Effects of Relational Capital and Commitment on Venture Capitalists' Perception of Portfolio Company Performance

Posted: 10 Nov 2009

See all articles by Dirk De Clerq

Dirk De Clerq

Brock University - Faculty of Business

Harry J. Sapienza

University of Minnesota - Twin Cities - Carlson School of Management

Date Written: 2006

Abstract

This study is an attempt to explain how therelationship between a venture capital firm (VCF) and its portfolio companies(PFCs) affects the VCF's perception of PFC performance. A discussion ofrelational capital and the relationship between trust and perceived performanceleads to the formulation of several hypotheses. These hypotheses predict thatVCFs' perception of PFC performance will be positively related to the degree towhich the VCF and PFC trust each other, interact socially, and share goals.Finally, VCFs' commitment to a PFC is expected to improve the VCF's perceptionsof PFC performance. Data from a 2002 survey of 298 U.S. venture capital firms are used to testthe hypotheses. Supplemented by interviews with several venture capitalists,the data indicate that relational capital and VCF commitment to the PFC doindeed contribute to VCFs' perceptions of PFC performance. Trust, socialinteraction, goal congruence, and VCF commitment all contribute uniquely toperceptions of PFC performance. (SAA)

Keywords: Portfolio firms, VentureXpert dataset, Capital, Social capital, Venture capital firms, Firm performance, Trust relationships, Commitment, Performance evaluation

Suggested Citation

De Clercq, Dirk and Sapienza, Harry J., Effects of Relational Capital and Commitment on Venture Capitalists' Perception of Portfolio Company Performance (2006). Journal of Business Venturing, Vol. 21, Issue 3, p. 326-347 2006. Available at SSRN: https://ssrn.com/abstract=1503223

Dirk De Clercq (Contact Author)

Brock University - Faculty of Business ( email )

St. Catharines, Ontario L2S 3A1
Canada

Harry J. Sapienza

University of Minnesota - Twin Cities - Carlson School of Management ( email )

19th Avenue South
Minneapolis, MN 55455
United States

Register to save articles to
your library

Register

Paper statistics

Abstract Views
385
PlumX Metrics