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Venture Capital as Human Resource Management

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  • Antonio Geldson de Carvalho
  • Charles W. Calomiris
  • Joao Amaro de Matos

Abstract

Venture capitalists add value to portfolio firms by obtaining and transferring information about senior managers across firms over time. Information transfer occurs on a significant scale and takes place both among a single venture capitalist's portfolio firms and between different venture capitalists' firms via a network of venture capitalists, which venture capitalists use to locate and relocate managers. Cross-sectional differences are associated with differences in the intensity with which venture capitalists network. The observable factors relevant in explaining the intensity with which venture capitalists network include: 1) the value of the information transmitted through the network, 2) the riskiness of the activities of portfolio firms, 3) the size of the venture capital fund, 4) the degree of difficulty in enticing executives to manage portfolio firms, and 5) the reputation of the venture capitalist for successfully recycling managers. These factors reflect costs and benefits to venture capitalists of participating in the network.

Suggested Citation

  • Antonio Geldson de Carvalho & Charles W. Calomiris & Joao Amaro de Matos, 2005. "Venture Capital as Human Resource Management," NBER Working Papers 11350, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:11350
    Note: CF DAE LS
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    References listed on IDEAS

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    Cited by:

    1. Bertoni, Fabio & Tykvová, Tereza, 2015. "Does governmental venture capital spur invention and innovation? Evidence from young European biotech companies," Research Policy, Elsevier, vol. 44(4), pages 925-935.
    2. Antonio Gledson De Carvalho & Humberto Gallucci-Netto & Eduardo M. R. Siqueira, 2017. "Determinants of success in venture capital investments: evidence from Brazil," Venture Capital, Taylor & Francis Journals, vol. 19(3), pages 147-161, July.
    3. Bertoni, Fabio & Tykvová, Tereza, 2013. "Which form of venture capital is most supportive of innovation? Evidence from European biotechnology companies," FZID Discussion Papers 69-2013, University of Hohenheim, Center for Research on Innovation and Services (FZID).
    4. Balázs FazekasBalázs Fazekas, 2016. "Value-Creating Uncertainty – A Real Options Approach in Venture Capital," Financial and Economic Review, Magyar Nemzeti Bank (Central Bank of Hungary), vol. 15(4), pages 151-166.
    5. SAU, Lino, 2007. "New Pecking Order Financing for Innovative Firms: an Overview," MPRA Paper 3659, University Library of Munich, Germany.
    6. Anne Stévenot & Loris Guéry, 2010. "Le rôle «d’entrepreneur institutionnel» des capitalinvestisseurs auprès des entreprises:des influences coercitives et cognitives liées à l’importance relative des ressources," Revue Finance Contrôle Stratégie, revues.org, vol. 13(2), pages 107-144., June.

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    More about this item

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand

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