Angel Investing in Finland: An Analysis Based on Agency Theory and the Incomplete Contracting Theory

Wealthy individuals - business angels who invest a share of their net worth in entrepreneurial ventures - form an essential part of an informal venture capital market that can secure funding for entrepreneurial ventures. In Finland, business angels represent an untapped pool of capital that can contribute to fostering entrepreneurial development. In addition, business angels can bridge knowledge gaps in new business ventures by means of making their human capital available. This study has two objectives. The first is to gain an understanding of the characteristics and investment behaviour of Finnish business angels. The strongest focus here is on the due diligence procedures and their involvement post investment. The second objective is to assess whether agency theory and the incomplete contacting theory are useful theoretical lenses in the arena of business angels. To achieve the second objective, this study investigates i) how risk is mitigated in the investment process, ii) how uncertainty influences the comprehensiveness of due diligence as well as iii) how control is allocated post investment. Research hypotheses are derived from assumptions underlying agency theory and the incomplete contacting theory. The data for this study comprise interviews with 53 business angels. In terms of sample size this is the largest on Finnish business angels. The research hypotheses in this study are tested using regression analysis. This study suggests that the Finnish informal venture capital market appears to be comprised of a limited number of business angels whose style of investing much resembles their formal counterparts’. Much focus is placed on managing risks prior to making the investment by strong selectiveness and by a relatively comprehensive due diligence. The involvement is rarely on a day-to-day basis and many business angels seem to see board membership as a more suitable alternative than involvement in the operations of an entrepreneurial venture. The uncertainty involved does not seem to drive an increase in due diligence. On the contrary, it would appear that due diligence is more rigorous in safer later stage investments and when the business angels have considerable previous experience as investors. Finnish business angels’ involvement post investment is best explained by their degree of ownership in the entrepreneurial venture. It seems that when investors feel they are sufficiently rewarded, in terms of an adequate equity stake, they are willing to involve themselves actively in their investments. The lack of support for a relationship between increased uncertainty and the comprehensiveness of due diligence may partly be explained by an increasing trend towards portfolio diversification. This is triggered by a taxation system that favours investments through investment companies rather than direct investments. Many business angels appear to have substituted a specialization strategy that builds on reducing uncertainty for a diversification strategy that builds on reducing firm specific (idiosyncratic) risk by holding shares in ventures whose returns are not expected to exhibit a strong positive correlation.

Four-dimensional current algebra from Chern-Simons theory

We study an abelian Chern-Simons theory on a five-dimensional manifold with boundary. We find it to be equivalent to a higher-derivative generalization of the abelian Wess-Zumino-Witten model on the boundary. It contains a U(1) current algebra with an operational extension.

Rotation sensitivity of Lau fringes: an analysis based on coherence theory

An analysis based on coherence theory is presented, which explains the experimentally observed rotation sensitivity of the contrast of Lau fringes obtained under spatially incoherent illumination.

A Relationship Mediated Theory of Internal Marketing (summary section only)

This report presents a new theory of internal marketing. The thesis has developed as a case study in retrospective action research. This began with the personal involvement of the author in an action research project for customer service improvement at a large Australian retail bank. In other words, much of the theory generating ‘research’ took place after the original project ‘action’ had wound down. The key theoretical proposition is that internal marketing is a relationship development strategy for the purpose of knowledge renewal. In the banking case, exchanges of value between employee participants emerged as the basis for relationship development, with synergistic benefits for customers, employees and the bank. Relationship development turned out to be the mediating variable between the learning activity of employee participants at the project level and success in knowledge renewal at the organisational level. Relationship development was also a pivotal factor in the motivation and customer consciousness of employees. The conclusion reached is that the strength of relationship-mediated internal marketing is in combining a market focused commitment and employee freedom in project work to achieve knowledge renewal. The forgotten truth is that organisational knowledge can be renewed through dialogue and learning, through being trustworthy, and by gaining the trust of employees in return.

Simultaneous measurement of aerodynamic and heat transfer data for large angle blunt cones in hypersonic shock tunnel

Aerodynamic forces and fore-body convective surface heat transfer rates over a 60 degrees apex-angle blunt cone have been simultaneously measured at a nominal Mach number of 5.75 in the hypersonic shock tunnel HST2. An aluminum model incorporating a three-component accelerometer-based balance system for measuring the aerodynamic forces and an array of platinum thin-film gauges deposited on thermally insulating backing material flush mounted on the model surface is used for convective surface heat transfer measurement in the investigations. The measured value of the drag coefficient varies by about +/-6% from the theoretically estimated value based on the modified Newtonian theory, while the axi-symmetric Navier-Stokes computations overpredict the drag coefficient by about 9%. The normalized values of measured heat transfer rates at 0 degrees angle of attack are about 11% higher than the theoretically estimated values. The aerodynamic and the heat transfer data presented here are very valuable for the validation of CFD codes used for the numerical computation of How fields around hypersonic vehicles.

What Can A Service Logic Offer Marketing Theory

The goods-dominated marketing model has major shortcomings as a guiding marketing theory. Its marketing mix approach is mainly geared towards buying and does not include consumption as an integral part of marketing theory. Although it is during the process of consuming goods and services that value is generated for customers and the foundation for repeat purchasing and customer relationships are laid, this process is left outside the scope of marketing. The focus in service marketing is not on a product but on interactions in service encounters. Consumption has become an integral part of a holistic marketing model. Other than standardized goods-based value propositions can be better understood when taking a servicebased approach. It is concluded that marketing based on a goods logic is but a special case of marketing based on a service logic and applicable only in certain contexts with standardized products.

From One Segment to a Segment of One - The Evolution of Market Segmentation Theory

The purpose of this study was to deepen the understanding of market segmentation theory by studying the evolution of the concept and by identifying the antecedents and consequences of the theory. The research method was influenced by content analysis and meta-analysis. The evolution of market segmentation theory was studied as a reflection of evolution of marketing theory. According to this study, the theory of market segmentation has its roots in microeconomics and it has been influenced by different disciplines, such as motivation research and buyer behaviour theory. Furthermore, this study suggests that the evolution of market segmentation theory can be divided into four major eras: the era of foundations, development and blossoming, stillness and stagnation, and the era of re-emergence. Market segmentation theory emerged in the mid-1950’s and flourished during the period between mid-1950’s and the late 1970’s. During the 1980’s the theory lost its interest in the scientific community and no significant contributions were made. Now, towards the dawn of the new millennium, new approaches have emerged and market segmentation has gained new attention.

On the momentum balance in linear-combination models for the transition zone

The momentum balance of the linear-combination integral model for the transition zone is investigated for constant pressure flows. The imbalance is found to be small enough to be negligible for all practical purposes. [S0889-504X(00)00703-0].

Molecular theory of solvation and solvation dynamics of a classical ion in a dipolar liquid

A microscopic theory of equilibrium solvation and solvation dynamics of a classical, polar, solute molecule in dipolar solvent is presented. Density functional theory is used to explicitly calculate the polarization structure around a solvated ion. The calculated solvent polarization structure is different from the continuum model prediction in several respects. The value of the polarization at the surface of the ion is less than the continuum value. The solvent polarization also exhibits small oscillations in space near the ion. We show that, under certain approximations, our linear equilibrium theory reduces to the nonlocal electrostatic theory, with the dielectric function (c(k)) of the liquid now wave vector (k) dependent. It is further shown that the nonlocal electrostatic estimate of solvation energy, with a microscopic c(k), is close to the estimate of linearized equilibrium theories of polar liquids. The study of solvation dynamics is based on a generalized Smoluchowski equation with a mean-field force term to take into account the effects of intermolecular interactions. This study incorporates the local distortion of the solvent structure near the ion and also the effects of the translational modes of the solvent molecules.The latter contribution, if significant, can considerably accelerate the relaxation of solvent polarization and can even give rise to a long time decay that agrees with the continuum model prediction. The significance of these results is discussed.

The fate of the initiator tRNAs is sensitive to the critical balance between interacting proteins

Formylation of the initiator tRNA is essential for normal growth of Escherichia coil, The initiator tRNA containing the U35A36 mutation (CUA anticodon) initiates from UAG codon, However, an additional mutation at position 72 (72A --> G) renders the tRNA (G72/U35A36) inactive in initiation because it is defective in formylation, In this study, we isolated U1G72/U35A36 tRNA containing a wobble base pair at 1-72 positions as an intragenic suppressor of the G72 mutation. The U1G72/U35A36 tRNA is formylated and participates in initiation. More importantly, we show that the mismatch at 1-72 positions of the initiator tRNA, which was thus far thought to be the hallmark of the resistance of this tRNA against peptidyl-tRNA hydrolase (PTH), is not sufficient, The amino acid attached to the initiator tRNA is also important in conferring protection against PTH. Further, we show that the relative levels of PTH and IF2 influence the path adopted by the initiator tRNAs in protein synthesis. These findings provide an important clue to understand the dual function of the single tRNA(Met) in initiation and elongation, in the mitochondria of various organisms.

Gauge-invariant reformulation of an anomalous gauge theory

An anomalous gauge theory can be reformulated in a gauge invariant way without any change in its physical content. This is demonstrated here for the exactly soluble chiral Schwinger model. Our gauge invariant version is very different from the Faddeev-Shatashvili proposal [L.D. Faddeev and S.L. Shatashvili, Theor. Math. Phys. 60 (1984) 206] and involves no additional gauge-group-valued fields. The status of the "gauge" A0=0 sometimes used in anomalous theories is also discussed and justified in our reformulation.

Hamilton’s theory of turns and a new geometrical representation for polarization optics

Hamilton’s theory of turns for the group SU(2) is exploited to develop a new geometrical representation for polarization optics. While pure polarization states are represented by points on the Poincaré sphere, linear intensity preserving optical systems are represented by great circle arcs on another sphere. Composition of systems, and their action on polarization states, are both reduced to geometrical operations. Several synthesis problems, especially in relation to the Pancharatnam-Berry-Aharonov-Anandan geometrical phase, are clarified with the new representation. The general relation between the geometrical phase, and the solid angle on the Poincaré sphere, is established.