For young technology firms, acquiring resources can often be costly die to the information asymmetry and uncertainty that exist surrounding the new technology. We contend that managers of technology companies use signals strategically as a potent tool for mobilizing necessary resources. We specifically examine a financing phenomenon known as private equity, or private placements. Our empirical analyses focus on the degree to which private equity placements are effective signals about firm quality. We examine whether these signals enable technology to mobilize three kinds of resources: capital, research partners, and commercial partners. Overall, the empirical analyses demonstrated consistent and cogent effects of the signaling properties of private equity placements on the ability to attract financial and complementary resources.
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