Lecture 3 Flashcards
What are the phases of venture growth?
1) Phase 1: Infancy
2) Phase 2: Growth
3) Phase 3: Maturity
What are fundamental challenges to rapid growth? And what are the solutions for it?
1) Instant size, internal turmoil -> balance, good timing
2) A sense of infallibility -> Environmental scanning
3) Extraordinary resource needs -> Deferred compensation
What do (Barringer & Jones, 2004) state?
A firm’s ability to grow is directly related to its ability to deal with its managerial capacity problems
What does the diagram based on Penrose’s theory explain?
How firms growth depends on both entrepreneurial services and managerial services
What are the two factors explaining ‘why do some small business managers refrain from growing their firms?’
1) No desire to grow
2) Growth intention is the strongest predictor of growth
What is moral hazard?
Occurs when employees do not act in the best interest of the company -> no consequence due to salary
To what leads moral hazard?
1) Suboptimal effort
2) Misdirected effort
What is a solution for the challenge: socialization of new managers?
Participation in inter-organizational relationships
What is a solution for the challenge: managerial motivation regarding growth?
Financial incentives, stock options
What is a solution for the challenge: adverse selection?
Relevant industry experience
What is a solution for the challenge: moral hazard?
Financial incentives
How to hire staff for growth?
1) Hire staff from different backgrounds
2) Hire staff who fits in the company
