Small Fish, Big Fish: The Impact of Venture Capital Portfolio Composition on Affiliation Benefits

Ozmel, U., Guler, I. (2015) Small Fish, Big Fish: The Impact of Venture Capital Portfolio Composition on Affiliation Benefits, Strategic Management Journal 36(13): 2039-2057.

41 Pages Posted: 5 Nov 2016 Last revised: 4 Mar 2017

See all articles by Umit Ozmel

Umit Ozmel

Purdue University - Krannert School of Management

Isin Guler

University of North Carolina (UNC) at Chapel Hill - Kenan-Flagler Business School

Date Written: November 4, 2015

Abstract

This study examines whether the value a venture derives from an affiliation depends on its relative standing in the portfolio of all affiliations held by its partner. Relative standing refers to how the venture ranks among other ventures in the partner’s portfolio with respect to expected returns. The relative standing of a venture in its partner’s portfolio influences the venture’s access to the partner’s resources and the venture’s performance. We also argue that a venture’s relative standing becomes more important to performance when the partner has a larger portfolio or higher status. In addition to a field study, we test the effect of a venture’s relative standing in a venture capital portfolio on its exit likelihood, controlling for endogeneity. We find support for our hypotheses.

Suggested Citation

Ozmel, Umit and Guler, Isin, Small Fish, Big Fish: The Impact of Venture Capital Portfolio Composition on Affiliation Benefits (November 4, 2015). Ozmel, U., Guler, I. (2015) Small Fish, Big Fish: The Impact of Venture Capital Portfolio Composition on Affiliation Benefits, Strategic Management Journal 36(13): 2039-2057. , Available at SSRN: https://ssrn.com/abstract=2864586

Umit Ozmel

Purdue University - Krannert School of Management ( email )

610 Purdue Mall
West Lafayette, IN 47907
United States

Isin Guler (Contact Author)

University of North Carolina (UNC) at Chapel Hill - Kenan-Flagler Business School ( email )

McColl Building
Chapel Hill, NC 27599-3490
United States

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