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Origin and Development of a Network Paper. Jung-Chin Shen. Origin of the paper. It seems that a syndication network consisting both IVC and CVC increases the chance of IPO of an invested company. Behind the statement Incomplete data Wrong measure Wrong method Poor reasoning

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Origin and Development of a Network Paper

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Origin and Development of a Network Paper

Jung-Chin Shen


Origin of the paper

  • It seems that a syndication network consisting both IVC and CVC increases the chance of IPO of an invested company.

  • Behind the statement

    • Incomplete data

    • Wrong measure

    • Wrong method

    • Poor reasoning

  • Development of a paper is like a real option: when to exercise an abandon option is a strategic decision.


What idea can be a paper?

  • Interesting

    • Interesting theories are those which deny certain assumptions of their audience, while non- interesting theories are those which affirm certain assumptions of their audience (Davis, 1971)

  • Important/Relevant: so what?

  • Practical implications

    • The tension between theory and practice:

      • Academics is important in its own right

      • Nothing is more practical than a good theory

      • A theory will be considered truly interesting only if it has repercussions on both levels


What do we know about VC network?

  • Network positions are advantageous

  • VC investments tend to be highly localized

  • VC syndication networks

    • Risk sharing

    • Portfolio selection

    • Value-added

    • Post-investment monitoring

  • IVC’s complementary knowledge is advantageous


First attempt

A mix of IVC and CVC is useful for invested companies’ performance

Shift of focus from network consequences to network formation

Divide into two papers: one on determinants of VC syndication network, and the other on the effects of network on firm performance


Second attempt

  • More: the effects of social networks (e.g., network positions)

  • Less: Network formation and network evolution

  • Research strategy: analogy

    • CVC, IVC+CVC, CVC

    • Hierarchy, network, market

    • Concurrent make-and-buy decision

  • Theoretical contribution? Empirical contribution? Why interesting? So what?


Third attempt

  • More: the effects of social networks (e.g., network positions)

  • Less: Network formation and network evolution

  • Network formation

    • Repeated ties

    • Reciprocity

    • Common third party

  • Research strategy: What has been ignored?

    • Compare interpersonal and interorganizational

    • Homophily


Homophily as an interorganizational networking principle

  • Homophily at the interorganizational level

  • Why interesting?

    • Taken-for-granted assumption: embeddedness

  • So what?

    • Target: embeddedness cannot correctly depict network structure or network evolution

  • Positioning

    • Explaining “hybrid network”

  • Analytical strategy

    • Comparing pure homophilious and heterophilous network


Hypotheses generation

  • Counter-intuitive starting point:

    • Hybrid network is costly….

  • Possible candidates

    • Spatial uncertainty

    • Industry distance

    • Experience

  • Theory development

    • Combine information economics and network theory

  • Justify data and sample selection


A beautiful theory and inconvenient facts


Control of publicly traded companies in East Asia


Group affiliation around the world

Source: Khanna and Yafeh (2005)


Group heterogeneity around the world


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