DO VCS MATTER? THE IMPORTANCE OF OWNERS ON PERFORMANCE VARIANCE IN START-UP FIRMS

Adding to the corporate effect literature, we study the effect of owners on firm performance in a new context, that of venture capital firms (VCs) and the start-up firms in which they invest. After discussing the effect that VC ownership call have oil start-ups, we estimate that start-up-specific, discussing the of ownership can have on start-up-specific, owner (VC), and year effects account for significant variance in performance (26.3 percent, 11.2 percent and 3.7 percent, respectively). The effects of industry and investments stage are not statistically different from zero. We also provide all analysis that separates the owner effect into two components: a selection component-which impacts investment-and a management component-which explains significant variance in performance. By examining the owner effect in a different institutionalized from (of governance-that of the start-up and its relationship to VC owners-our study also contributes to all understanding of the 'ownership' effect in the strategy literature more generally. Copyright (c) 2008 John Wiley & Sons, Ltd.