Peer Influence in Network Markets: An Empirical Investigation

We analyze the effect of peer influence on the diffusion of an innovative network good. We argue that the adopters of a network good have an incentive to convince others to purchase the same product because their utility depends on the number of other users. This peer-effect influences individuals’ adoption decisions alongside the more familiar installed-base-effect, based on the individual’s own insight that a larger number of installed units increases his/her benefit of adopting. We test empirically which effect dominates with Instant Messaging, an innovative network good. We arrive at surprising results with far-reaching implications for research and management. The diffusion of Instant Messaging was to a large extent driven by the peer-effect, but the installed-base-effect seemed to play no role. We perform our estimation with a discrete time hazard rate model that controls for unobserved heterogeneity.Hazard Rate Model;Innovation Diffusion;Instant Messaging;Network Markets;Peer Influence

Corporate Social Responsibility in Large Family and Founder Firms

Based on arguments about long-term orientation and corporate reputation, we argue that family and founder firms differ from other firms with regard to corporate social responsibility. Using Bayesian analysis, we then show that family and founder ownership are associated with a lower level of corporate social responsibility concerns, whereas ownership by institutional investors is associated with a higher level of corporate social responsibility concerns and a lower level of corporate social responsibility initiatives. We conclude that it makes sense to distinguish between family, founder and institutional investors and their roles as owners or managers when analyzing the effects of corporate governance on corporate social responsibility.corporate social responsibility;family firms;family management;family ownership;founder firms;long-term orientation

I Can’t Get No Satisfaction - Necessity Entrepreneurship and Procedural Utility

We study a unique sample of 1,547 nascent entrepreneurs in Germany and analyze which factors are associated with their start-up satisfaction. Our results identify a group of nascent entrepreneurs that “cannot get satisfaction†with their start-up because they did not choose to become entrepreneurs out of free will, but out of long-term unemployment or a lack of better employment alternatives. Overall, financial success is the most important determinant of start-up satisfaction. Yet, achievement of independence and creativity is also highly important, a finding that emphasizes the economic relevance of procedural utility and non-financial incentives.entrepreneurship;necessity entrepreneurship;procedural utility;satisfaction;unemployment

The Social Capital of Venture Capitalists and Its Impact on the Funding of Start-Up Firms

How does the social capital of venture capitalists (VCs) affect the funding of start-ups? Extant entrepreneurship literature conceptualizes a substitute effect between the social and financial capital that new firms attain from their investors. On the contrary, by building on the rich social capital literature, we hypothesize a positive effect of VCs’ social capital, derived from past syndication, on the amount of money that start-ups receive. Specifically, we argue that both structural aspects of VCs’ social network, such as the number of connections and the spanning of structural holes, and relational aspects, such as the diversity of network partners’ attributes, provide VCs with superior access to information about current investment objects and opportunities to leverage them in the future, increasing their willingness to invest in these firms. Our empirical results, derived from a novel dataset containing more than 5,000 funding rounds in the Internet and IT sector, strongly confirm our hypotheses. Both structural and relational attributes of VCs’ syndication networks have a significant influence on the funds received by start-up firms, highlighting the importance of a social capital perspective on new venture funding. We discuss the implications of our findings for theories of venture capital and entrepreneurship, showing that the role and effect of VCs’ social capital on start-up firms is much more complex than previously argued in the literature.social networks;social capital;start-ups;venture capital;structural holes

Business Takeover or New Venture? Individual and Environmental Determinants from a Cross-Country Study

Whereas the determinants of entrepreneurial choice have been thoroughly analyzed in the literature, little is known about the preferred mode of entry into entrepreneurship, such as taking over an existing business or starting a new venture. Using a large international dataset, this study reports considerable differences in takeover preferences across 33 countries. Hierarchical (multi-level) regressions are performed to explore individual-level and country-level determinants of the preferred mode of entry. At the individual level, a person’s human capital, risk attitude, and inventiveness influence the preference for starting a new venture versus taking over an existing business. At the country level, the culture-inherent level of risk tolerance, the country’s level of innovation output, and the administrative difficulty of starting a new business are found to explain the between-country variation in the preferred mode of entry. Implications of our findings for research and practice are also discussed.entrepreneurship;occupational choice;business takeover;entry mode;new venture start;multi-level analysis

Corporate Social Responsibility in Large Family and Founder Firms

Based on arguments about long-term orientation and corporate reputation, we argue that family and founder firms differ from other firms with regard to corporate social responsibility. Using Bayesian analysis, we then show that family and founder ownership are associated with a lower level of corporate social responsibility concerns, whereas ownership by institutional investors is associated with a higher level of corporate social responsibility concerns and a lower level of corporate social responsibility initiatives. We conclude that it makes sense to distinguish between family, founder and institutional investors and their roles as owners or managers when analyzing the effects of corporate governance on corporate social responsibility

Attractive Supervisors: How Does the Gender of the Supervisor Influence the Performance of the Supervisees?

A series of field and laboratory experiments were conducted in which single-sex groups of male or female students competed in different intellectual tasks to earn money or university grades (N = 291). The supervisor of these groups was one of several youn

Peer Influence in Network Markets: An Empirical Investigation

We analyze the effect of peer influence on the diffusion of an innovative network good. We argue that the adopters of a network good have an incentive to convince others to purchase the same product because their ut

Education and Entrepreneurial Choice: An Instrumental Variables Analysis

Education is argued to be an important driver of the decision to start a business. The measurement of its influence, however, is difficult since it is considered to be an endogenous variable. This study is the first to account for this endogeneity by using an instrumental variables approach. The effect of education on the decision to become self-employed is found to be strongly positive, much higher than the estimated effect in case no instrumental variables are used. That is, the higher the respondent's level of education, the greater the likelihood that he or she starts a business. Implications for method and practice are discussed

Family Background Variables as Instruments for Education in Income Regressions: A Bayesian Analysis

The validity of family background variables instrumenting education in income regressions has been much criticized. In this paper, we use data of the 2004 German Socio-Economic Panel and Bayesian analysis in order to analyze to what degree violations of the strong validity assumption affect the estimation results. We show that, in case of moderate direct effects of the instrument on the dependent variable, the results do not deviate much from the benchmark case of no such effect (perfect validity of the instrument). The size of the bias is in many cases smaller than the standard error of education’s estimated coefficient. Thus, the violation of the strict validity assumption does not necessarily lead to strongly different results when compared to the strict validity case. This provides confidence in the use of family background variables as instruments in income regressions