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Firm Size Effects on Venture Capital Syndication: The Role of Resources and Transaction Costs

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Author Info

  • Bruining, J.
  • Verwaal, E.
  • Lockett, A.
  • Wright, D.M.
  • Manigart, S.

Abstract

The present paper examines firm size effects on the decision of venture capital firms to participate in a venture capital investment syndication network. The authors submit that firm size effects in venture capital syndication are dependent on resource acquisition motives and transaction cost considerations. Analysis of 317 venture capital firms in 6 European countries reveals a curve linear relationship between firm size and venture capital syndication participation. We also find positive and negative moderating effects of firm size. The implication of our findings is that there are both advantages and disadvantages in syndicated investment for the smaller and larger venture capitalist.

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File URL: http://hdl.handle.net/1765/7160
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Bibliographic Info

Paper provided by Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam. in its series Research Paper with number ERS-2005-077-STR.

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Date of creation: 13 Dec 2005
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Handle: RePEc:dgr:eureri:30007806

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Web page: http://www.erim.eur.nl/

Related research

Keywords: Firm Size; Resource-Based View; Syndication Networks; Transaction Cost Theory; Venture Capital;

References

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  1. Joshua Lerner, 1994. "The Syndication of Venture Capital Investments," Financial Management, Financial Management Association, vol. 23(3), Fall.
  2. Williamson, Oliver E, 1983. "Credible Commitments: Using Hostages to Support Exchange," American Economic Review, American Economic Association, vol. 73(4), pages 519-40, September.
  3. Robbie, K & Wright, M & Thompson, S, 1992. "Management buy-ins in the UK," Omega, Elsevier, vol. 20(4), pages 445-456, July.
  4. Lockett, Andy & Wright, Mike, 2001. "The syndication of venture capital investments," Omega, Elsevier, vol. 29(5), pages 375-390, October.
  5. Douglas J. Cumming, 2006. "The Determinants of Venture Capital Portfolio Size: Empirical Evidence," The Journal of Business, University of Chicago Press, vol. 79(3), pages 1083-1126, May.
  6. Bruining, J. & Wright, D.M., 2002. "Entrepreneurial Orientation In Management Buy-Outs And The Contribution Of Venture Capital," Research Paper ERS-2002-67-ORG, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus Uni.
  7. 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.
  8. Elango, B. & Fried, Vance H. & Hisrich, Robert D. & Polonchek, Amy, 1995. "How venture capital firms differ," Journal of Business Venturing, Elsevier, vol. 10(2), pages 157-179, March.
  9. Ernst Verwaal & Bas Donkers, 2002. "Firm Size and Export Intensity: Solving an Empirical Puzzle," Journal of International Business Studies, Palgrave Macmillan, vol. 33(3), pages 603-613, September.
  10. S. Manigart & A. Lockett & M. Meuleman & M. Wright & H. Landström & H. Bruining & P. Desbrières & U. Hommel, 2004. "Why Do Venture Capital Companies Syndicate?," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 04/226, Ghent University, Faculty of Economics and Business Administration.
  11. Bygrave, William D., 1987. "Syndicated investments by venture capital firms: A networking perspective," Journal of Business Venturing, Elsevier, vol. 2(2), pages 139-154.
  12. 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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