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Understanding Diversification Strategy in Venture Capital Market

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  • Zhang Pingying

    (Department of Management, University of North Florida, Jacksonville, FL 32224, USA)

Abstract

Studies of diversification strategy in the venture capital (VC) market have shown that VC firms apply both specialization and diversification strategies. This study builds on the early results and investigates how the nature of diversification – related and unrelated – affects firm performance. We draw arguments from efficient knowledge management and a perspective of structural coordination needs. The secondary data of VC investment from 2002 to 2012 were collected, and regression analysis was performed. Our results suggest that related diversification is associated with better firm performance, and venture capitalists seem to prefer related to unrelated diversification at early stage.

Suggested Citation

  • Zhang Pingying, 2014. "Understanding Diversification Strategy in Venture Capital Market," Entrepreneurship Research Journal, De Gruyter, vol. 4(3), pages 277-296, July.
    • Handle: RePEc:bpj:erjour:v:4:y:2014:i:3:p:20:n:2
    DOI: 10.1515/erj-2013-0058
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    References listed on IDEAS

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    Keywords

    diversification strategy; venture capital;

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