Congratulations to Drs. Chambers, Chapman, and Xue

15 May 2007 at 12:25 am Peter G. Klein Leave a comment

| Peter Klein |

Three PhD students whose dissertation committees I chaired or co-chaired completed their work this semester. Molly Chambers (University of Missouri) studied the emergence of “new generation” cooperatives in Renville County, Minnesota and developed a conceptual model of team or “collective” entrepreneurship. The new generation cooperative is a patron-owned firm characterized by closed membership, appreciable and partially transferable equity shares, binding delivery obligations, and an emphasis on value creation, rather than the protection of existing rents — a model designed to mitigate the problems of vaguely defined property rights that characterize traditionally organized cooperative. Molly used a survey and structured interviews to compare the effects of transaction costs, ownership costs, and spawning conditions on the development of the Renville cluster during the 1990s.

John Chapman (University of Georgia) collected proprietary data from private equity firms to study the long-term performance effects of leveraged buyouts and the composition of buyout firms’ investment portfolios. Despite a series of papers in the 1980s and early 1990s demonstrating that LBOs created substantial economic value, critics continue to believe that buyouts create merely paper gains, that employees and other stakeholders suffer from “strip and flip” strategies, that debt hurts productivity and efficiency, and so on. John uses both secondary data for a large sample of firms over two decades and primary data from a smaller sample of today’s most active buyout firms to demonstrate that buyouts still create economic value. Buyout firms also continue to hold remarkably diverse asset portfolios, showing that diversification can add value under the right circumstances.

Jianhong Xue (University of Missouri) showed how entrepreneurship can be treated as a latent variable in a structural-equations model that examines the regional determinants of the “entrepreneurial opportunity set.” Jianhong’s analysis uses a variety of indicators (venture capital inflows, patents, SBIR awards, and anchor entities) as manifest variables for entrepreneurial activity in the technology sector; the resulting values of the latent entrepreneurship variable are used to construct an index of technology entrepreneurship for the 50 US states (which varies considerably from the Kauffman state-level index). Further analysis shows how the cross-sectional variation in entrepreneurship scores is explained by variation in institutional and structural characteristics.

Look soon for working papers from Molly, John, and Jianhong. I will post pointers when available. Congratulations to all!