Resource exchange and the Asian venture capital fund/portfolio company dyad

Cornelius, Barbara; Naqi, Sayed Ahmed

doi:10.1080/13691060213716

Cited by 4 publications

(1 citation statement)

References 26 publications

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“…The VC firms do not only provide capital for portfolio companies but also get involved in a broad range of activities in the portfolio companies. The portfolio companies tend to specialize in identifying unexploited opportunities and possess the skill to combine various resources to exploit those opportunities in a novel fashion, while VC firms can offer to create networks of both individuals and organizations to efficiently acquire capital and help find suppliers and customers and build up credibility for their portfolio companies (Cornelius and Naqi, 2002). Portfolio companies, particularly at early-stage, may have technical expertise but lack managerial experiences and need managerial coaching of VC firms (Schefczyk and Gerpott, 2001).…”

Section: Power Source Match Perspectivementioning

confidence: 99%

Effect of power source mismatch on new venture performance

Wang

Jiang

2018

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Purpose The venture capital syndication brings in various resources for the portfolio firms, which positively affects those firms’ performance, while conflicts within syndicates also have negative impact on the portfolio firms’ performance. This study aims to explore the two opposite effects of the venture capital syndication on the portfolio firms’ operations. Drawing on Ma et al.’s (2013) power source match perspective, the authors examine the effect of (mis)match of power source between ownership and status on the portfolio firms’ performance. Design/methodology/approach The study uses panel data from two professional databases containing information about the venture capital-backed firms in China. The fixed effect model is applied to analyze the data. Findings This study found that power source match in the venture capital syndicates works positively on the portfolio firms’ performance. This positive relationship is weakened when there is ownership-dominated power source mismatch present. Practical implications This study suggests that when new ventures search for venture capital, it is better to allocate greater ownership to the venture capital providers with high-status power, so that ownership power and status power can have a proper match to increase the coordination among venture capital providers, thereby helping portfolio firms perform better. Originality/value This study looks into the performance of a portfolio firm when there is power a (mis)match in a venture capital syndication, extending the current literature in this area where only the performance of the venture syndications is examined.

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Section: Power Source Match Perspectivementioning

confidence: 99%