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Entrepreneurs’ Access to Private Equity in China: The Role of Social Capital

Author

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  • Bat Batjargal

    (Davis Center, Room 240A, Harvard University, 625 Massachusetts Avenue, Cambridge, Massachusetts 02139, and Guanghua School of Management, Peking University, Beijing 100871, China)

  • Mannie (Manhong) Liu

    (School of Finance, Renmin University, Beijing, China)

Abstract

This article examines the effect of entrepreneurs’ social capital on investment decisions of venture capitalists. The empirical data is composed of 158 venture capital decisions in the People’s Republic of China. We found that entrepreneurs’ social capital has significant effects on investment selection decisions of venture capitalists in interaction with growth potential and technology/products of the venture. We also found that strong ties between entrepreneurs and venture capitalists have significant direct effects on investment process decisions such as contractual covenants, investment delivery, and venture valuation.

Suggested Citation

  • Bat Batjargal & Mannie (Manhong) Liu, 2004. "Entrepreneurs’ Access to Private Equity in China: The Role of Social Capital," Organization Science, INFORMS, vol. 15(2), pages 159-172, April.
    • Handle: RePEc:inm:ororsc:v:15:y:2004:i:2:p:159-172
    DOI: 10.1287/orsc.1030.0044
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    References listed on IDEAS

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