How Venture Capital Firms Choose Syndication Partners: The Moderating Effects of Institutional Uncertainty and Investment Preference

Lu Zheng, Likun Cao, Jie Ren*, Xibao Li, Ximing Yin, Jin Chen

*Corresponding author for this work

    Research output: Contribution to journalArticlepeer-review

    2 Citations (Scopus)

    Abstract

    This study investigates how venture capital firms (VCs) choose syndication partners. Exponential random graph models of Chinese VC syndication networks from 2006 to 2013 show that the homophily mechanism does not always determine VCs' partner selection. In selecting partners, VCs have to strike a balance between reducing uncertainty and mobilizing heterogeneous resources. Therefore, decisions about partners depend on institutional uncertainty and VCs' investment preferences. While VCs that focus on traditional business in an immature market are more likely to form homogeneous syndications, their peers that prefer to invest in innovative companies and that can rely on a stable market tend to syndicate with heterogeneous partners.

    Original languageEnglish
    Pages (from-to)463-490
    Number of pages28
    JournalManagement and Organization Review
    Volume18
    Issue number3
    DOIs
    Publication statusPublished - 7 Jun 2022

    Keywords

    • VC syndications
    • exponential random graph models
    • homophily
    • institutional uncertainty
    • investment preference

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    Zheng, L., Cao, L., Ren, J., Li, X., Yin, X., & Chen, J. (2022). How Venture Capital Firms Choose Syndication Partners: The Moderating Effects of Institutional Uncertainty and Investment Preference. Management and Organization Review, 18(3), 463-490. https://doi.org/10.1017/mor.2021.26