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Entrepreneurs’ resource background, innovation, philanthropy and the exit of external Investment in Private Ventures in China

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Abstract

Retaining external investment is an important task for private firms. However, the entrepreneurial financing literature has primarily focused on how to attract, instead of retain, start-up funding. Integrating social embeddedness, signaling, and strategic choice theories, we propose that entrepreneurs’ resource background, philanthropic, and innovative activities affect the exit speed of external investment for Chinese private ventures. In particular, we propose that external investment exits entrepreneurs with deprived resources faster than those more resourceful entrepreneurs. Yet, external investment stays longer when less resourceful entrepreneurs commit to innovative or philanthropic activities.

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Notes

  1. The Gini coefficient is a widely used indicator of economic inequality. A Gini coefficient of zero represents absolute equality, while one represents absolute inequality. It is usually believed that societies that have a Gini coefficient of more than 0.40 are at an increased risk of widespread social unrest. As a reference, Organization for Economic Cooperation and Development ranks the U.S. as having the highest Gini coefficient (at 0.39 after taxes and transfers) among the G7, followed by the U.K. at 0.34 and Italy at 0.32.

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Acknowledgements

This research is supported by Saint Louis University’s Faculty Research Leave Award, and National Natural Science Foundation of China (NSFC grants # 71628204 and 71810107002).

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  1. Richard A. Chaifetz School of Business, Saint Louis University, St. Louis, MO, USA

    Jintong Tang

  2. Saunders College of Business, Rochester Institute of Technology, Rochester, NY, USA

    Zhi Tang

  3. Business School, Sun Yat-sen University, Guangzhou, 510275, China

    Renhong Zhu & Xinchun Li

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Tang, J., Tang, Z., Zhu, R. et al. Entrepreneurs’ resource background, innovation, philanthropy and the exit of external Investment in Private Ventures in China. Asia Pac J Manag 38, 467–489 (2021). https://doi.org/10.1007/s10490-019-09674-0

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