Technology Entrepreneurship (TEN)

 

Chair for Technology Entrepreneurship

The Chair for Technology Entrepreneurship (Univ-Prof. Hopp) engages in research and teaching in the areas of venture capital financing and entrepreneurship.

The research focus is on empirical analyses of strategic business decisions, particularly in the founding process and in establishing new organizations. Another research focus is on the organizational impact of venture capital syndication. On the above topics, the Chair has published a number of articles in refereed international and national journals. The Handelsblatt ranks Prof. Hopp at number 42 of the "Top 100 researchers under 40" and number 65 of the "Top 100 researchers (current)".

The scientific work is guided by theory-driven quantitative empirical research. Current research projects are undertaken in the following areas:

  • Empirical Analyses of Entrepreneurial Decision Making
  • Syndication of Venture Capital Investments
  • Business Planning

Empirical Analyses of Entrepreneurial Decision Making

Entrepreneurs pursue potentially profitable investment opportunities and the creation of organizations with the intent to reap the benefits of their effort. While plagued by high levels of uncertainty and ambiguity, they have to structure a complex set of interrelated tasks. Substantial prudence in entrepreneurial decisions is necessary to choose the appropriate organizing activities. Thus, under the conditions that apply for one entrepreneur, an organizing activity might be beneficial, while under the conditions that another finds himself in, exerting effort elsewhere might be a preferable alternative. The decisions entrepreneurs take (from marketing, competitive intelligence to business planning) are likely endogenous and thus, self-selected. Yet, comparing outcomes of these decisions is problematic since nascent entrepreneurs self-select their strategies. Therefore, such comparisons cannot assume that strategies were randomly chosen. Unconditional observations of performance do not provide evidence regarding the benefits a strategy. An appropriate empirical strategy must account for this effect. We apply several empirical methodologies to various entrepreneurial founding activities, ranging from marketing, customer involvement to business planning.

Syndication of Venture Capital Investments

The syndication of venture capital involves cooperation between partner venture capitalists (VCs) who jointly finance promising growth companies. Their relationship is characterized by uncertainty over the prospects of the ventures they fund and the considerable time and effort they apply to guiding and advising the entrepreneurs. There are various ways in which VCs can benefit from each other, in terms of sharing financial and managerial resources or sharing risk. As VCs are mutually dependent on each other, it is important to choose the best possible partner(s). The decision of whom to invite to participate in VC transactions lies at the heart of understanding why syndication adds value to the funded firm. However, a major problem associated with a lead VC’s partnering decision is uncertainty and information asymmetry. Our research examines the choice of partners in the field of syndication and the impact of syndication on governance structures and corporate performance subsequently.

Business Planning

Gumpert (2002) estimates that 10 million entrepreneurs worldwide write business plans every year. This is more than the number of births, deaths and divorces in the United States for 2008 (US Census, 2012). Despite this, there is considerable evidence that many new entrepreneurs choose not to write a business plan. Nor do they appear to see the need to write such plans. The theoretical stances echo differences in the empirical understanding of the efficacy of business plans. In essence, considerable ambiguity exists about the value of business plans (here defined as documents that collect and analyze information to identify future tasks, risks and opportunities). Rather than spending up to 200 hours developing financial projections/writing a plan (that is unlikely to provide positive benefits), some researchers suggest that nascent entrepreneurs should implement rather than plan their venture. Yet some studies reject this ‘just do it’ advice, arguing instead that business plans stimulate faster and better decision making. These disparities reflect two central questions that remain open in the existing literature: 1) what factors influence the decision to conduct formal business plan activities?; and 2) what is the impact of business plan activities on nascent venture outcomes? Our analysis of 824 nascent entrepreneurs highlights two key results: that nascents choose to plan in response to external financial needs; and that formal planning is most likely to lead to venture creation and inhibit venture disbandment.

Teaching Overview

This chairīs teaching is intended to equip students with a background in applied statistical analysis in entrepreneurship. Answering economic questions, such as the effectiveness of business plans or the impact of investments in human capital on subsequent entrepreneurial success earnings are paramount for researchers and practitioners alike. Yet, to do this, a solid background in applied statistics and econometrics is indispensable. Rather than teaching and preaching statistical tools, we will apply the statistical toolbox available to real life situations and datasets to investigate the economic impact that various mechanisms have on entrepreneurial performance.

Students will learn when and how they can use these statistical techniques to answer economic questions with appropriate rigueur. Using modern statistics to answer real life problems marks the transition from being a student of economics to be an applied managerial economist. The content of the courses should enable students to work on their own empirical project (such as a Master thesis) or apply the concept in real-life (such as their subsequent job assignments).

The following courses are offered on the Master and Phd Level:

Empirical Research in Organizations and Entrepreneurship: The scope of this course is to engage students in independent empirical analyses of data and in replicating published empirical work based on the PSED I and II datasets.

Advanced Methods in Empirical Entrepreneurship research: Students will actively train the necessary steps for conducting an own empirical research project based on publicly available datasets and published research papers using the publicly available PSED I and II dataset. At the end of the course students should be able to design, implement, and evaluate empirical research.