Adequacy of agency theory in explaining the venture capitalist-entrepreneur relationship: a firm life-cycle perspective. (2018)

• Record Type: Journal Article
• Authors: Panda, Swati
• Is Part Of: International journal of entrepreneurship and small business. Volume 34:Number 3(2018)
• Page Start: 309
• Page End: 329
• Publication Date: 2018
• Subjects: agency theory -- entrepreneurship -- India -- information asymmetry -- goal incongruence -- venture capital; Entrepreneurship -- Periodicals; Small business -- Management -- Periodicals; 658.42105
• Languages: English
• ISSNs: 1476-1297

Abstract

This paper explores the adequacy of agency theory in explaining the venture capitalist (VC)-entrepreneur relationship through a firm life-cycle perspective. The findings indicate that advanced stage relationships suffer severely from agency risks while early stage relationships are less affected. The findings have important theoretical implications, as they propose boundary conditions along which agency theory can be applied to the VC-entrepreneur relationship. VCs and entrepreneurs can utilise the recommendations for better decision making, leading to an improved working relationship.