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Testing a model of reasoned risk-taking: Governance, the experience of principals and agents, and global strategy in high-technology IPO firms (2003)
| Venue: | Strategic Management Journal |
| Citations: | 35 - 2 self |
BibTeX
@ARTICLE{Carpenter03testinga,
author = {Mason A. Carpenter and Timothy G. Pollock and Myleen M. Leary},
title = {Testing a model of reasoned risk-taking: Governance, the experience of principals and agents, and global strategy in high-technology IPO firms},
journal = {Strategic Management Journal},
year = {2003},
pages = {803--820}
}
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Abstract
Research on the governance of risky ventures, like the initial public offerings (IPOs) of high-technology firms, has focused primarily on the relationship between governance mechanisms and firm performance. While such an emphasis is clearly important, it does little to shed light on potential relationships between governance and the strategies pursued by risky firms, nor does it take into account the complementary role of key stakeholders in affecting those strategies. To partially remedy this deficit we integrate agency and behavioral perspectives to develop a theory of ‘reasoned risk-taking, ’ whereby the nature of risks undertaken is a consequence of the interaction of governance mechanisms and stakeholder characteristics. We demonstrate our theory by predicting when corporate governance should be associated with strategic risk-seeking beyond a firm’s technical core—as seen in the degree to which it has expanded internationally. Surprisingly, even though venture capitalists (VC) are risk specialists, we find that technology-based IPO firms are less likely (i.e., a negative relationship) to have extensive global sales when they are backed by a VC. In support of our reasoned risk-taking theoretical framework, we find that VCs are indeed risk-seeking when VC backing is complemented by the international experience of their board appointees, top management team (TMT) members, or both. IPO firms
Keyphrases
global strategy high-technology ipo firm governance mechanism vc backing top management team key stakeholder negative relationship technology-based ipo firm high-technology firm extensive global sale venture capitalist corporate governance international experience risk-taking theoretical framework ipo firm risky venture firm technical core board appointee risk specialist behavioral perspective potential relationship risky firm stakeholder characteristic initial public offering firm performance complementary role
