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Venture capital as human resource management

Antonio Gledson de Carvalho, Charles Calomiris and Joao Amaro de Matos

Nova SBE Working Paper Series from Universidade Nova de Lisboa, Nova School of Business and Economics

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 capitalists 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.

Pages: 39 pages
Date: 2005
New Economics Papers: this item is included in nep-bec, nep-cfn, nep-ent and nep-hrm
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Related works:
Journal Article: Venture capital as human resource management (2008) Downloads
Working Paper: Venture Capital as Human Resource Management (2005) Downloads
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