Human capital and conflict management in the entrepreneur-venture capitalist relationship: the entrepreneurs’ perspective

Entrepreneurs’ human capital is important in the entrepreneur-venture capitalist (E-VC) relationship where conflict between the two parties is almost inevitable. However, how human capital affects entrepreneurs’ responses to conflict is under explored. Adopting a qualitative analysis, this study integrates the human capital and conflict management literature to examine the factors that cause conflict in the E-VC relationship in China and to investigate how entrepreneurs with different degrees of human capital respond to conflict. Our findings show communication barriers, and different goals and value systems are the main sources of conflict between Chinese entrepreneurs and foreign VCs. Entrepreneurs with start-up experience are more likely to adopt collaborative and competing strategies and hence have a more positive and productive attitude towards conflict with VCs, whereas inexperienced entrepreneurs tend to use passive accommodating and avoiding approaches that create problems in the E-VC relationship.