Cohesiveness or Competitiveness: Venture Capital Syndication Networks and Firms’ Performance in China

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Abstract

We use a time-sequence dataset of 837 Venture Capital Firms in China to investigate how social network characteristics of the VC firms affect their performance. We identified three network positional features: degree centrality, Eigen-value centrality, and efficiency that hypothetically are consequential to VC firm’s performance. Our data analysis reveal that network efficiency is a significant but negative determinant of VC firm’s performance – the network inefficiency, measured by the extent to which the alter firms of an ego firm are connected with each other boosts the ego firm’s performance. We discuss such finding by contextualizing it in the unique institutional environment and emerging market of China.

Authors

• Song Yang, University of Arkansas

• Yuanqin Li, Shanghai University