Abstract: Extant studies on managers’ mobility have contended that the mobility of managers is often accompanied by the transfer of human and social capital, thus acting on interfirm relationships. Since the venture capital (VC) industry is characterized as knowledge-intensive, the interpersonal network formed by managers’ mobility plays a crucial role in VC firms’ network formation. Anchored in the resource-based view, this paper explores the impact of VC managers’ outflow on losing VC firms. Leveraging China’s VC industry as the research context, this study empirically tests the hypotheses based on the managers’ mobility and investment data of 1,015 active VC firms. This study finds evidence for the positive effect of VC managers’ outflow on VC firms’ network formation. More importantly, the findings suggest that the positive effect is more pronounced for VC firms in peripheral syndication network positions and VC firms with small TMT sizes, both of which are in vulnerable strategic positions. The study contributes to the employee mobility literature by revealing the positive effect of managers’ outflow on losing firms’ network formation and sheds light on the interplay between needs and opportunities in interfirm alliance formation by uncovering their microfounations.

Key words: managers' mobility, interfirm relationship, venture capital, syndication