Networking as a Barrier to Entry and the Competitive Supply of Venture Capital

Hochberg, Yael V.; Ljungqvist, Alexander; Lu, Yang

doi:10.1111/j.1540-6261.2010.01554.x

Cited by 259 publications

(55 citation statements)

References 22 publications

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“…VentureXpert is used widely for research in both finance (Hochberg et al, 2007(Hochberg et al, , 2010 and economic sociology (Podolny, 2001;Sorenson & Stuart, 2001, 2008. Our data cleaning process entailed several steps.…”

Section: Data and Methods Data Sourcementioning

confidence: 99%

After the Break-Up: The Relational and Reputational Consequences of Withdrawals from Venture Capital Syndicates

Zhelyazkov

Gulati

2016

AMJ

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Section: Data and Methods Data Sourcementioning

confidence: 99%

After the Break-Up: The Relational and Reputational Consequences of Withdrawals from Venture Capital Syndicates

Zhelyazkov

Gulati

2016

AMJ

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“…VC firms are deeply involved in commercializing technological discontinuities because these discontinuities have high value creation potential (von Burg and Kenney 2000). The literature on VC syndication also suggests that these centrally positioned VCs usually possess information advantages over VCs that are more peripherally positioned (e.g., Freeman 1999, Hochberg et al 2007, Hochberg et al 2010, Sorenson and Stuart 2001. Knowledge about the quality of the start-up firms in which VCs invest is scarce.…”

Section: Hypothesis 3 (H3)mentioning

confidence: 99%

Top Management’s Attention to Discontinuous Technological Change: Corporate Venture Capital as an Alert Mechanism

Maula

Keil

Zahra

2013

Organization Science

172

123

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Technological discontinuities pose serious challenges to top managers' attention. These discontinuities, which often occur at the fringes of an industry, are usually driven by innovative and (often) venture capital-backed start-ups creating new products and transforming existing industries in ways that are difficult for incumbent managers to understand against the backdrop of their existing cognitive schemata. However, failing to appreciate and embrace successful technological discontinuities might endanger incumbents' very existence. Extending the attention-based view, we explore whether and how interorganizational relationships guide top managers' attention either to or away from technological discontinuities. We propose that homophilous relationships (e.g., alliances with industry peers) should exhibit a negative relationship with incumbents' timely attention to technological discontinuities, whereas heterophilous relationships (e.g., with venture capitalists as a result of coinvestments) should exhibit a positive relationship. Furthermore, we hypothesize that the status of the partners strengthens the effect of homophilous and heterophilous relationships with the timely attention of top managers to technological discontinuities. Based on a longitudinal study of the incumbents in four information and communications technology industry sectors, we find that heterophilous ties through corporate venture capital (CVC), coinvesting with high-status venture capital firms, exhibit a strong positive relationship with timely attention. CVC, when it connects senior management to high-status venture capitalists through coinvestments, has a special role in directing top managers' attention to technological discontinuities and ensuing business opportunities. Implications for the understanding of the role of interorganizational ties as structural determinants of top managers' attention are discussed. org/page/terms-and-conditionsThis article may be used only for the purposes of research, teaching, and/or private study. Commercial use or systematic downloading (by robots or other automatic processes) is prohibited without explicit Publisher approval. For more information, contact permissions@informs.org.The Publisher does not warrant or guarantee the article's accuracy, completeness, merchantability, fitness for a particular purpose, or non-infringement. Descriptions of, or references to, products or publications, or inclusion of an advertisement in this article, neither constitutes nor implies a guarantee, endorsement, or support of claims made of that product, publication, or service. Copyright © 2013, INFORMS Please scroll down for article-it is on subsequent pagesINFORMS is the largest professional society in the world for professionals in the fields of operations research, management science, and analytics. For more information on INFORMS, its publications, membership, or meetings visit http://www.informs.org Organization Science Vol. 24, No. 3, May-June 2013, pp. 926-947 ISSN 1047 T echnological discontinu...

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“…To measure the extent of collaborative relationships among lenders, we turn to social network analysis. It is widely acknowledged that the structure of financial networks has important implications for information dissemination (e.g., Baum et al, 2004;Hochberg et al, 2007;Cohen et al, 2008;Meuleman et al, 2009;Godlewski et al, 2012;and Horton et al, 2012). We apply the graph theory, a mathematical discipline widely used to solve the problems of networks, and construct the collaboration networks that a loan syndication gives rise to.…”

Section: Empirical Framework (I) Relational Distance Communication Amentioning

confidence: 99%

“…In this paper, nodes represent lenders and links represent the existence of a leader-participant relationship between them. Following Baum et al (2004), Hochberg et al (2007Hochberg et al ( , 2010, Meuleman et al (2009) and Godlewski et al (2012) for any given year, we construct a syndication network using the data from the preceding 5 years. Since there is little contact among participant banks in the same syndicate, we only consider the relationship between lead-participant banks (Godlewski et al, 2012).…”

Section: Empirical Framework (I) Relational Distance Communication Amentioning

confidence: 99%

“…There are many examples of financial networks explored in the literature -for example, the coinvestment networks of venture capital and private equity firms (Hochberg et al, 2007(Hochberg et al, , 2010and Meuleman et al, 2009), the networks of corporate boards (Conyon and Muldoon, 2006;Kang and Tan, 2008;and Horton et al, 2012), the links between mutual fund managers and corporate board members (Cohen et al, 2008), and the co-underwriting networks of investment banks in security offerings (Baum et al, 2004). This paper focuses on syndication networks and uses the characteristics of these networks to examine the likelihood of cascading in the syndicated loan market.…”

Section: Introductionmentioning

confidence: 99%

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The Cascade Effect on Lending Conditions: Evidence from the Syndicated Loan Market

Wu¹,

Chang²,

Suardi³

et al. 2013

Business Fin & Account

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This paper investigates, both theoretically and empirically, how interactions among potential lenders may influence contract terms via informational cascade in the syndicated loan market. Our model shows that the ex-post observed interest rate is higher and the probability of syndication failure is lower when potential lenders can only observe the decisions of their predecessors versus when they can freely communicate with each other. Empirical tests confirm the model's predictions and the existence of a cascade effect on lending conditions. Using relational distance to proxy for the segmentation of communication, we find that relational distance is positively related to the loan spread and the requirements for collateral and guarantees, but negatively related to the probability of syndication failure.

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Networking as a Barrier to Entry and the Competitive Supply of Venture Capital

Cited by 259 publications

References 22 publications

After the Break-Up: The Relational and Reputational Consequences of Withdrawals from Venture Capital Syndicates

After the Break-Up: The Relational and Reputational Consequences of Withdrawals from Venture Capital Syndicates

Top Management’s Attention to Discontinuous Technological Change: Corporate Venture Capital as an Alert Mechanism

The Cascade Effect on Lending Conditions: Evidence from the Syndicated Loan Market

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