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The effects of social networks and contractual characteristics on the relationship between venture capitalists and entrepreneurs

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  • Kwanghui Lim
  • Brian Cu

Abstract

We show how social ties and contractual factors shape the relationship between entrepreneurs and venture capitalists (VCs). While direct ties result in the VC offering more advice to the entrepreneur, indirect ties result in greater levels of disagreement between VC and entrepreneur. We also find that contractual favorableness is associated with more advice and less disagreement, but that contractual flexibility is surprisingly not significant. The results vary by area of advice and disagreement. Our results suggest that scholars and practitioners must integrate contractual and social network perspectives to better understand the VC-entrepreneur relationship. Copyright Springer Science+Business Media, LLC 2012

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  • Kwanghui Lim & Brian Cu, 2012. "The effects of social networks and contractual characteristics on the relationship between venture capitalists and entrepreneurs," Asia Pacific Journal of Management, Springer, vol. 29(3), pages 573-596, September.
    • Handle: RePEc:kap:asiapa:v:29:y:2012:i:3:p:573-596
    DOI: 10.1007/s10490-010-9212-x
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    Cited by:

    1. Alqatawni, Tahsen, 2013. "The Relationship Conflict between Venture Capital and Entrepreneur," MPRA Paper 48005, University Library of Munich, Germany.
    2. Yuan Li & Haowen Chen & Yi Liu & Mike Peng, 2014. "Managerial ties, organizational learning, and opportunity capture: A social capital perspective," Asia Pacific Journal of Management, Springer, vol. 31(1), pages 271-291, March.
    3. Tachia Chin & Sang-Bing Tsai & Kai Fang & Wenzhong Zhu & Dongjin Yang & Ren-huai Liu & Richard Ting Chang Tsuei, 2016. "EO-Performance relationships in Reverse Internationalization by Chinese Global Startup OEMs: Social Networks and Strategic Flexibility," PLOS ONE, Public Library of Science, vol. 11(9), pages 1-19, September.
    4. Wang, Lei & Zhou, Fangzhao & An, Yunbi, 2017. "Determinants of control structure choice between entrepreneurs and investors in venture capital-backed startups," Economic Modelling, Elsevier, vol. 63(C), pages 215-225.
    5. Kolte, Ashutosh & Festa, Giuseppe & Ciampi, Francesco & Meissner, Dirk & Rossi, Matteo, 2023. "Exploring corporate venture capital investments in clean energy—a focus on the Asia-Pacific region," Applied Energy, Elsevier, vol. 334(C).
    6. Peng, Mike W. & Lee, Seung-Hyun & Hong, Sungjin J., 2014. "Entrepreneurs as intermediaries," Journal of World Business, Elsevier, vol. 49(1), pages 21-31.

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