Small Business Economics

, Volume 52, Issue 2, pp 455–484 | Cite as

Governance in entrepreneurial ecosystems: venture capitalists vs. technology parks

  • Douglas CummingEmail author
  • Jochen Christian Werth
  • Yelin Zhang


We argue two alternative routes that lead entrepreneurial start-ups to acquisition outcomes instead of liquidation. On one hand, acquisitions can come about through the control route with external financers such as venture capitalists (VCs). VCs take control through their board seats along with other contractual rights that can bring about changes in a start-up necessary to successfully attract a strategic acquirer. Consistent with this view, we show that VCs often replace the founding entrepreneur as CEO long before an acquisition exit. On the other hand, acquisitions can come about through more advice and support provided to the start-up, such as that provided by an incubator or technology park. Based on a sample of 251 Crunchbase companies in the USA over the years 2007 to 2014, we present evidence that is strongly consistent with these propositions. Further, we show a tension between VC backing of start-ups resident in technology parks insofar as such start-ups are slower to become, and less likely to be, acquired.


Entrepreneurship Entrepreneurial finance Governance Technology park Incubator Board of directors Venture capital Angel 

JEL classification

G23 G24 L26 



We thank two anonymous reviewers, Massimo G. Colombo, Giovanni Battista Dagnino, Erik E. Lehmann, Mari-Paz Salmador, and other conference participants for their valuable suggestions at Small Business Economics special issue development conference in Catania, Italy. We are also indebted to Sofia Johan and the seminar participants at York University for the helpful comments. The Social Sciences and Humanities Research Council of Canada provided valuable financial support.


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Copyright information

© Springer Science+Business Media, LLC, part of Springer Nature 2017

Authors and Affiliations

  • Douglas Cumming
    • 1
    Email author
  • Jochen Christian Werth
    • 2
  • Yelin Zhang
    • 1
  1. 1.York University—Schulich School of BusinessTorontoCanada
  2. 2.School of Economics and Business AdministrationGoethe University FrankfurtFrankfurtGermany

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