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Resources access needs and capabilities as mediators of the relationship between VC firm size and syndication

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  • Ernst Verwaal

    ()

  • Hans Bruining
  • Mike Wright
  • Sophie Manigart
  • Andy Lockett

Abstract

Drawing from the resource-based view and transaction costs economics, we develop a theoretical framework to explain why small and large firms face different levels of resource access needs and resource access capabilities, which mediate the relationship between firm size and hybrid governance. Employing a sample of 317 venture capital firms, drawn across 6 European countries, we empirically assess our framework in the context of venture capital syndication. We estimate a path model using structural equation modeling and find, consistent with our theoretical framework, mediating effects of different types of resource access needs and resource access capabilities between VC firm size and syndication frequency. These findings advance the small business literature by highlighting the trade-offs that size imposes on firms that seek to manage their access to external resources through hybrid governance strategies.

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File URL: http://hdl.handle.net/10.1007/s11187-008-9126-x
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Bibliographic Info

Article provided by Springer in its journal Small Business Economics.

Volume (Year): 34 (2010)
Issue (Month): 3 (April)
Pages: 277-291

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Handle: RePEc:kap:sbusec:v:34:y:2010:i:3:p:277-291

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Web page: http://www.springerlink.com/link.asp?id=100338

Related research

Keywords: Venture capital; Firm size; Investment syndication; Resource access capabilities; Resource access needs; Transaction cost economics; Hybrid governance; G2; G3; D8; L26;

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References

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  1. Sapienza, Harry J. & Manigart, Sophie & Vermeir, Wim, 1996. "Venture capitalist governance and value added in four countries," Journal of Business Venturing, Elsevier, vol. 11(6), pages 439-469, November.
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  8. Busenitz, Lowell W. & Barney, Jay B., 1997. "Differences between entrepreneurs and managers in large organizations: Biases and heuristics in strategic decision-making," Journal of Business Venturing, Elsevier, vol. 12(1), pages 9-30, January.
  9. Lockett, Andy & Wright, Mike, 2001. "The syndication of venture capital investments," Omega, Elsevier, vol. 29(5), pages 375-390, October.
  10. Cumming, Douglas & Siegel, Donald S. & Wright, Mike, 2007. "Private equity, leveraged buyouts and governance," Journal of Corporate Finance, Elsevier, vol. 13(4), pages 439-460, September.
  11. James A. Brander & Raphael Amit & Werner Antweiler, 2002. "Venture-Capital Syndication: Improved Venture Selection vs. The Value-Added Hypothesis," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 11(3), pages 423-452, 09.
  12. Bygrave, William D., 1987. "Syndicated investments by venture capital firms: A networking perspective," Journal of Business Venturing, Elsevier, vol. 2(2), pages 139-154.
  13. Oliver E. Williamson, 1967. "Hierarchical Control and Optimum Firm Size," Journal of Political Economy, University of Chicago Press, vol. 75, pages 123.
  14. Yael V. Hochberg & Alexander Ljungqvist & Yang Lu, 2007. "Whom You Know Matters: Venture Capital Networks and Investment Performance," Journal of Finance, American Finance Association, vol. 62(1), pages 251-301, 02.
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Cited by:
  1. Dominique Dufour & Eric Nasica & Dominique Torre, 2013. "Syndication in private equity industry: comparing the strategies of independent and captive venture capitalists," Working Papers halshs-00853695, HAL.

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