Requisite expertise, firm reputation, and status in venture capital investment allocation decisions

Dimo Dimov; Dean A. Shepherd; Kathleen M. Sutcliffe

doi:10.1016/j.jbusvent.2006.05.001

Requisite expertise, firm reputation, and status in venture capital investment allocation decisions

Dimo Dimov, Dean A. Shepherd, Kathleen M. Sutcliffe

Research output: Contribution to journal › Article › peer-review

Abstract

Drawing together research in the upper echelon perspective, strategy, and organizational sociology, this paper examines (1) the relationship between the finance expertise of a venture capital (VC) firm's management team and investment selection, and (2) the moderation of this relationship by the VC firm's social position. We find that while finance expertise is associated with a lower proportion of early-stage investments, this relationship is weaker for firms with high reputation and stronger for firms with high status. We conclude with a discussion of the importance and nuances of external image considerations on investment decisions as well as insights into the importance of the requisite nature of expertise.

Original language	English (US)
Pages (from-to)	481-502
Number of pages	22
Journal	Journal of Business Venturing
Volume	22
Issue number	4
DOIs	https://doi.org/10.1016/j.jbusvent.2006.05.001
State	Published - Jul 2007
Externally published	Yes

Keywords

Investment selection
Reputation
Status
TMT expertise
Venture capital

ASJC Scopus subject areas

Business and International Management
Management of Technology and Innovation

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10.1016/j.jbusvent.2006.05.001

Cite this

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title = "Requisite expertise, firm reputation, and status in venture capital investment allocation decisions",

abstract = "Drawing together research in the upper echelon perspective, strategy, and organizational sociology, this paper examines (1) the relationship between the finance expertise of a venture capital (VC) firm's management team and investment selection, and (2) the moderation of this relationship by the VC firm's social position. We find that while finance expertise is associated with a lower proportion of early-stage investments, this relationship is weaker for firms with high reputation and stronger for firms with high status. We conclude with a discussion of the importance and nuances of external image considerations on investment decisions as well as insights into the importance of the requisite nature of expertise.",

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AU - Dimov, Dimo

AU - Shepherd, Dean A.

AU - Sutcliffe, Kathleen M.

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N2 - Drawing together research in the upper echelon perspective, strategy, and organizational sociology, this paper examines (1) the relationship between the finance expertise of a venture capital (VC) firm's management team and investment selection, and (2) the moderation of this relationship by the VC firm's social position. We find that while finance expertise is associated with a lower proportion of early-stage investments, this relationship is weaker for firms with high reputation and stronger for firms with high status. We conclude with a discussion of the importance and nuances of external image considerations on investment decisions as well as insights into the importance of the requisite nature of expertise.

AB - Drawing together research in the upper echelon perspective, strategy, and organizational sociology, this paper examines (1) the relationship between the finance expertise of a venture capital (VC) firm's management team and investment selection, and (2) the moderation of this relationship by the VC firm's social position. We find that while finance expertise is associated with a lower proportion of early-stage investments, this relationship is weaker for firms with high reputation and stronger for firms with high status. We conclude with a discussion of the importance and nuances of external image considerations on investment decisions as well as insights into the importance of the requisite nature of expertise.

KW - Investment selection

KW - Reputation

KW - Status

KW - TMT expertise

KW - Venture capital

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ER -

Requisite expertise, firm reputation, and status in venture capital investment allocation decisions

Abstract

Keywords

ASJC Scopus subject areas

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