financial contracting theory meets the real world an empirical analysis of venture capital contracts we compare the characteristics of real world financial contracts to their counterparts in financial contracting theory we do so by studying the actual contracts between venture capitalists vcs and entrepreneurs the distinguishing characteristic of vc financings is that they allow vcs to separately allocate cash flow rights board rights voting rights liquidation rights and other control rights we describe and measure these rights we then interpret our results in relation to existing financial contracting theories we also describe the interrelation and the evolution across financing rounds of the different rights query 1 query 2

the european court of justice national governments and legal integration in the european union we develop a game theoretic model of the conditions under which the european court of justice can be expected to take adverse judgments against european union member governments and when the governments are likely to abide by these decisions the model generates three hypotheses first the greater the clarity of eu case law precedent the lesser the likelihood that the court will tailor its decisions to the anticipated reactions of member governments second the greater the domestic costs of an ecj ruling to a litigant government the lesser the likelihood that the litigant government will abide by it and hence the lesser the likelihood that the court will make such a ruling third the greater the activism of the ecj and the larger the number of member governments adversely affected by it the greater the likelihood that responses by litigant governments will move from individual noncompliance to coordinated retaliation through new legislation or treaty revisions these hypotheses are tested against three broad lines of case law central to ecj jurisprudence bans on agricultural imports application of principles of equal treatment of the sexes to occupational pensions and state liability for violation of eu law the empirical analysis supports our view that though influenced by legal precedent the ecj also takes into account the anticipated reactions of member governments

what do entrepreneurs pay for venture capital affiliation this study empirically evaluates the certification and value added roles of reputable venture capitalists vcs using a novel sample of entrepreneurial start ups with multiple financing offers i analyze financing offers made by competing vcs at the first professional round of start up funding holding characteristics of the start up fixed offers made by vcs with a high reputation are three times more likely to be accepted and high reputation vcs acquire start up equity at a 10 14 discount the evidence suggests that vcs extra financial value may be more distinctive than their functionally equivalent financial capital these extra financial services can have financial consequences a central issue for early stage high tech entrepreneurs is obtaining external resources when the assets of their start up are intangible and knowledge based particularly for entrepreneurs without an established reputation convincing external resource providers such as venture capitalists vcs to provide financial capital may be challenging the literature contains two main lines of research for overcoming this problem one research stream has concentrated on designing institutional structures to permit financing early stage ventures this contractual and monitoring based approach is aimed at solving potential agency problems between investors and entrepreneurs e g admati and pfleiderer 1994 lerner 1995 hellmann 1998 and kaplan and str omberg 2001 2002 2003 a second research stream has suggested that when the quality of a start up cannot be directly observed external actors rely on the quality of the start up s affiliates as a signal of the start up s own quality

policy rivalry among industrial states what can we learn from models of strategic trade policy the economic theory of international trade has changed dramatically over the last decade by admitting into its mainstream a body of literature that focuses on the implications of monopolistic and oligopolistic elements in international markets by applying the tools of the new industrial organization in an international context two new classes of models have emerged models of intra industry trade and models of strategic trade policy the policy implications of models of strategic trade policy were quite disturbing for the economics profession since these models demonstrated that the classical harmony between national and cosmopolitan welfare maximization does not exist if one assumes opportunities for strategic manipulation of oligopolistic international industries this article reviews two prominent models of strategic trade policy the brander spencer model and the krugman model and relates them to more familiar earlier concepts such as stackelberg s asymmetrical duopoly solution and the venerable infant industry argument for government intervention the primary purpose of this article however is to provide a synopsis of the large literature addressing the question of whether models of strategic trade policy can give guidance for government policy

a status based model of market competition this article explores the significance of status processes for generating and reproducing hierarchy among producers in a market it develops a conception of a market as a status order in which each

less filling tastes great the realist neoliberal debate this essay examines and reformulates the realist neoliberal debate focusing initially on the issue of the attribution of goals to states we argue that not only are goals merely the epiphenomena of other things but also that their specification constitutes but a re description of strategic environments that is although an attribution of goals may contribute to our characterization of outcomes a discussion of them is not central to the development of a theory that explains and predicts the outbreak of conflict and the patterns of cooperation instead we argue that the realist neoliberal debate should be recast so that our central research agenda is the development of substantively specific models that allow us to ascertain how the equilibrium to a game in which states structure international affairs influences the types of issue specific subgames states play how countries coordinate to equilibria of different types how we can characterize the coordination problems associated with different equilibria how states can enhance the attractiveness of an equilibrium and how states can signal commitments to the strategies that are part of that equilibrium

power politics and international trade r recent literature attributes the relative scarcity of open international markets to the prisoner s dilemma structure of state preferences with respect to trade we argue that the prisoner s dilemma representation does not reflect the most critical aspect of free trade agreements in an anarchic international system namely their security externalities we consider these external effects explicitly doing so leads us to two conclusions 1 free trade is more likely within rather than across political military alliances and 2 alliances are more likely to evolve into free trade coalitions if they are embedded in bipolar systems than in multipolar systems using data drawn from an 80 year period beginning in 1905 we test these hypotheses the results of the analysis make it clear that alliances do have a direct statistically significant and large impact on bilateral trade flows and that this relationship is stronger in bipolar rather than in multipolar systems in the early 1970s students of international relations began what would become a long and heated debate about the political correlates of open international markets recently however an important element of consensus has begun to emerge most contributors to this debate now seem to agree that the prisoner s dilemma structure of state preferences with respect to trade explains the relative dearth of open international markets here we argue that what has become the standard prisoner s dilemma representation neglects the most critical aspect of free trade agreements in the anarchic international system namely their security externalities we consider these external effects explicitly in order to do so we construct and analyze a simple game theoretic model the results of this analysis demonstrate that tariff games between allies differ systematically from those played between actual or potential adversaries these differences imply that free trade is more likely within rather than across political military alliances however our analysis also suggests that the evolutionary prospects of alliances vary those that are the products of bipolar systems are more likely to evolve into free trade coalitions than are their multipolar counterparts less credible exit threats and clearer responsibilities for alliance stability explain the advantage of a bipolar system we test this argument using data drawn from an 80 year period beginning in 1905 the empirical analysis supports our argument it demonstrates that alliances have a direct statistically significant and large effect upon bilateral trade moreover it shows that on average alliances have a much stronger effect on trade in a bipolar than in a multipolar world 2

the gains debate framing state choice the theoretical bifurcation of international relations theory into neo realist and neo liberal camps has resulted in a gains debate that says little about an empirical world in which states exhibit both relative and absolute gains pursuit this article deploys prospect theory in an attempt to move beyond the gains debate the intent here is synthetic by bringing the predictions of both perspectives under a single theoretical umbrella we can model a broader set of state behavior the thesis developed demonstrates that states in a gains frame pursue absolute gains and are risk averse while states in a losses frame pursue relative gains and are risk acceptant this hypothesis is assessed against the behavior of the european community in the formation of the montreal protocol a regime intended to protect the earth s protective ozone shield the new model accurately predicts the timing and content of shifts in ec preferences suggesting that a synthesis of realist and liberal approaches is possible

entrenching the yoshida defense doctrine three techniques for institutionalization japan s level of defense expenditure relative to tbe size of its economy bas long been uniquely low among the major industrialized countries as of 1995 japan s expenditures stood at 0 96 percent of gross domestic product gdp even adding to this tbe approximately 0 3 percent of gdp devoted to pensions for retired personnel the level of spending is considerably less than that of major westem states such as tbe united states united kingdom france and germany as well as industrialized asian states such as south korea taiwan malaysia and singapore furthermore these relative magnitudes have remained reasonably stable over tbe past few decades see table 1 defense expenditure as a percentage of gdp or gnp gross national product often referred to simply as defense burden has over tbe past few decades become the standard benchmark for measuring a state s relative contribution to international security because of this tbe appropriateness and consequences of japan s relatively low expenditure of national wealth on defense bave been hotly debated botb in japan and abroad critics accuse japan of unfairly exploiting a defense free ride to build its economic success and others worry that japan s lack of military capabilities prevents it from becoming a normal state whose political role is commensurate

unobservable effects and business performance while unobservable factors such as corporate culture access to scarce resources management skill and luck can be postulated to be principal determinants of business success their effects are all but ignored in studies of business performance this study making use of the pims data base reports empirical evidence indicating that failure to control for unobservable factors influencing profitability both biases and exaggerates the effect of strategic factors indeed the influence of unobservable factors is so pervasive as to invalidate many of the conclusions drawn from studies failing to control for their effects

the diminishing signaling value of patents between early rounds of venture capital financing a long stream of research has documented the positive effects that patents bring about to emerging firms in high technology industries the general consensus is that patents contribute to firm growth because they confer monopolistic market rights offer protection from competitors increase the negotiating position of patent holders and other benefits what has received relatively less attention in the literature is whether patents act as a signal that attracts investors such as venture capital firms the handful of studies that have addressed that question has not analyzed whether the signaling function of patents decreases after the initial attraction of venture capital as information asymmetries between investors and target firms reduce in this study we hypothesize that patent activity has a signaling value that diminishes once information asymmetries between investors and funded firms lessen to study our proposition we draw upon a longitudinal dataset of more than 580 u s based biotechnology firms to empirically demonstrate that biotechnology firms that have submitted patent applications substantially increase the level of funding they receive for their first round of financing in line with a reduction of information asymmetries once the initial investment has materialized patent applications and granted patents have no effect on the growth of venture capital funds raised during the second round of financing we conclude the study with a discussion of avenues for new research implications for policy makers that consider the usefulness of the current patent system and with insights that can be employed by managers of firms in knowledge intensive areas such as biotechnology

founder s human capital external investment and the survival of new high technology ventures the effect of founder characteristics in attracting external investment and enhancing survival of new high technology ventures is explored using human capital theory and signalling theory we test the effect of founder characteristics on external investment in and survival of new high technology ventures by tracking a random sample of 193 high technology start ups all participants in the israeli technology incubator program founder s business management expertise and academic status attracted external investment but founder s general technological expertise did not founder s business management expertise and general technological expertise positively affected venture survival but founder s academic status did not possible implications for entrepreneurs investors policy and further research are discussed

side payments versus security cards domestic bargaining tactics in international economic negotiations the literature on international economic cooperation has devoted relatively little attention to domestic bargaining tactics and their determinants recent scholarship has tended to stress the utility and frequency of side payments while discounting other prominent bargaining tactics and a broader understanding of tactical choice this article argues that policymakers choose among domestic bargaining tactics to garner support when faced with situations in which other government officials or societal interest groups block the ratification of international economic agreements focusing on offers of side payments and attempts at issue redefinition the article s findings suggest that differences in domestic resistance to proposals of material compensation and in external security threat may explain choices between those tactics in domestic bargaining

innovation appropriability and the underpricing of initial public offerings using the information asymmetries theory of underpricing we investigate the role of innovation in the underpricing of initial public offerings ipos we develop and test a model in which patents reduce information asymmetries in industries where the link between patents and inventive returns is transparent thereby reducing underpricing conversely patents reflect increased information asymmetries and underpricing in industries where the link is not transparent we examine these relationships in a sample of 1 413 ipos and find strong support for our hypotheses in so doing we make an important theoretical contribution by showing that the ipo market contextualizes firm information abstract from author copyright of academy of management journal is the property of academy of management and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder s express written permission however users may print download or email articles for individual use this abstract may be abridged no warranty is given about the accuracy of the copy users should refer to the original published version of the material for the full abstract copyright applies to all abstracts

contracting signaling and moral hazard a model of entrepreneurs angels and venture capitalists abstract investment by wealthy individuals known as angels in startup firms is quite significant and has taken off in the last few years angels invest in the company at an earlier stage than venture capitalists vcs do this paper examines the relationship between an entrepreneur an angel and a vc from the seed investment made by the angel to the exit stage the study characterizes the equilibrium contracts among the players and provides insights into the related institutional arrangements next the study examines the signaling aspects of the game the paper also analyzes the moral hazard problems of the entrepreneur and the vc it shows that the outcome in a startup firm is not efficient because of the free rider phenomenon

innovation needs patents reform abstract the international patent system demonstrates many failures to adapt to new ways of producing information the coming of antibiotics finally forced it to take account of the shift from individual to corporate invention by establishing new criteria for patentability however these favour industries which can operate a portfolio approach in their r d to the disadvantage of other industries and smaller firms in all industries in complex technologies whose economic importance has been growing rapidly patents are now used as much as a bargaining currency to prevent lock out from use of state of the art components developed by competitors as they are as a stimulus to r d changes which have been proposed to deal with these problems including empirical supporting evidence are discussed these include compulsory expert arbitration of disputes with legal aid for the respondent party in the event of an appeal to the courts an innovation warrant as a supplementary type of protection and shared risk compulsory licensing as a practical way of changing from time to money as the measure of a grant this would give multiple innovators access to inventions as early as possible while maintaining or even improving incentives to invest in invention and innovation

sargent wallace meets krugman flood garber or why sovereign debt swaps do not avert macroeconomic crises this paper argues that the frequent failure of the debt swaps follows from fundamental forces driven by the market s assessment of the scarcity of fiscal revenue relative to the demand for fiscal outlays as a country approaches the range of partial default swaps may not provide the expected breathing room and could even bring the crisis forward our methodology combines three independent themes exchange rate crises as the manifestation of excessive monetary injections the fiscal theory of inflation and sovereign debt the integrated framework derives devaluation and external debt repudiation as part of a public finance optimising problem

signaling through private equity placements and its impact on the valuation of biotechnology firms abstract this paper investigates how young publicly held technology firms contend with information asymmetry and the hazards it introduces to acquire the capital necessary for future growth we ascribe to the view that firms issuing private equity signal the marketplace that managers believe their growth opportunities are undervalued consistent with this view we find significant positive abnormal returns to announcements of private equity placements we develop theory suggesting that returns are determined by the timing of previous signals we also argue that the characteristics of the private placement signal specifically whether private equity is bundled with research partnerships influence the strength of the signal our results largely support our expectations

staged financing an agency perspective this paper investigates the structure of outside investment in a profitable entrepreneurial venture though efficient financing the venture up front may be infeasible because the entrepreneur cannot commit to not renegotiate down the outside investor s claim once she s sunk her investment staging the investment over time helps to mitigate this commitment problem the early rounds of investment create collateral that support the later rounds we characterize the optimal staged investment path and show how it is affected by various features of the venture the predictions of the model are consistent with observations on staged financing in venture capital

modelling the dependency between currency and debt crises an option based approach abstract the interrelation between currency and debt crises is considered in a model relying on option pricing theory by capturing uncertainty and time aspects in this stochastic and dynamic framework we analyze parameters that determine the probabilities and dependencies of these crises

guns butter and anarchy a state in the international system implicit in realism must allocate its limited resources between satisfying its intrinsically valued ends and the means of military power i formalize this guns versus butter problem in a simple infinite horizon model in which two states must continually decide how to allocate their resources and whether to attack the other state the analysis establishes sufficient conditions to ensure the existence of an equilibrium in which neither state attacks shows that there is a strictly pareto dominant pair of peaceful equilibrium payoffs characterizes the unique peaceful markov perfect equilibrium that yields them and describes the comparative statics of the equilibrium allocations more broadly the analysis also suggests that the notion of anarchy has little if any substantive significance distinctively related to international politics and that the problem of absolute and relative gains is superfluous

capital market imperfections high tech investment and new equity financing highly variable returns asymmetric information and a lack of collateral should cause small high tech firms to have poor access to debt new equity financing has several advantages over debt but may be costly compared to internal finance we examine an unbalanced panel of over 2 400 publicly traded us high tech companies over the period 1981 98 most small high tech firms obtain little debt financing new equity financing in the form of the initial public offering is very important and permits a major increase in firm size after going public comparatively few firms make heavy use of external finacing

spatial collocation and venture capital in the us biotechnology industry biotechnology firms operate in a high risk and high reward environment and are in a constant race to secure venture capital vc funds previous contributions to the literature show that the vc firms tend to invest locally in order to monitor their investments and to provide operating assistance to their target firms further biotechnology is a knowledge based industry that tends to exhibit spatial clusters and the firms in such industries may collocate to benefit from gaining access to local markets for specialized inputs e g skilled researchers and from local knowledge spillovers and network externalities if such gains exist we expect that the collocated firms should exhibit positively correlated performance including in their ability to attract venture capital funds the purpose of this paper is to empirically measure the strength and spatial extent of the relationships among the amount of funds raised by proximate biotechnology firms we model these relationships with a spatial autoregression sar model and we control for characteristics of the biotechnology firms and the vc firms that provide their funds as well as site specific factors based on our fitted sar model we find that the amount of venture capital raised by a particular biotechnology firm is significantly influenced by the number of vc firms and the vc funding levels raised by biotechnology firms located within a 10 mile radius but these relationships are not statistically significant beyond this range

absolute and relative gains in international relations theory the problem of absolute and relative gains divides neoliberal institutionalism and structural realism the former assumes states focus primarily on their absolute gains and emphasizes the prospects for cooperation the latter supposes states are largely concerned with relative gains and emphasizes the prospects for conflict existing work in international relations theory generally traces the differences between these two theories to different assumptions about states preferences using a simple game theoretic model this essay offers a reformulation of the problem of absolute and relative gains that links changes in the states behavior the feasibility of cooperation and especially the states concern for relative versus absolute gains explicitly to changes in the constraints facing the states many of the differences between neoliberal institutionalism and structural realism appear as special cases of the model

what percentage of innovations are patented empirical estimates for european firms abstract a 1993 survey on the innovative activities of europe s largest industrial firms obtained useable results on patenting activities for 604 respondents the data are used to calculate the sales weighted propensity rates for 19 industries the propensity rates equal the percentage of innovations for which a patent application is made the propensity rates for product innovations average 35 9 varying between 8 1 in textiles and 79 2 in pharmaceuticals the average for process innovations is 24 8 varying from 8 1 in textiles to 46 8 for precision instruments only four sectors have patent propensity rates for both product and process innovations combined that exceed 50 pharmaceuticals chemicals machinery and precision instruments regression results that control for the effect of industry sector show that patent propensity rates increase with firm size and are higher among firms that find patents to be an important method for preventing competitors from copying both product and process innovations the effect of secrecy is not so straightforward firms that find secrecy to be an important protection method for product innovations are less likely to patent as expected but secrecy has little effect on the propensity to patent process innovations the r d intensity of the firm has no effect on patent propensity rates for both product and process innovations the sector of activity has a strong influence on product patent propensities but very little effect on process patent propensities after controlling for the effect of other factors

the security dilemma revisited robert jervis s article cooperation under the security dilemma is among the most important works in international relations of the past few decades in it jervis develops two essential arguments first he explains that the security dilemma is the key to understanding how in an anarchic international system states with fundamentally compatible goals still end up in competition and at war the security dilemma exists when many of the means by which a state tries 1 to increase its security decrease the security of others it provides the rational foundation for what jervis termed the spiral model which describes how the interaction between states that are seeking only security can fuel competition and strain political relations 2 second jervis explains that the magnitude and nature of the security dilemma depend on two variables the offense defense balance and offense defense differentiation 3 as a result the security dilemma can vary across space and time although states exist in a condition of international anarchy that does not vary there can be significant variation in the attractiveness of cooperative or competitive means the prospects for achieving a high level of security and the probability of war

what is behind the recent surge in patenting abstract we investigate the cause of an unprecedented surge of us patenting over the past decade conventional wisdom points to the establishment of the court of appeals of the federal circuit by congress in 1982 we examine whether this institutional change which has benefited patent holders explains the burst in us patenting using both international and domestic data on patent applications and awards we conclude that the evidence is not favorable to the conventional view instead it appears that the jump in patenting reflects an increase in us innovation spurred by changes in the management of research

motives to patent empirical evidence from germany abstract against the background of the patent upsurge we first analyse the role of patenting and alternative instruments to protect intellectual property based on a sample of german companies active in patenting in a second step we investigate the motives to patent considering sector and company size effects we find that company size matters both for the importance of instruments and the motives to patent especially important are the new strategic motives to patent like using patents to improve a company s own position in negotiations with partners licensees and the financial sector or to use patents as incentives for r d personnel or performance indicators these correlate positively with company size we derive some possible challenges for future patent policies from these insights

does patenting help high tech start ups abstract using data on all high and medium tech start ups in the uk in 2000 this paper assesses the effect associated with a firm s decision to patent on a firm s subsequent growth between 2001 and 2005 we propose a new approach to addressing well known issues challenging identification of any patent effect firm heterogeneity simultaneity between firm performance and patenting and sample selection our findings suggest that patentees have higher asset growth than non patentees of between 8 and 27 per annum 2011 elsevier b v all rights reserved

rationalist explanations for war realist and other scholars commonly hold that rationally led states can and sometimes do fight when no peaceful bargains exist that both would prefer to war against this view i show that under very broad conditions there will exist negotiated settlements that genuinely rational states would mutually prefer to a risky and costly fight popular rationalist and realist explanations for war fail either to address or to explain adequately what would prevent leaders from locating a less costly bargain essentially just two mechanisms can resolve this puzzle on strictly rationalist terms the first turns on the fact that states have both private information about capabilities and resolve and the incentive to misrepresent it the second turns on the fact that in specific strategic contexts states may be unable credibly to commit to uphold a mutually preferable bargain historical examples suggest that both mechanisms are empirically plausible

scraps of paper agreements and the durability of peace in the aftermath of war what determines whether peace lasts or fighting resumes and what can be done to foster durable peace drawing on theories of cooperation i argue that belligerents can overcome the obstacles to peace by implementing measures that alter incentives reduce uncertainty about intentions and manage accidents a counterargument suggests that agreements are epiphenomenal merely reflecting the underlying probability of war resumption i test hypotheses about the durability of peace using hazard analysis controlling for factors including the decisiveness of victory the cost of war relative capabilities and others that affect the baseline prospects for peace i find that stronger agreements enhance the durability of peace in particular measures such as the creation of demilitarized zones explicit third party guarantees peacekeeping and joint commissions for dispute resolution affect the duration of peace agreements are not merely scraps of paper rather their content matters in the construction of peace that lasts

a penny for your quotes patent citations and the value of innovations the use ofpatents in economic research has been seriously hindered by the fact that patents vary enormously in their importance or value and hence simple patent counts cannot be informative about innovative output the purpose of this article is to put forward patent counts weighted by citations as indicators of the value of innovations thereby overcoming the limitations of simple counts the empirical analysis of a particular innovation computed tomography scanners indeed shows a close association between citation based patent indices and independent measures of the social value of innovations in that field moreover the weighting scheme appears to be nonlinear increasing in the number of citations implying that the informational content of citations rises at the margin as in previous studies simple patent counts are found to be highly correlated with contemporaneous rd however here the association is within afield over time rather than cross sectional

high public debt in currency crises fundamentals versus signaling effects abstract this paper examines how public debt government credibility and external circumstances affect the probability of currency devaluations in a three period open economy version of the barro and gordon j polit economy 91 1983 589 model nominal public debt links current to future policy actions resisting a crisis may either enhance or undermine the sustainability of the exchange rate regime depending on whether what matters is the government s reputation or fundamentals i e the level of the debt the focus is on the impact of public debt debt maturity and the government s credibility on the expected devaluation in the current and future periods we can thus identify the factors that affect the short term interest rate and the forward rate hence derive predictions about the level and the slope of the yield curve

determinants of venture capital firms preferences regarding the industry diversity and geographic scope of their investments abstract competition is intensifying in the venture capital industry in the u s the number of venture capital firms vcfs tripled from 1980 to 1989 supplier power in the form of institutional investors such as pension funds continues to grow foreign venture capital has grown to the extent that commitments to foreign vcfs exceeded domestic commitments in both 1988 and 1989 further alternative sources of financing for entrepreneurs such as individual investors angels corporations and strategic alliances are increasingly viable options vcfs face pressure to seek lower risk investments improve rates of return and provide value to new venture development surprisingly few scholarly studies have begun to investigate the strategies vcfs are aiming to implement in order to deal with this increasing pressure building on the premise that decisions regarding product market scope are a key component of firm strategy hofer and schendel 1978 this study examined 169 domestic vcfs in order to identify factors that might explain variations in preferences regarding the industry diversity and geographic scope of their investments the sample drawn from california massachusetts and texas represented about 27 of all u s based vcfs in 1987 the year in which the data were gathered in terms of the total size of investment portfolio the average for these 169 vcfs was 69 8 million which is statistically indistinguishable from the u s average of 65 million results indicate that 1 vcfs specializing in early stage ventures prefer less industry diversity and narrower geographic scope relative to other vcfs 2 corporate vcfs i e those owned by non financial corporations prefer less industry diversity but broader geographic scope relative to non corporate vcfs 3 larger vcfs prefer greater industry diversity and broader geographic scope than do smaller vcfs and 4 provision of small business investment companies sbic financing by the vcf has no impact on preferences regarding industry diversity but is associated with a preference for narrower geographic scope one implication of these results is that vcfs in the u s are not homogeneous as regards the intended product market scope of their portfolios this in turn holds implications not only for vcfs but also for their suppliers limited partners buyers entrepreneurs and policy makers vcfs can no longer rely on haphazard investment schemes they need to attract investors by virtue of the benefits offered by their portfolio strategy and they need to attract superior investments via offering valueadded services and know how potential investors in venture capital will want to examine for example the impact on risk and return of investing smaller amounts in several vcfs at one extreme versus making one large investment in a very diversified vcf at the other extreme the results of this and other studies suggest that outcomes timing magnitude and riskiness of returns of choosing such alternatives will vary widely and will depend in great part on the strategies of the vcfs involved it will not be possible for investors to make wise choices without a full examination of their own objectives and of the profiles of vcfs entrepreneurs with the most attractive ventures have alternative sources of financing to consider and should weigh the benefits of being financed and supported by various vcfs as part of the vcfs portfolios knowing a vcf s preferences regarding product market scope improves their chances of approaching and selecting the right fit and for those entrepreneurs with a narrower set of options such knowledge may make the difference between receiving and not receiving financing in a timely manner finally policy makers may be able to make use of knowledge of the forces that influence the investment strategies of vcfs presently concerns for policy makers may include the gap in seed capital increased foreign presence in the u s market and the export of promising innovative technology via alliances with foreign firms all of these factors are influenced by the strategies pursued by vcfs as they jockey for position in the increasingly competitive venture capital market

a venture capital model of the development process for new ventures abstract for years researchers have hypothesized that new ventures develop in a fairly predictable chronological process by evolving through various functional and strategic developmental stages however cross comparable longitudinal data from large numbers of ventures are still not available to validate these stages of development hypotheses the study sought to determine whether venture capital firms which have extensive experience with the longitudinal development of new ventures operate in accord with a common theory about how this process operates these findings also represent a first step toward empirically validating various elements of stages of development theories the study analyzed the perceptions of the ceo or managing partner of 73 u s venture capital firms about key features of the development process for new businesses venture capital firms were asked whether they differentiated stages in the development process for each such stage information was elicited on what the stage was called distinguishing characteristics of ventures in that stage key developmental goals or benchmarks typically accomplished in that stage and the major risks involved sufficient consensus was found on these aspects of the development process for a venture capital model of this process to be constructed the model consists of five sequential stages 1 seed 2 start up 3 second stage 4 third stage and 5 exit stage strong consensus was found on distinguishing characteristics of ventures in early stages of development key developmental goals or benchmarks in various stages and major developmental risks associated with each stage consensus on developmental characteristics diminished somewhat in later stages presumably because of differential rates of development among investees as well as differing degrees of success in accomplishing earlier objectives nevertheless sufficient differences in functional characteristics remained to clearly distinguish later stage investees from early stage investees and to enable differentiations in maturity between third stage and exit stage investees the venture capital developmental model exhibits both similarities and differences from stages of development paradigms first the venture capital model is primarily strategic and market oriented in focus it gives lesser emphasis to the elements of organizational structure management style and management specialization than some stages of development theories although these elements are identified by venture capitalists as potential areas of risk should problems arise second like stages of development paradigms the venture capital model is universal and not venture specific venture capital firms appear to view all potentially feasible business concepts despite differences in product organizational complexity rate of development or ultimate size as passing through the same process sequence albeit at different speeds and with varying degrees of success third the model while reflecting the financial objectives of venture capital investors is primarily shaped by the naturally occurring functional development of investees it does not represent arbitrary requirements imposed on investees to segment the developmental process into steps that would not otherwise occur the development of venture capital investees is influenced by the strategic and financial objectives of venture capital firms thus the model does not necessarily mirror the strategic and dynamic elements of the development process for firms that are not intended by their founders to grow rapidly and then go public or be acquired by a larger corporation or for ventures that must depend upon internally generated funds or bank loans to finance development the venture capital model representing perceptions of 73 venture capital firms derived from longitudinal data for many hundreds of new ventures appears to empirically confirm the concept of an evolutionary progression through key functional and strategic steps which is a central element of most stages of development hypotheses the study did not go into sufficient depth however to provide detail on the influence of factors such as organizational structure and management styles and control systems on development these factors are central elements in several stages of development theories and are arguably of critical importance in the growth survival and financial success of new ventures

which ties matter when the contingent effects of interorganizational partnerships on ipo success this paper investigates the contingent value of interorganizational relationships at the time of a young firm s initial public offering ipo we compare the signaling value to young firms of having ties with two types of interorganizational partnerships endorsement relationships such as those with venture capital firms and investment banks and strategic alliance partnerships we propose that under different equity market conditions potential investors in an issuing firm attend to different types of uncertainty attention to these different types of uncertainty affects investors perceptions of the relative value of a young firm s different kinds of endorsements and partnerships and hence ipo success results from a sample of young biotechnology firms show that ties to prominent venture capital firms are particularly beneficial to ipo success during cold markets while ties to prominent investment banks are particularly beneficial to ipo success during hot markets a firm s strategic alliances with major pharmaceutical health care firms did not have such contingent effects implications for understanding the contingent value of interorganizational ties are discussed copyright 2003 john wiley sons ltd

do intergovernmental organizations promote peace a basic debate in world politics involves the impact of intergovernmental organizations igos on international conflict liberals functionalists and others see igos as capable of transforming global anarchy while realists emphasize the essential irrelevance of igos in managing such fundamental processes as war and peace recent quantitative studies also yield disparate conclusions depending on particular econometric assumptions implying variously that igos foster pacific relations among states have no impact on dispute behavior or even increase dispute propensity at least part of the problem is a lack of theoretical and empirical specificity the authors apply bargaining theory to develop a middle path between the realist and liberal perspectives only some igos those with security mandates and the most sophisticated institutional structures are likely to influence dispute behavior the authors combine the theory with two improvements in research design first igos vary in capability mandate and cohesion the authors construct a dataset of igo institutional heterogeneity and member cohesiveness second states join igos for reasons that are not unrelated to why states fight the authors control for the level of international involvement among countries and find support for their arguments in initial tests

research bets and behavioral ir behavioral ir faces a fundamental challenge the actors in most ir models and theories are not individuals they are aggregates like states ministries interest groups political parties and rebel factions there are two broad approaches to attempting to integrate behavioral research about individuals the first a quasi behavioral approach makes nonstandard assumptions about the preferences beliefs or decision making processes of aggregate actors the second tries to build theories in which the key actors are individuals pursuing the former means that the assumptions about actors will be only weakly linked to the empirical findings propelling behavioral research the second approach faces formidable obstacles that international relations theory has confronted for a long time and for the most part has not overcome

testing patent value indicators on directly observed patent value an empirical analysis of ocean tomo patent auctions the valuation of patents is an important albeit challenging task extant research to identify patent value indicators has so far relied on expert estimates of patent value exploited patent renewal data or depended on more indirect measures of patent value recently specialized market places for patent transactions have emerged that allow us for the first time to directly observe patent s private value one of the most prominent market places for patents is ocean tomo a platform that offers periodical patent auctions we make use of this auction data to empirically test predictions on patent value identifiers on real world auction prices we find empirical support for forward citations and the patent s family size however both indicators explain only a small variance in patent value in contrast our full model explains a large share of variance making us optimistic that with increased directly observed patent value such models can be useful tools in patent valuation

relative gains and the pattern of international cooperation many political situations involve competitions where winning is more important than doing well in international politics this relative gains problem is widely argued to be a major impediment to cooperation under anarchy after discussing why states might seek relative gains i demonstrate that the hypothesis holds very different implications from those usually presumed relative gains do impede cooperation in the two actor case and provide an important justification for treating international anarchy as a prisoner s dilemma problem but if the initial absolute gains situation is not a prisoner s dilemma relative gains seeking is much less consequential its significance is even more attenuated with more than two competitors relative gains cannot prop up the realist critique of international cooperation theory but may affect the pattern of cooperation when a small number of states are the most central international actors

entrepreneurial ability venture investments and risk sharing a number of issues that relate to the desirability and implications of new venture financing are examined within a principal agent framework that captures the essence of the relationship between entrepreneurs and venture capitalists the model suggests 1 as long as the skill levels of entrepreneurs are common knowledge all will choose to involve venture capital investors since the risk sharing provided by outside participation dominates the agency relationship that is created 2 the less able entrepreneurs will choose to involve venture capitalists whereas the more profitable ventures will be developed without external participation because of the adverse selection problem associated with asymmetric information 3 if a costly signal is available that conveys the entrepreneur s ability some entrepreneurs will invest in such a signal and then sell to investors these entrepreneurs however need not be the more able ones the implications for new venture financing of these and other findings are discussed and illustrated by example

the relative gains problem for international cooperation modern realism claims that the fear that others will enjoy relatively greater benefits frequently impedes international cooperation recent articles in this review by duncan snidal and robert powell modeled conditions under which the impact of relative gains varied joseph grieco criticizes snidal s model as based on assumptions that allow him to avoid rather than confront the realist arguments he also argues that powell s model while constructive ignores important additional sources of sensitivity to relative gains in response powell discusses the value of alternative assumptions about preferences and constraints in international relations snidal defends his analysis and presents an additional proof to support the independence of his central result the diminishing impact of relative gains with increasing numbers of states from assumptions of concern to grieco both responders emphasize their work as contributing to a contextually rich theory of international politics that builds on elements of both realism and neo liberalism

power and interdependence revisited ten years ago we published power and interdependence 1 the passage of a decade makes this an appropriate time to reread and reevaluate that book and to take stock of the research program to which it contributed in doing this we hope to deepen and enrich scholarly understanding of the politics of interdependence and to stimulate reflection on directions for the field of international relations over the next decade 2 such a reappraisal seems particularly opportune given the changes in world politics and especially in american policy that have marked the intervening years stanley j michalak commented in 1979 that the authors may cringe from the analogy but power and interdependence may well become the politics among nations of the 1970s 3 but from the perspective of the late 1980s the world may look different while the 1970s were seen as the decade of interdependence many observers regard the use of force and concern for security as characteristic of the 1980s indeed the view is widespread in some circles that the 1980s resemble the 1950s more than the 1970s and that hans j morgenthau s work is more relevant to contemporary issues of world politics than power and interdependence