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

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

Author Info

Bruining, J.
Verwaal, E.
Lockett, A.
Wright, D.M.
Manigart, S. (Erasmus Research Institute of Management (ERIM), RSM Erasmus University)

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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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 Revision_Date: 2008-04-17.

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

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

Joshua Lerner, 1994. "The Syndication of Venture Capital Investments," Financial Management, Financial Management Association, vol. 23(3), Fall.
Williamson, Oliver E, 1983. "Credible Commitments: Using Hostages to Support Exchange," American Economic Review, American Economic Association, vol. 73(4), pages 519-40, September. [Downloadable!] (restricted)
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. [Downloadable!] (restricted)
Bygrave, William D., 1987. "Syndicated investments by venture capital firms: A networking perspective," Journal of Business Venturing, Elsevier, vol. 2(2), pages 139-154. [Downloadable!] (restricted)
Bruining, J. & Wright, D.M., 2002. "Entrepreneurial Orientation In Management Buy-Outs And The Contribution Of Venture Capital," Research Paper ERS-2002-67-ORG Revision_, 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. [Downloadable!]

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