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6467In this article, we use a social network analysis on the Chinese Venture Capital （VC） industry. By analyzing joint investments and the structural position of VC firms, this research shows the different stages of VC firms’ syndication networks, and how syndication changes depending on the stage. By using the network approach, we identify paths for how a company transitions from a follower into an industrial leader in a changing network. With the help of Ground Truth, in the form of a list of industry leaders, we find three different paths to becoming a leader. These paths correspond to the network resource, structural hole and neighbor network theory. In addition, this paper visualizes their growth and development. There are three common patterns in the development of Chinese VC leaders. The first is bonding-ties, where VC firms have frequent cooperation with one or several leaders. This frequent cooperation results in bonding-ties being formed, and the firm accumulating resources and information over a long period, eventually acquiring a better position in the industry. For this kind of VC firm, cooperation with specific leaders means putting long-term gains ahead of short-term profits. The second pattern is bridging-ties, where VC firms use their professional knowledge （that is unique to them） as an advantage to connect with a few leaders, and this advantage allows them to accumulate resources in successive investments. The third pattern, the information-hub strategy, refers to VC firms gaining investment information from markets or local governments. Here information means investment opportunities, which are valuable resources. This strategy limits VC firms to become leaders, as they are usually followers in most investments, due to their ties to various industry leaders. This research is about how VC firms become VC leaders, and the role they play in the process. Our contribution is the use of visual tools to describe network dynamics, and this research can be a sample for future research, as well as act as a guide for non-leaders in joint investments.
/ Journals / Foreign Economics & Management
Foreign Economics & Management
LiZengquan, Editor-in-Chief
ZhengChunrong, Vice Executive Editor-in-Chief
YinHuifang HeXiaogang LiuJianguo, Vice Editor-in-Chief
The Growth Path of Industrial Leaders: Analyze the Venture Capital Industry from the Network Perspective
Foreign Economics & Management Vol. 41, Issue 02, pp. 3 - 16 (2019) DOI:10.16538/j.cnki.fem.2019.02.001
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References
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Cite this article
Guo Qing, Luo Jiade, Zhou Jianlin, et al. The Growth Path of Industrial Leaders: Analyze the Venture Capital Industry from the Network Perspective[J]. Foreign Economics & Management, 2019, 41(2): 3-16.
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