Government Officials or Mixed Institutions: How Do Ventures Acquire Public Sector Investment in Emerging Economies? Daniel E. Armanios, Stanford University Chuck E. Eesley, Stanford University Li Jizhen, Tsinghua University Kathleen M. Eisenhardt, Stanford University Academy of Management Conference, Boston, MA, August 6, 2012
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Government Officials or Mixed Institutions: How Do Ventures Acquire Public Sector Investment in Emerging Economies?Daniel E. Armanios, Stanford UniversityChuck E. Eesley, Stanford UniversityLi Jizhen, Tsinghua UniversityKathleen M. Eisenhardt, Stanford University
Academy of Management Conference, Boston, MA, August 6, 2012
Motivation•How ventures acquire financing in emerging economies remains unclear (Batjargal & Liu 2004; Vissa 2011)
• Public sector an important financing source in emerging economies• Average assets of state-owned banks nearly
2x privately owned banks in emerging economies (Dinç 2005)
• In China, 46% domestic financing sources in public sector(figures from NBSC 2011; CBRC, 2010)
• Scholarship focuses on public sector perspective (Cuervo-Cazurra & Dau, 2009; Mahmood & Rufin, 2005, Spicer
et al, 2005) and not venture perspective
Introduction• Two Possible Pathways for Public Sector Investment Acquisition
• Government Official Ties (Park & Luo, 2001; Xin and Pearce, 1996)
•Hypothesis 1c: Mixed institutions such as science parks help those ventures without government official ties more likely acquire public sector investment.
Hypotheses (4)• Public sector houses significant financial resources and power over allocation(Acquaah 2007; Li & Atuahene-Gima 2001, Nee 1992; Peng & Luo 2000; Walder 1995)
• Public sector investment provides added benefits over private sector investment• Heightened credibility(Gu 1996; Tan 1999, 2006)
• Protection from political uncertainty(Acquaah 2007; Peng & Luo 2000; Li & Zhang 2007)
•Hypothesis 2: Acquiring public sector investment increases venture performance.
Research Design•Haidian District: science parks/non-science park firms within same district (controls for district-level policy differences)
•Matched Sample (O’Connor et al., 2006; Obloj & Capron, 2011)
• Ensures treatment (science parks) matched w/most similar control (non-science park)• Surveyed 81 science park, 65 non-science
park firms • N=94 matched science park and non-
science park firms (matching controls: industry and age)
• Market Institutions->Performance(Cuervo-Cazurra & Dau 2009)
• Here: Mixed Institutions->Performance
Acknowledgements• US NSF EAPSI program• NSF Graduate Research Fellowship• Stanford Graduate Research
Fellowship• Stanford Technology Ventures
Program• Qin Lan• Li Xiaoqi• Wang Yiran• Kou Yixin• Mao Liqing• Lin Xin• Qian Jin Jian• Luo Jing• Li “Frank” Heng• Mengying Zhang• Xuan Ping Lim
• Li Sha• Klaus Meyer• Riitta Katila• Robert Eberhart• Marc Schneiberg• Henning Piezunka• Walter Powell• Daisy Chung• Dan Wang• Curtiss Cobb• Yishen Wang• Hong Yun• Zheng Feng• Liu Tong• Mo Yingchuan• Chen Rui
Appendix (1): Robustness Checks• Counterargument #1: Science parks select those w/government ties (t-tests indicate firms with government ties outside science park)• Counterargument #2: Government ties signal of venture quality (t-tests between science/non-science park and with/without gov’t ties show no performance differences)• Counterargument #3: Private Sector Investment not Public Sector Investment matters more (with Private Sector Investment included, Public Sector Investment still matters more)
Appendix (2): Backup Material for Questions•Handling nonlinearity in IV Analysis