Blurring Firm Boundaries: The Role of Venture Capital in Strategic Alliances

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122 Scopus citations

Abstract

This study documents a new value-added role of venture capitalists and addresses important questions about how resources are combined to create firms. As part of the nexus of contracts surrounding a firm, strategic alliances can be viewed as relational contracts that blur firm boundaries. This paper provides evidence that alliances are more frequent among companies sharing a common venture capitalist. The effect is concentrated in alliances in which contracting problems are more pronounced, consistent with venture capitalists utilizing informational and other advantages in providing resources to firms. Further, these alliances improve the probability of exit for venture-backed firms.

Original languageEnglish (US)
Pages (from-to)1137-1168
Number of pages32
JournalJournal of Finance
Volume63
Issue number3
DOIs
StatePublished - Jan 1 2008

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics

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