The Effects of Government Funding on Board Turnover in New Ventures: A Longitudinal Study of Innovative U.S.-Based Venture Boards
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2024-06-27
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en
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Research about the governance of new ventures is limited. New ventures can be described as private firms, that are typically small and entrepreneurial and professionally funded. New venture boards are different from public firm boards as they are usually smaller, less formal and include outside and inside directors. Governments provide financial support to such new ventures in order to develop innovative industries. The effect of this government funding on the board of directors of new ventures is unknown. Using the resource-based view (RBV) and signaling theory, two contradicting arguments have been made. From the RBV perspective it is argued that government funding allows ventures to develop resources that are valuable, rare, inimitable and non-substitutable. This should allow the venture to perform better which should lead to a decrease in board turnover. A signaling theory approach suggests that government funding should lead to an increase in board turnover. Government funding signals a venture’s potential which increases outsider interference and reduces the need for experienced board members as signals of future potential. Based on a sample of U.S.-based science and engineering ventures incorporating a longitudinal design, it is found that government funding significantly increases board turnover in new ventures in support of signaling theory.
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Faculteit der Managementwetenschappen