IDEAS home Printed from https://ideas.repec.org/a/wsi/jdexxx/v19y2014i04ns1084946714500216.html
   My bibliography  Save this article

Why Are Suboptimal Contracts Usually Chosen In Venture Capital Backed Nascent Entrepreneurship?

Author

Listed:
  • YINYIN CAI

    (School of Management and Economics, Southeast University, No. 2, Dongda Street, Jiulonghu Campus, Juyuan 6-205, Nanjing, China 211189, China)

Abstract

This paper attempts to interpret the reason for high failure rate in venture capital backed nascent entrepreneurship by applying contract theory and employing a theoretical model of contract choice between entrepreneurs and venture capitalists. The results of the model show that the suboptimal contract for new venture growth is not only the best choice of venture capitalists, but also the best choice of nascent entrepreneurs, which may lead to a high failure rate in venture capital backed nascent entrepreneurship. Some implications and solutions are also discussed.

Suggested Citation

  • Yinyin Cai, 2014. "Why Are Suboptimal Contracts Usually Chosen In Venture Capital Backed Nascent Entrepreneurship?," Journal of Developmental Entrepreneurship (JDE), World Scientific Publishing Co. Pte. Ltd., vol. 19(04), pages 1-5.
  • Handle: RePEc:wsi:jdexxx:v:19:y:2014:i:04:n:s1084946714500216
    DOI: 10.1142/S1084946714500216
    as

    Download full text from publisher

    File URL: http://www.worldscientific.com/doi/abs/10.1142/S1084946714500216
    Download Restriction: Access to full text is restricted to subscribers

    File URL: https://libkey.io/10.1142/S1084946714500216?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wsi:jdexxx:v:19:y:2014:i:04:n:s1084946714500216. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Tai Tone Lim (email available below). General contact details of provider: http://www.worldscinet.com/jde/jde.shtml .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.