Venture capitalists (VCs) contribute to entrepreneurial firms by engaging in governance activities, such as providing services and monitoring the entrepreneurial firm's operations and performance. This study examines the role and influence of the VC's governance activities on 93 Dutch entrepreneurial firms. Results suggest that while the VC's governance activities may help to stimulate the use of the entrepreneurial firm's control systems, they also moderate the relationship between the entrepreneurial firm's use of control systems and its financial performance. It appears in particular that cost control systems contribute positively to the entrepreneurial firm's financial performance when the VC provides service activities. However, the use of cost control systems tends to be negatively related to the entrepreneurial firm's financial performance when the VC is highly focused on monitoring.
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