The effects of intra-industry and extra-industry networks on performance: A case of venture capital portfolio firms

Cristiano Bellavitis, Igor Filatotchev, Dzidziso Samuel Kamuriwo

Research output: Contribution to journalArticlepeer-review

16 Scopus citations

Abstract

This study examines the influence of intra-industry and extra-industry networks 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.

Original languageEnglish (US)
Pages (from-to)129-144
Number of pages16
JournalManagerial and Decision Economics
Volume35
Issue number2
DOIs
StatePublished - Mar 2014
Externally publishedYes

ASJC Scopus subject areas

  • Business and International Management
  • Strategy and Management
  • Management Science and Operations Research
  • Management of Technology and Innovation

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