFT and entrepreneurial opportunity shift over time: EFT becomes gradually less important and entrepreneurial opportunity becomes more important over time. Further, both effects are partially mediated by external financing.
Equity Crowdfunding, Market Timing, and Firm Capital Structure – with Maarten Cerpentier, Tom Vanacker, Ine Paeleman
Journal of Technology Transfer (2022)
Finance studies on the impact of market timing (or “windows of opportunity”) have almost exclusively focused on publicly traded firms and initial public offering firms. We provide first-time evidence on the impact of market timing on the capital structure of private firms that raise initial equity crowdfunding (ECF). We capture market timing by differentiating between ECF campaigns launched in hot markets, characterized by high ECF volumes, versus cold markets. Our sample includes firms financed via either Crowdcube or Seedrs, the two largest UK ECF platforms. Consistent with the idea of hot markets serving as windows of opportunity, we find that in hot markets, ECF firms set higher targets, collect more overfunding, and thus raise more equity capital than ECF firms in cold markets. Surprisingly, however, and inconsistent with a market timing theory of capital structure, we fail to find differences between the leverage ratios of hot- and cold-market firms from the year of the ECF campaign. This finding is explained by hot-market ECF firms contemporaneously rebalancing their capital structure by attracting more debt, especially financial debt. We discuss the theoretical and practical implications of these findings.
Cooperation between Airports: A Focus on the Financial Intertwinement of European Airport Operators – with Katrien De Langhe, Franziska Kupfer, Christa, Sys, Eddy Van de Voorde, Thierry Vanelslander
Journal of Air Transport Management (2018)
Recent airport cooperation initiatives and the lack of detailed research on the cooperation between airports suggest a research gap on this topic. The present study therefore investigates cooperative arrangements between European airports by focusing on their financial intertwinement. Social network analysis tools are used to examine the structural patterns of financial relationships in the airport sector, while a multiple regression quadratic assignment procedure (MRQAP) is applied to measure the impact of financial path dependency and spatial patterns on the occurrence of investment ties. The findings indicate a high degree of stability in investment relations in the airport industry over time. Furthermore, it is suggested that the formation of interorganisational linkages is facilitated by spatial proximity.
Venture Capital: The Effect of Local and Global Social Ties on Firm Performance – with Thomas Vanoutrive, Ann Verhetsel
Papers in Regional Science (2018)
Firm financing literature has been dominated by a relatively ‘undersocialized’ and ‘aspatial’ view. We approach this gap by applying a social capital and economic geography informed lens to financial transactions. We explore if and how the early growth performance of venture capital backed organizations varies with the structural and physical location of their investors in syndication networks. Drawing on longitudinal data of Belgian firms and their venture capital investors, it is demonstrated that inter-firm relational ties and, especially cross-border linkages expand organizational outcome. In that, we show that not only social relations shape financial activity, but that also spatial patterns of co-investment networks deserve notice.
Which Way to Grow? Startup Internationalization and Innovation in Latin America and Europe – with Ilka Weichert
Objective: Internationalization and innovation are both critical strategies for growth-oriented startups. Whereas high uncertainty and unique learning challenges in emerging markets such as Latin America make the respective startups set their preference on internationalization, and only thereafter on innovation, in developed markets like Europe internationalization and innovation are more and more regarded as “vicious circle”, reinforcing each other. This suggests that the institutional context of firms shapes the priorities set on innovation and internationalization, and the relationship of the two strategies. In this paper, we investigate potential tradeoffs between internationalization and innovation in Latin America and Europe by having a closer look at the legal business context in a startups home country. Our paper contributes to the literature on international and strategic entrepreneurship and the institutional context startups face in their home countries.
Copyright © All Rights Reserved