Network Impact on the Investment Strategy and Performance of Cross-Border Venture Capital Institutions in China

Xiaoli Wang () and Yi Tan
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Xiaoli Wang: School of Management, Marist College, Poughkeepsie, NY 12601, USA
Yi Tan: Antai College of Economics & Management, Shanghai Jiaotong University, Shanghai 200030, China

JRFM, 2024, vol. 17, issue 9, 1-20

Abstract: In this paper, we investigate whether the VC institutions’ position in the network affects their investment strategies and performance. Our results show that network location has a negative correlation with geographic concentration index, industry concentration index, and stage concentration index, which indicates that the higher the network position of the cross-border VC institutions, the higher the degree of geographical diversification, the wider the industry diversification, and the higher the investment stage diversification of their investments. In addition, our results show that the relationship between network position and the VC’s performance is not simply linear but rather an inverted U-shaped correlation. When the network location is lower than the critical value, higher network location positively improves the VC’s investment performance; however, when the network location is higher than the critical value, then the relationship is reversed.

Keywords: cross-border venture capital; network location; investment preference; investment performance (search for similar items in EconPapers)
JEL-codes: C E F2 F3 G (search for similar items in EconPapers)
Date: 2024
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