Seller Organizations, Market Brokers and Brokerage in the Context of U.S. Venture Capital Market
Year: 2017
Type: dissertation
Abstract: Market intermediaries – brokers – play a critical role in making markets by bridging the buyer-seller informational interface. This role is particularly valuable for sellers who often lack information about buyers. In this dissertation, I explore when sellers need brokers and their resources and to what extent sellers gain benefits from them. To date, most of brokerage research has built theories and empirical evidence about actors who broker. This dissertation complements to extant research by taking the perspective of the brokered – actor who connects to a broker. I develop and test my theoretical arguments in the context of the U.S. venture capital market in which start-ups as sellers choose to use law firms as market brokers for their venture capital financing. In the first study, I explore the brokering roles of law firms in the venture capital market. I specify two types of roles, connection-making and coordination, based on qualitative and quantitative analyses. Building on the first study, the second study explores brokerage motivations for sellers. I examine when sellers choose to rely on brokers for their connection-making and coordination roles. In parallel with these roles, I test and find support for catalysis and coordination conditions that increase incentives to use brokers: (1) when they struggle to secure financing deals, (2) when they form deals with buyers that have highly embedded brokerage routines and (3) when they form deals with multiple buyers. In the third study, I explore brokerage outcomes for sellers. I propose that brokers develop a portfolio of clients (buyers), exploiting alternatives to create new matches in attempts that meet both profit motivation and reputation building effort. I hypothesize and find support that brokers maintain strong ties with some buyers by repetitive representation, while they utilize other buyers to create matches for sellers that they represent. I conclude by integrating the three studies to elaborate on the studies’ common themes and to make implications on research concerning market brokerage and research concerning entrepreneurship.
Source: TSpace (University of Toronto)
Author: Kwangjun An
Language: English
Subfield: Finance
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W2942294452