Dance with the one that brought you? Venture capital firms and the retention of founder-CEOs
Article first published online: 15 OCT 2009
© 2009 Strategic Management Society. Published by John Wiley & Sons, Ltd.
Strategic Entrepreneurship Journal
Volume 3, Issue 3, pages 199–217, September 2009
How to Cite
Pollock, T. G., Fund, B. R. and Baker, T. (2009), Dance with the one that brought you? Venture capital firms and the retention of founder-CEOs. Strat.Entrepreneurship J., 3: 199–217. doi: 10.1002/sej.71
- Issue published online: 15 OCT 2009
- Article first published online: 15 OCT 2009
- Initial public offerings;
- venture capitalist;
- corporate governance;
- symbolic action;
- decision making
We consider how a venture capital firm's perceived uncertainty in new and uncertain industry environments affects its decisions to retain founder-CEOs at companies they take public. We further consider how the human capital of the founder-CEO, the overall experience of the venture capital firm (VCF), and the VCF's specific experience with the new industry moderate the relationship between industry-based uncertainty and founder-CEO retention. We explore these issues in the context of 340 venture capital firm investments in Internet sector start-ups that went public from 1995 to 2000. We find evidence that industry-based uncertainty decreases the likelihood of founder-CEO retention, that founder-CEO human capital and VCF Internet-sector experience decreases the effects of these uncertainties on founder-CEO retention for business-to-business (B2B) firms, but increases them for business-to consumer (B2C) firms, and that VCF age further decreases the likelihood that the founder-CEOs of B2C firms will be retained. Copyright © 2009 Strategic Management Society.