The effects of intra-industry and extra-industry networks on performance: A case of venture capital portfolio firms

Bellavitis, C., Filatotchev, I. & Kamuriwo, D. S. (2014). The effects of intra-industry and extra-industry networks on performance: A case of venture capital portfolio firms. Managerial and Decision Economics, 35(2), pp. 129-144. doi: 10.1002/mde.2647

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Abstract

This study examines the influence of intra-industry and extra-industry networks on firm performance by using data on 1264 UK venture-capital-backed start-up companies. The venture's network was operationalized by connecting together the various portfolio companies sharing the same investor. Regression results show that the venture's network has a strong impact on firm's success. Yet, whereas extra-industry ties are directly and positively linked to the likelihood of the venture to reach a successful exit, intra-industry ties exert a negative impact on companies' performances. However, interaction effects show that once a firm establishes a sufficient number of extra-industry ties, it is able to profit from the network in its industry of operation. Overall, these findings show that an optimal balance of ties is achieved through a diverse set of connections incorporating both intra-industry and extra-industry ties.

Item Type: Article
Additional Information: This is the accepted version of the following article: Bellavitis, C., Filatotchev, I. and Kamuriwo, D. S. (2014), The Effects of Intra-industry and Extra-industry Networks on Performance: A Case of Venture Capital Portfolio Firms. Manage. Decis. Econ., 35: 129–144., which has been published in final form at http://dx.doi.org/10.1002/mde.2647
Subjects: H Social Sciences > HD Industries. Land use. Labor > HD28 Management. Industrial Management
Divisions: Cass Business School > Faculty of Management
URI: http://openaccess.city.ac.uk/id/eprint/6766

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