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Academic Journal
Strategy & Entrepreneurship

“New insights into venture capitalists' activity: IPO and time-to-exit forecast as antecedents of their post-investment involvement”

We examine how VCFs' forecast of an IPO exit affects their breadth of advising and the likelihood
of founder–CEO replacement shortly after they invest in a new venture. Moreover, we examine
how the expected time-to-exit moderates these relationships. Our findings show that the
likelihood of founder–CEO replacement upon receiving venture capital funding is significantly
greater if a VCF perceives this company as a potential IPO as opposed to a trade sale, and this
likelihood increases if the forecasted time-to-exit is short. We also illustrate how the breadth of
advice varies as a function of the forecasted IPO and time-to-exit.
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Academic Journal
Strategy & Entrepreneurship

“New Product Development Speed: Too Much of a Good Thing?”

New product development speed has become increasingly important for managing innovation in fast-changing business environments. While the existing literature has not produced consistent results regarding the relationship between speed and success for NPD projects, many scholars and practitioners assert that increasing NPD speed is virtually always important to NPD success. The purpose of this study is to examine the implicit assumption that faster is better as it relates to NPS. From the perspectives of time compression diseconomies and absorptive capacity, the authors question the assumption that speed has a linear relationship with success. The authors further argue that time compression diseconomies depend on levels of uncertainty involved in NPD projects. Using survey data of 471 NPD projects, the hypotheses were tested by hierarchical regression analysis and subgroup polynomial regression. The results of this study indicate that NPD speed has a curvilinear relationship with new product success, and the nature of the speed-success relationship varies, depending on type and level of uncertainty. When turbulence or technological newness is high, the relationship is curvilinear but when uncertainties are low, the relationship is linear. In contrast, the results of this study suggest that a curvilinear relationship under conditions of low market newness but not when market newness is high. Discussion focuses on the implications of NPD speed under the different conditions of uncertainty.
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Academic Journal
Finance

“New venture legitimacy: the conditions for angel investors”

Favorable legitimacy judgments by potential resource providers are critical for the survival and growth of new ventures. We examine which aspects of a venture’s activities, structures, and outcomes, as conveyed by its narrative, are associated with legitimacy judgments by potential angel investors in a sample of 176 new venture proposals. We find that entrepreneurial ventures with quality top management teams, advisors, and developed products are viewed more favorably by angel investors and likely have better access to these investors. This research provides new insights into the establishment of legitimacy within the economically important angel capital market.
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Academic Journal
Business Analytics

“Noise Accumulation in High Dimensional Classification and Total Signal Index”

Great attention has been paid to Big Data in recent years. Such data hold promise for scientific discoveries but also pose challenges to analyses. One potential challenge is noise accumulation. In this paper, we explore noise accumulation in high dimensional two-group classification. First, we revisit a previous assessment of noise accumulation with principal component analyses, which yields a different threshold for discriminative ability than originally identified. Then we extend our scope to its impact on classifiers developed with three common machine learning approaches—random forest, support vector machine, and boosted classification trees. We simulate four scenarios with differing amounts of signal strength to evaluate each method. After determining noise accumulation may affect the performance of these classifiers, we assess factors that impact it. We
conduct simulations by varying sample size, signal strength, signal strength proportional to the number predictors, and signal magnitude with random forest classifiers. These simulations suggest that noise accumulation affects the discriminative ability of high-dimensional classifiers developed using common machine learning methods, which can be modified by sample size, signal strength, and signal magnitude. We developed the measure total signal index (TSI) to track the trends of total signal and noise accumulation.
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