The relationship between slack resources and the performance of entrepreneurial firms: The role of venture capital and angel investors

摘要

Several research works are devoted to understand when, where, and how slack resources benefit firm performance. However, it is always assumed that the slack resources are managed in isolation by the managers. This paper points out that powerful exchange partners such as venture capital (VC) (are professional investors that use institutional money to invest) and angel investors (are individuals who often have entrepreneurial experience and use their personal funds to invest) may affect managers' discretion over resources. Based on the insights from extant slack research and managerial discretion theory, the research work tries to examine how powerful exchange partners, such as VC and angel investors, influence the relationship between slack resources and firm performance. The sample for the study included 120 firms identified as backed by formal angel/VC investors using a database provided by the Belgian Venture Capital and Private Equity Association (BVA) between 1994 and 2004, and a set of comparable firms which did not raise such financing either angel/ VC financing backed, the paper attempts to compare the performance on the basis of the gross profit. The results showed how the presence of VC and angel investors positively moderates the slack -performance relationship and is conditioned by the type of investor under consideration and investor ownership stake. The contribution of the study towards the management and entrepreneurship literatures are discussed.