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The Effects of Intra‐industry and Extra‐industry Networks on Performance: A Case of Venture Capital Portfolio Firms

Year: 2013

Type: article

Abstract: This study examines the influence ofintra‐industryandextra‐industrynetworks 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. Copyright © 2013 John Wiley & Sons, Ltd.

Source: Managerial and Decision Economics

DOI: 10.1002/mde.2647

Authors: Cristiano Bellavitis, Igor Filatotchev, Dzidziso Samuel Kamuriwo

Institutions: University of London, City, University of London, Vienna University of Economics and Business

Language: English

Topic: Private Equity and Venture Capital

Subfield: Accounting

Field: Business, Management and Accounting

Domain: Social Sciences

SDGs: Decent work and economic growth, Industry, innovation and infrastructure

Open Access status: green

OpenAlex ID: W1892435491

FWCI: 10.35

Cites: 109

Cited by: 26

Related to: 10