Network Position, Network Capability and VC's Investment Performance: An Interaction Model

Abstract

Abstract:

Syndication networkis a prominent feature of the venture capital industry in China. Such network allows venture capital firms (VC) to effectively identify and exploit investment opportunities and obtain a high return on investment. The network typical of VC investors has become a key factor in their success. From the social network perspective, the paper builds a theoretical framework on the analysis of logical relationships between VC's network position, network capability and investment performance, explores the effect of network position and network capability on VC's investment performance, and the moderating roles of network capability. Based on the samples of 479 VCs from the CVSource and Zero2IPO database, a theoretical model is empirically analyzed and tested. The results show that central position and brokerage position have a positive association with VC's investment performance. VCs that are capable to acquire and integrate network resources have a much better investment performance. The more capable VCs are to integrate network resources, the more positively they can apply the network position to their investment performance. Network resource acquiring capability significantly moderated the relationship between brokerage position and investment performance of VC, but does not moderate the relationship between central position and VC's investment performance.

Key words: network position, network resource, acquiring capability, integrating capability, investment performance

Luo Ji, Dang Xinghua, Wang Yuxiao. Network Position, Network Capability and VC's Investment Performance: An Interaction Model[J]. , 2016, 28(9): 83-97.

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