management support and the performance of entrepreneurial start-ups

MANAGEMENT SUPPORT
reasoning is that because of the shortage of management capacity the founders are, among
other things, forced to take care of all operational tasks, such as recruiting personnel,
setting up marketing plans, or legal issues, instead of devoting their time and energy to
improving products and services or developing the market (Cooper, Gimeno-Gascon, and
Woo (1991); Zemke (1995); Schefczyk and Pankotsch (2002)).
Venture capital (VC) fi rms have long since become aware of the problems that start-ups
often face during the early stages. Th erefore, most venture capital fi rms nowadays not
only off er their clients fi nancial capital, but also management support (Amit, Glosten,
and Muller (1990); Busenitz, Moesel, and Fiet (1997); Casamatta (2001); Jain (2001)).
Th is management support not only includes knowledge transfer in specifi c fi elds, such as
strategic management, organization design, marketing or process streamlining, but also
networking activities or coaching founders and senior managers (Geigenberger (1999);
Schefczyk (2000b); Feinendegen et al. (2001); Nathusius (2001); Brinkrolf (2002)). Th e
VC fi rms themselves, and also anecdotal stories about successful start-ups in the press and
consultants’ reports, constantly stress the positive eff ect that management support has on
the performance of start-ups (Barney et al. (1996)). As a consequence, the relevance of
management support for entrepreneurial start-ups is now widely accepted. Many startups
even state that they actively search for both fi nancial capital and management support
when cooperating with a venture capital fi rm and that often the real benefi t is expected
from the latter (Mittendorfer (2001); Stadler (2001); Strascheg (2001)).
Nevertheless, the few empirical studies that do analyze the relationship between management
support and the performance of entrepreneurial start-ups show inconsistent results
(Sapienza and Gupta (1994)). Some studies support the notion of a positive relationship
between the two variables (Sapienza and Timmons (1989a); Sapienza and Timmons
(1989b); Sapienza (1992); Schefczyk (2000a); Schefczyk (2000b)). Others fi nd diff erent
results and conclude that no clear relationship exists (Rosenstein et al. (1989); Rosenstein
et al. (1993); Barney et al. (1996)). Additionally, most research on this subject is not
done from the perspective of the start-up, but from the viewpoint of the VC fi rm, and is
focused on North American companies (Sapienza and Timmons (1989a); Sweeting and
Wong (1997); Schefczyk (1999b)). Th us, it seems that so far, no research has suffi ciently
explored the relationship between management support and the performance of entrepreneurial
start-ups, and especially not for non-U.S. fi rms.
For this reason, our main aim in this paper is to present the results of an empirical study
that analyzes the contribution of management support off ered by venture capital fi rms to
the performance of entrepreneurial start-ups in Germany. We base our study on a survey
of founders and managers of a sample of 106 German start-up companies. In Section 2,
we provide an overview of the theoretical positions that have been used in other studies
to explain the relevance of management support for the performance of entrepreneurial
start-ups. We show that the resource-based view is a particularly relevant perspective for
the research question at hand. Th us, from a resource-based viewpoint, we derive and
empirically test several hypotheses on the performance eff ect of management support. In
Section 3 we describe our research design, both the sample selection and the defi nition
and measurement of variables. Sections 4 and 5 present, discuss, and interpret the main
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