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August 19, 2026Entrepreneurship Theory and Practice

“We Own What you Think”: Institutional Constraints on Hybrid Entrepreneurship and High-Growth Entrepreneurship

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Authors

AMAli MohammadiSRSergio Rodriguez-Garnica

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Overview

Policy evaluation demonstrates that legal limits on employee side-businesses reduce high-growth ventures and increase investor syndication, indicating that hybrid entrepreneurship enables vital...

Key Points

  • To assess whether institutional and legal constraints that restrict employees from pursuing hybrid entrepreneurship diminish the formation of high-growth potential ventures.
  • Analyzed state-level institutional changes using the legal ruling Alcatel v. Brown as an exogenous shock restricting hybrid entrepreneurial activity.
  • Evaluated shifts in metrics of high-growth entrepreneurial potential across early-stage startups and examined compensatory responses by venture capital investors.
  • Affected states experienced a marked decline in indicators of ventures with high-growth potential following the institutional restriction.
  • Negative effects were most pronounced among early-stage ventures, demonstrating that hybrid entrepreneurship functions as a mechanism for low-cost business experimentation.
  • Venture capital investors adjusted to restricted experimentation by significantly increasing investment syndication and capital staging.

Cite This Study

Mohammadi et al. (2026) studied this question.

synapsesocial.com/papers/6a8563eb03308d306e2d763ahttps://doi.org/10.1177/10422587261473009
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