Venture Capital as Human Resource Management
Coauthor(s): Antonio Gledson de Carvalho, Joao Amaro de Matos.
Venture capitalists add value to portfolio firms 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%u2019s portfolio firms and between different venture capitalists%u2019 firms via a network of venture capitalists, which venture capitalists use to locate and relocate managers. Cross-sectional differences 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 through the network, 2) the riskiness of the activities of 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. These factors reflect costs and benefits to venture capitalists of participating in the network.
Source: Journal of Economics and Business
Calomiris, Charles, Antonio Gledson de Carvalho, and Joao Amaro de Matos. "Venture Capital as Human Resource Management." Journal of Economics and Business 60, no. 3 (May 2008): 223-55.