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Venture Capital as Human Resource Management

FEUNL Working Paper No. 470

39 Pages Posted: 26 Feb 2006  

Antonio Gledson De Carvalho

Fundacao Getulio Vargas School of Business at Sao Paulo

Charles W. Calomiris

Columbia University - Columbia Business School; National Bureau of Economic Research (NBER)

Joao Amaro de Matos

Nova School of Business and Economics

Multiple version iconThere are 2 versions of this paper

Date Written: February 2005

Abstract

Part of the way venture capitalists add value to portfolio firms is 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. We collect and analyze survey data on the operation of this human resource network. Theoretical and empirical analyses indicate that cross-sectional differences among portfolio firms 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 though the network, 2) the riskiness of the activities of the 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. We show that each of these factors reflects the costs and benefits to venture capitalists of participating in the network.

Suggested Citation

De Carvalho, Antonio Gledson and Calomiris, Charles W. and Amaro de Matos, Joao, Venture Capital as Human Resource Management (February 2005). FEUNL Working Paper No. 470. Available at SSRN: https://ssrn.com/abstract=882473 or http://dx.doi.org/10.2139/ssrn.882473

Antonio Gledson De Carvalho (Contact Author)

Fundacao Getulio Vargas School of Business at Sao Paulo ( email )

R. Itapeva, 474 - 7o. andar
Sao Paulo 01313-902
Brazil
+5511 3281-7767 (Phone)

Charles Calomiris

Columbia University - Columbia Business School ( email )

3022 Broadway
601 Uris, Dept. of Finance & Economics
New York, NY 10027
United States
212-854-8748 (Phone)
212-316-9219 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Joao Amaro de Matos

Nova School of Business and Economics ( email )

Campus de Campolide
Lisbon, 1099-038
Portugal

HOME PAGE: http://docentes.fe.unl.pt/~amatos

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