IDEAS home Printed from https://ideas.repec.org/a/kap/asiapa/v36y2019i2d10.1007_s10490-017-9561-9.html
   My bibliography  Save this article

Syndication through social embeddedness: A comparison of foreign, private and state-owned venture capital (VC) firms

Author

Listed:
  • Jar-Der Luo

    (Tsinghua University)

  • Ke Rong

    (Tsinghua University)

  • Kunhao Yang

    (Tsinghua University)

  • Rong Guo

    (Chinese Academy of Science and Technology for Development (CASTED))

  • YaQi Zou

    (Tsinghua University)

Abstract

This paper explores the different syndication behavior in various types of Chinese venture capitals (VC), in particular it focuses on foreign, private-owned and state-owned VC firms and these firms’ behavior when faced with institutional uncertainties. Mixed methods data analysis was conducted using the Simuton database of 1,173 VC firms and snowball interviews were also conducted in the Chinese state-owned and private-owned VCs as well as foreign VCs. Findings indicate foreign VC investors are more willing to build much denser relationships than those of Chinese state-owned and private VC firms in order to overcome the uncertainty. This result provides additional evidence that adopting close relationships or a guanxi-based (informal social network) strategy does not only depend on cultural issues such as East Asian culture, but also on high institutional uncertainty. Furthermore, this paper develops four propositions on how VC firms establish syndication influenced by high institutional uncertainty. Finally, the conclusion and discussion sections put forward implications to VC companies about how informal social networks facilitate the internationalization process and growth in foreign markets.

Suggested Citation

  • Jar-Der Luo & Ke Rong & Kunhao Yang & Rong Guo & YaQi Zou, 2019. "Syndication through social embeddedness: A comparison of foreign, private and state-owned venture capital (VC) firms," Asia Pacific Journal of Management, Springer, vol. 36(2), pages 499-527, June.
    • Handle: RePEc:kap:asiapa:v:36:y:2019:i:2:d:10.1007_s10490-017-9561-9
    DOI: 10.1007/s10490-017-9561-9
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s10490-017-9561-9
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s10490-017-9561-9?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Williamson, Oliver E, 1979. "Transaction-Cost Economics: The Governance of Contractural Relations," Journal of Law and Economics, University of Chicago Press, vol. 22(2), pages 233-261, October.
    2. Jan Johanson & Jan-Erik Vahlne, 2009. "The Uppsala internationalization process model revisited: From liability of foreignness to liability of outsidership," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 40(9), pages 1411-1431, December.
    3. James A. Brander & Raphael Amit & Werner Antweiler, 2002. "Venture‐Capital Syndication: Improved Venture Selection vs. The Value‐Added Hypothesis," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 11(3), pages 423-452, September.
    4. John Dunning, 2001. "The Eclectic (OLI) Paradigm of International Production: Past, Present and Future," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 8(2), pages 173-190.
    5. Bengt Holmstrom, 1982. "Moral Hazard in Teams," Bell Journal of Economics, The RAND Corporation, vol. 13(2), pages 324-340, Autumn.
    6. Yael V. Hochberg & Alexander Ljungqvist & Yang Lu, 2007. "Whom You Know Matters: Venture Capital Networks and Investment Performance," Journal of Finance, American Finance Association, vol. 62(1), pages 251-301, February.
    7. Williamson, Oliver E. & Winter, Sidney G. (ed.), 1993. "The Nature of the Firm: Origins, Evolution, and Development," OUP Catalogue, Oxford University Press, number 9780195083569.
    8. Yael V. Hochberg & Alexander Ljungqvist & Yang Lu, 2010. "Networking as a Barrier to Entry and the Competitive Supply of Venture Capital," Journal of Finance, American Finance Association, vol. 65(3), pages 829-859, June.
    9. Tain‐Jy Chen, 2003. "Network Resources for Internationalization: The Case of Taiwan's Electronics Firms," Journal of Management Studies, Wiley Blackwell, vol. 40(5), pages 1107-1130, July.
    10. Bygrave, William D., 1988. "The structure of the investment networks of venture capital firms," Journal of Business Venturing, Elsevier, vol. 3(2), pages 137-157.
    11. Bygrave, William D., 1987. "Syndicated investments by venture capital firms: A networking perspective," Journal of Business Venturing, Elsevier, vol. 2(2), pages 139-154.
    12. Ranjay Gulati, 1999. "Network location and learning: the influence of network resources and firm capabilities on alliance formation," Strategic Management Journal, Wiley Blackwell, vol. 20(5), pages 397-420, May.
    13. Homin Chen & Tain-Jy Chen, 1998. "Network Linkages and Location Choice in Foreign Direct Investment," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 29(3), pages 445-467, September.
    14. Admati, Anat R & Pfleiderer, Paul, 1994. "Robust Financial Contracting and the Role of Venture Capitalists," Journal of Finance, American Finance Association, vol. 49(2), pages 371-402, June.
    15. Bruce Kogut & Pietro Urso & Gordon Walker, 2007. "Emergent Properties of a New Financial Market: American Venture Capital Syndication, 1960-2005," Management Science, INFORMS, vol. 53(7), pages 1181-1198, July.
    16. Lockett, Andy & Wright, Mike, 2001. "The syndication of venture capital investments," Omega, Elsevier, vol. 29(5), pages 375-390, October.
    17. Granovetter, Mark, 2000. "A Theoretical Agenda for Economic Sociology," Center for Culture, Organizations and Politics, Working Paper Series qt4mk4g08q, Center for Culture, Organizations and Politics of theInstitute for Research on Labor and Employment, UC Berkeley.
    18. Rong, Ke & Wu, Jinxi & Shi, Yongjiang & Guo, Liang, 2015. "Nurturing business ecosystems for growth in a foreign market: Incubating, identifying and integrating stakeholders," Journal of International Management, Elsevier, vol. 21(4), pages 293-308.
    19. Oliver E. Williamson & Scott E. Masten (ed.), 1995. "Transaction Cost Economics," Books, Edward Elgar Publishing, volume 0, number 594.
    20. Hemmert, Martin, 1999. "'Intermediate Organization' Revisited: A Framework for the Vertical Division of Labor in Manufacturing and the Case of the Japanese Assembly Industries," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 8(3), pages 487-517, September.
    21. Stoian, Carmen, 2013. "Extending Dunning's Investment Development Path: The role of home country institutional determinants in explaining outward foreign direct investment," International Business Review, Elsevier, vol. 22(3), pages 615-637.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Xiaoming He & Lin Cui & Klaus E. Meyer, 2022. "How state and market logics influence firm strategy from within and outside? Evidence from Chinese financial intermediary firms," Asia Pacific Journal of Management, Springer, vol. 39(2), pages 587-614, June.
    2. Bing Feng & Kaiyang Sun & Ziqi Zhong & Min Chen, 2021. "The Internal Connection Analysis of Information Sharing and Investment Performance in the Venture Capital Network Community," IJERPH, MDPI, vol. 18(22), pages 1-16, November.
    3. Peter Ping Li & En Xie, 2019. "The unique research on the informal ties and social networks in East Asia: Diverse perspectives and new research agenda," Asia Pacific Journal of Management, Springer, vol. 36(2), pages 305-319, June.
    4. Ruling Zhang & Killian J. McCarthy & Xiao Wang & Zengrui Tian, 2021. "How Does Network Structure Impact Follow-On Financing through Syndication? Evidence from the Renewable Energy Industry," Sustainability, MDPI, vol. 13(7), pages 1-23, April.
    5. Dong, Weijia & Li, Ye & Lv, Xin & Yu, Chang, 2021. "How does venture capital spur the innovation of environmentally friendly firms? Evidence from China," Energy Economics, Elsevier, vol. 103(C).
    6. Amir Pezeshkan & Adam Smith & Stav Fainshmidt & Anil Nair, 2022. "A neo-configurational institutional analysis of international venture capital attractiveness and performance: insights for Asia-Pacific," Asia Pacific Journal of Management, Springer, vol. 39(2), pages 365-393, June.
    7. Abosag, Ibrahim & Yen, Dorothy Ai-wan & Barnes, Bradley R. & Gadalla, Eman, 2021. "Rethinking guanxi and performance: Understanding the dark side of Sino–U.S. business relationships," International Business Review, Elsevier, vol. 30(4).
    8. Jiani Wang & Su Chen & William Scheela, 2023. "Foreign venture capital investing strategies in transition economies: The case of China," Asia Pacific Journal of Management, Springer, vol. 40(4), pages 1481-1524, December.
    9. Wang, Xin & Ma, Chaoqun & Yao, Zheng, 2024. "The double-edged sword effect of digital capability on green innovation: Evidence from Chinese listed industrial firms," Economic Analysis and Policy, Elsevier, vol. 82(C), pages 321-339.
    10. Feng, Bing & Sun, Kaiyang & Zhong, Ziqi & Chen, Min, 2021. "The internal connection analysis of information sharing and investment performance in the venture capital network community," LSE Research Online Documents on Economics 112731, London School of Economics and Political Science, LSE Library.
    11. Douglas Cumming & Satish Kumar & Weng Marc Lim & Nitesh Pandey, 2023. "Mapping the venture capital and private equity research: a bibliometric review and future research agenda," Small Business Economics, Springer, vol. 61(1), pages 173-221, June.
    12. Keith D. Brouthers & Liang Chen & Sali Li & Noman Shaheer, 2022. "Charting new courses to enter foreign markets: Conceptualization, theoretical framework, and research directions on non-traditional entry modes," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 53(9), pages 2088-2115, December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Jie Ren & Jar-Der Luo & Ke Rong, 2020. "How Do Venture Capitals Build Up Syndication Ecosystems for Sustainable Development?," Sustainability, MDPI, vol. 12(11), pages 1-14, May.
    2. Wang, Lanfang & Wang, Susheng, 2012. "Endogenous networks in investment syndication," Journal of Corporate Finance, Elsevier, vol. 18(3), pages 640-663.
    3. Das, Sanjiv R. & Jo, Hoje & Kim, Yongtae, 2011. "Polishing diamonds in the rough: The sources of syndicated venture performance," Journal of Financial Intermediation, Elsevier, vol. 20(2), pages 199-230, April.
    4. Zhiyang Liu & Zhiqi Chen, 2014. "Venture Capital Networks and Investment Performance in China," Australian Economic Papers, Wiley Blackwell, vol. 53(1-2), pages 97-111, June.
    5. Zhang, Jing & Zhang, Wei & Schwab, Andreas, 2024. "Interorganizational triads for foreign-market entry: Partnerships among Western, bridge-economy, and local VCs in Mainland China," Journal of Business Venturing, Elsevier, vol. 39(1).
    6. Dimitris Christopoulos & Stefan Koeppl & Monika Köppl-Turyna, 2022. "Syndication networks and company survival: evidence from European venture capital deals," Venture Capital, Taylor & Francis Journals, vol. 24(2), pages 105-135, April.
    7. Sophie Manigart & Andy Lockett & Miguel Meuleman & Mike Wright & Hans Landström & Hans Bruining & Philippe Desbrières & Ulrich Hommel, 2006. "Venture Capitalists’ Decision to Syndicate," Entrepreneurship Theory and Practice, , vol. 30(2), pages 131-153, March.
    8. Miguel Meuleman & Andy Lockett & Sophie Manigart & Mike Wright, 2010. "Partner Selection Decisions in Interfirm Collaborations: The Paradox of Relational Embeddedness," Journal of Management Studies, Wiley Blackwell, vol. 47(6), pages 995-1019, September.
    9. Wang, Pengfei, 2020. "Broadening versus reinforcing investor portfolios: Social structure and the search for venture capital investors," Journal of Business Venturing, Elsevier, vol. 35(1).
    10. Hu, Xiao & Wang, Jiayi & Wu, Banggang & Xiang, Shuting, 2023. "Venture capital firms' lead orientation and entry to new investment markets," Pacific-Basin Finance Journal, Elsevier, vol. 82(C).
    11. Kang, Jun-Koo & Li, Yingxiang & Oh, Seungjoon, 2022. "Venture Capital Coordination in Syndicates, Corporate Monitoring, and Firm Performance," Journal of Financial Intermediation, Elsevier, vol. 50(C).
    12. Christian Hopp, 2010. "When do venture capitalists collaborate? Evidence on the driving forces of venture capital syndication," Small Business Economics, Springer, vol. 35(4), pages 417-431, November.
    13. Miguel Meuleman & Mike Wright & Sophie Manigart & Andy Lockett, 2009. "Private Equity Syndication: Agency Costs, Reputation and Collaboration," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 36(5-6), pages 616-644.
    14. Schilder, Dirk, 2007. "Venture capital syndicate networks: the determinants of interconnectedness," Freiberg Working Papers 2007/03, TU Bergakademie Freiberg, Faculty of Economics and Business Administration.
    15. Asif Iqbal Siddiqui & Dora Marinova, 2016. "Funding Liquidity Risk, Syndication Behavior And The Risk Culture Of The Australian Venture Capital Industry," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 64(05), pages 1279-1297, December.
    16. Casamatta, Catherine & Haritchabalet, Carole, 2007. "Experience, screening and syndication in venture capital investments," Journal of Financial Intermediation, Elsevier, vol. 16(3), pages 368-398, July.
    17. Sang Yoon Shin, 2019. "Network advantage’s effect on exit performance: examining venture capital’s inter-organizational networks," International Entrepreneurship and Management Journal, Springer, vol. 15(1), pages 21-42, March.
    18. Jonathan Labbé, 2020. "Venture capital risk, start-ups and innovation: the syndication of venture capital investments recipe [Capital-risque, start-ups et innovation : la recette du financement par syndication]," Post-Print hal-03000103, HAL.
    19. Thomas Keil & Markku V.J. Maula & Cameron Wilson, 2010. "Unique Resources of Corporate Venture Capitalists as a Key to Entry into Rigid Venture Capital Syndication Networks," Entrepreneurship Theory and Practice, , vol. 34(1), pages 83-103, January.
    20. Lei Zhang, 2019. "Founders Matter! Serial Entrepreneurs and Venture Capital Syndicate Formation," Entrepreneurship Theory and Practice, , vol. 43(5), pages 974-998, September.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kap:asiapa:v:36:y:2019:i:2:d:10.1007_s10490-017-9561-9. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.