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Does Competition Kill Ties?

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Author Info
Richard Kum-yew Lai (Harvard Business School)

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Abstract

Venture capital firms (VCs) form syndicates that compete to invest in deals. Does more competition makes it less likely that VCs will choose syndicate partners based on past ties? Using over 200,000 observations on how VCs choose each other in 572 biotech deals in Massachussetts from 1967 through 2004, I find the answer is: yes. The theory of embeddedness argues that past ties can explain the pattern of who works with who. I interpret my finding as a first step in demarcating when embeddedness might apply and when atomistic, calculative, economic forces might be a better explanation of who works with who.

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File URL: http://129.3.20.41/eps/othr/papers/0509/0509001.pdf
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Publisher Info
Paper provided by EconWPA in its series Others with number 0509001.

Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Length: 30 pages
Date of creation: 04 Sep 2005
Date of revision:
Handle: RePEc:wpa:wuwpot:0509001

Note: Type of Document - pdf; pages: 30
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Web page: http://129.3.20.41

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Related research
Keywords: economics of sociology; embeddedness; venture capital; ties; competition;

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Find related papers by JEL classification:
G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage

References listed on IDEAS
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