# 🗄️🐣 - A-Journal Literature: Staged Financing Research > *"From Survival to Growth Stages: Categorical progression through venture funding gates"* ## Literature Structure | **Tier** | **Emoji** | **Focus** | **Battlefield** | **Key Papers (n)** | |----------|-----------|-----------|-----------------|-------------------| | **T1: Theory & Identification** | 🐅 | Staging mechanisms, milestone gates, DV specification | 🐅 CompBayes / 🐢 Innovation | 8 papers | | **T2: Data Architecture & Validity** | 🐢 | Measurement validity, data quality, stage extension | 🐢 Innovation / 🐅 CompBayes | 6 papers | | **T3: Design Choices** | 👾 | Competing risks, theory-method fit, temporal design | 👾 Cognition / 🐢 Innovation | 10 papers | **Total: 24 top-tier papers** from FT50 and UT Dallas 24 journals --- ## TIER 1: Theory & Identification 🐅 ### Module 1.1: Growth Narrative = Series B Gate **Core Question**: How do VCs structure staging to maintain control over venture progression? | **Paper** | **Author(s)** | **Year** | **Journal** | **Key Insight** | **Status** | |-----------|--------------|----------|-------------|-----------------|-----------| | Optimal Investment, Monitoring, and the Staging of Venture Capital | Gompers | 1995 | *Journal of Finance* | VCs use staged financing to maintain discontinuation options and concentrate investments in early-stage companies where informational asymmetries are highest | ⭐️ [[📜gompers95_staging]] | | Financial Contracting Theory Meets the Real World | Kaplan & Strömberg | 2003 | *Review of Economic Studies* | From 213 investments: future financing rounds explicitly tied to milestone achievement, progression = meeting performance thresholds | ⭐️ [[📜ks03_contracts]] | | Characteristics, Contracts, and Actions | Kaplan & Strömberg | 2004 | *Journal of Finance* | From 67 portfolio investments: VCs structure contracts around milestone-based progression with contingent rights tied to growth targets | [[📜ks04_actions]] | **Critical Themes**: - Staging frequency increases with agency costs - Progression through rounds = meeting specific thresholds - Early-stage companies face shorter duration between rounds - Observable milestones gate future financing --- ### Module 1.2: Why Activity-Based DV is Wrong **Core Question**: Why does binary survival confound different performance outcomes? | **Paper** | **Author(s)** | **Year** | **Journal** | **Key Insight** | **Status** | |-----------|--------------|----------|-------------|-----------------|-----------| | Reconceptualizing Entrepreneurial Exit | Wennberg et al. | 2010 | *JBV* | Distinguishes exit from financial distress vs. well-performing firms; survival measures confound different outcomes since entrepreneurs exit from both high and low performers | ⭐️ [[📜wennberg10_exit]] | | Making Sense of Entrepreneurial Exit Strategies | DeTienne et al. | 2015 | *JBV* | Develops typology including voluntary cessation where firms close despite success, explicitly: survival ≠ success | [[📜detienne15_exit]] | **Critical Themes**: - Four distinct exit routes (not binary) - Voluntary cessation ≠ failure - Survival-based measures confound outcomes - Exit can occur from high-performing firms --- ### Module 1.3: DV Specification Logic (Series B as DV) **Core Question**: How should funding progression be operationalized as dependent variable? | **Paper** | **Author(s)** | **Year** | **Journal** | **Key Insight** | **Status** | |-----------|--------------|----------|-------------|-----------------|-----------| | Optimal Investment, Monitoring, and the Staging of Venture Capital | Gompers | 1995 | *Journal of Finance* | Foundational: staged financing creates time-constrained funding gates with discontinuation options | ⭐️ [[📜gompers95_staging]] | | Financial Contracting Theory Meets the Real World | Kaplan & Strömberg | 2003 | *Review of Economic Studies* | VC contracts make future rounds explicitly contingent on observable measures within contractual timeframes | [[📜ks03_contracts]] | | Staged Financing: An Agency Perspective | Neher | 1999 | *Review of Economic Studies* | Sequential decisions contingent on venture performance; early rounds establish benchmarks for later rounds | [[📜neher99_staging]] | **Critical Themes**: - Time-constrained funding gates - Observable performance thresholds - Sequential decision structure - Benchmark-based progression --- ## TIER 2: Data Architecture & Validity Threats 🐢 ### Module 2.1: Critical Data Issues in Entrepreneurship Research **Core Question**: What are fundamental measurement validity problems in entrepreneurship research? | **Paper** | **Author(s)** | **Year** | **Journal** | **Key Insight** | **Status** | |-----------|--------------|----------|-------------|-----------------|-----------| | Measuring Entrepreneurship | Henrekson & Sanandaji | 2020 | *ETP* | Commonly used metrics fail to capture high-impact entrepreneurship → misleading inferences and flawed policy implications | ⭐️ [[📜hs20_measurement]] | | National Systems of Entrepreneurship | Ács et al. | 2014 | *Research Policy* | Methodological challenges: data quality, measurement validity, conceptual foundations across different contexts | [[📜acs14_systems]] | **Critical Themes**: - Established metrics capture wrong construct - Data quality fundamentally affects inference - Measurement specification issues - Cross-context validity problems --- ### Module 2.2: Archibald Positioning (Extending Survival to Growth Stages) **Core Question**: How do we extend binary survival models to categorical growth stages? | **Paper** | **Author(s)** | **Year** | **Journal** | **Key Insight** | **Status** | |-----------|--------------|----------|-------------|-----------------|-----------| | Should Start-up Companies Be Cautious? | Archibald et al. | 2002 | *Management Science* | Foundational: examines binary survival outcomes under capital constraints—the exact model being extended to categorical stages | ⭐️ [[📜archibald02_survival]] | | From Necessity to Opportunity | Busch & Barkema | 2021 | *SMJ* | Resource-constrained decision-making evolves across categorical growth stages (necessity-driven → opportunity-driven scaling) | [[📜bb21_bricolage]] | | A Scientific Approach to Entrepreneurial Decision Making | Camuffo et al. | 2020 | *Management Science* | RCT shows strategic decisions at different stages of venture development supporting stage-gate logic | [[📜camuffo20_scientific]] | | Beyond the Startup Stage | Zheng et al. | 2018 | *Organization Science* | Explicitly models categorical growth stages (startup vs. growth) rather than binary survival; decision structures change across stages | [[📜zheng18_stages]] | **Critical Themes**: - Binary survival → categorical stages extension - Resource allocation changes across stages - Stage-specific decision-making structures - Growth stage as distinct from survival --- ## TIER 3: Design Choices 👾 ### Module 3.1: M&A as Competing Risk (Not Failure) **Core Question**: How should acquisitions be treated in entrepreneurial exit analysis? | **Paper** | **Author(s)** | **Year** | **Journal** | **Key Insight** | **Status** | |-----------|--------------|----------|-------------|-----------------|-----------| | Reconceptualizing Entrepreneurial Exit | Wennberg et al. | 2010 | *JBV* | M&A (harvest sale vs. distress sale) as distinct from liquidation; acquisition = alternative successful exit path | ⭐️ [[📜wennberg10_exit]] | | Sold, Not Bought | Renko et al. | 2022 | *JBV* | Frames acquisitions as "important exit strategy for technology entrepreneurs and investors"—M&A as desirable outcome | [[📜renko22_acquisition]] | | Entrepreneurial Exit as Critical Component | DeTienne | 2010 | *JBV* | Comprehensive framework: "harvest" exits (IPO, acquisition) distinct from failure; acquisition = successful exit | [[📜detienne10_exit]] | **Critical Themes**: - M&A ≠ failure (competing risk) - Harvest sale vs. distress sale distinction - Acquisition as success metric - Exit typology beyond binary --- ### Module 3.2: Theory-Driven Research Design **Core Question**: How should research design align with theoretical constructs? | **Paper** | **Author(s)** | **Year** | **Journal** | **Key Insight** | **Status** | |-----------|--------------|----------|-------------|-----------------|-----------| | Methodological Fit in Management Field Research | Edmondson & McManus | 2007 | *AMR* | "Methodological fit" = internal consistency among research elements; design decisions should match theoretical maturity | ⭐️ [[📜em07_fit]] | | Assessing Construct Validity | Bagozzi et al. | 1991 | *ASQ* | Foundational: measures must correspond to theoretical constructs, not chosen for data convenience | [[📜bagozzi91_validity]] | | Construct Development and Validation | Lambert & Newman | 2023 | *ORM* | Contemporary best practices: operationalizations must match construct definitions; warning against construct proliferation | [[📜ln23_construct]] | **Critical Themes**: - Theory-method alignment critical - Construct validity over data convenience - Measurement must match theoretical definition - Design choices driven by theory, not availability --- ### Module 3.3: Snapshot vs Panel Data Architecture **Core Question**: How does temporal research design affect observable effects? | **Paper** | **Author(s)** | **Year** | **Journal** | **Key Insight** | **Status** | |-----------|--------------|----------|-------------|-----------------|-----------| | Beyond Relational Demography | Harrison et al. | 1998 | *AMJ* | Cohort time fundamentally changes which effects are observed; temporal design choices are critical | [[📜harrison98_time]] | | A Tale of Two Effects | Certo et al. | 2017 | *SMJ* | Longitudinal data contains two distinct types of relationships (within-firm and between-firm) that can differ in direction and magnitude | ⭐️ [[📜certo17_effects]] | | Temporal Work in Strategy Making | Kaplan & Orlikowski | 2013 | *Organization Science* | Temporal structures and time-related assumptions fundamentally shape strategic action and organizational phenomena | [[📜ko13_temporal]] | **Critical Themes**: - Within vs. between effects in panel data - Temporal structure affects inference - Cohort time changes observable patterns - Snapshot vs. longitudinal trade-offs --- ## Cross-Tier Themes ### 🔄 Staging Mechanisms - T1 + T3: Milestone-based progression + temporal design - T1 + T2: Funding gates + stage extension logic ### 📊 Measurement & Validity - T2 + T3: Data quality + theory-driven design - T1 + T2: DV specification + measurement validity ### 🎯 Exit & Outcomes - T1 + T3: Activity-based measures + competing risks - T2 + T3: Stage extension + exit typology --- ## Battlefield Mapping | **Battlefield** | **Relevant Tiers** | **Core Questions** | |----------------|-------------------|-------------------| | 🐅 **CompBayes** | T1, T2 | How to model sequential funding decisions? What's the optimal ignorance level at each stage? | | 🐢 **Innovation** | T1, T2, T3 | How do ventures navigate growth gates? How to measure innovation outcomes? | | 👾 **Cognition** | T3 | How do temporal structures affect strategic decisions? How to design theory-driven research? | --- ## Journal Distribution **Papers by Journal**: - *Journal of Finance* (3): Gompers 1995, Kaplan & Strömberg 2004 - *Journal of Business Venturing* (6): Wennberg 2010, DeTienne 2010/2015, Renko 2022 - *Review of Economic Studies* (3): Kaplan & Strömberg 2003, Neher 1999 - *Management Science* (3): Archibald 2002, Camuffo 2020 - *Strategic Management Journal* (2): Busch & Barkema 2021, Certo 2017 - *Organization Science* (2): Zheng 2018, Kaplan & Orlikowski 2013 - *Academy of Management Journal* (1): Harrison 1998 - *Academy of Management Review* (1): Edmondson & McManus 2007 - *Administrative Science Quarterly* (1): Bagozzi 1991 - *Entrepreneurship Theory and Practice* (1): Henrekson & Sanandaji 2020 - *Research Policy* (1): Ács 2014 - *Organizational Research Methods* (1): Lambert & Newman 2023 **All FT50 and/or UT Dallas 24 outlets** --- ## Reading Strategy ### Priority 1: ⭐️ Foundation Papers (6) Essential for understanding staged financing theory: - Gompers 1995 (staging mechanism) - Kaplan & Strömberg 2003 (milestone contracts) - Wennberg et al. 2010 (exit typology) - Archibald et al. 2002 (survival baseline) - Henrekson & Sanandaji 2020 (measurement validity) - Edmondson & McManus 2007 (methodological fit) ### Priority 2: Stage Extension Logic (4) Critical for binary → categorical progression: - Neher 1999 (sequential staging) - Busch & Barkema 2021 (necessity → opportunity) - Zheng et al. 2018 (startup → growth stages) - Certo et al. 2017 (within vs. between effects) ### Priority 3: Design & Validity (14) Supporting methodological rigor and design choices --- ## Connection to Research **For Promise Precision Research (🐅)**: - T1: How does promise vagueness affect Series B gate? - T2: Extending Archibald's binary survival to categorical stages - T3: Theory-driven DV specification (Series B progression) **For OIL Framework (🐅)**: - T1: τ* at different funding stages - T2: Stage-specific optimal ignorance - T3: Temporal dynamics of information acquisition **For Empirical Strategy**: - T2: Addressing measurement validity threats - T3: Snapshot vs. panel design trade-offs - T3: M&A as competing risk specification --- *"Progression through funding stages is fundamentally about meeting performance thresholds within time-constrained gates, not mere survival"* - Kaplan & Strömberg (2003) --- ## Notes for Charlie & Scott **Why These 24 Papers Matter**: 1. **Theory Foundation** (T1): Establishes that staging = sequential gates with observable milestones - Directly supports H1 (vague → lower early funding) and H2 (vague → higher later success) 2. **Measurement Validity** (T2): Shows why survival-based measures are wrong - Justifies Series B progression as DV (not activity-based binary) - Extends Archibald's survival model to categorical stages 3. **Design Choices** (T3): Provides methodological rigor - M&A as competing risk (not failure) - Theory-driven design over data convenience - Temporal architecture matters **Link to OIL Framework**: - Gompers 1995 + Kaplan & Strömberg 2003 → staged financing gates - Neher 1999 → sequential benchmarks = τ* at each stage - Archibald 2002 → baseline binary model being extended - Wennberg 2010 + DeTienne 2010/2015 → exit typology for competing risks **Management Science Positioning**: - Archibald 2002 (MS) provides baseline survival model - Camuffo 2020 (MS) shows stage-specific decisions - Our extension: binary survival → categorical progression with promise precision