Origin and Development of a Network PaperJung-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 advantageousVC investments tend to be highly localizedVC syndication networks

Risk sharing Portfolio selection Value-added Post-investment monitoring

IVC’s complementary knowledge is advantageous

First attemptA mix of IVC and CVC is useful for invested

companies’ performanceShift of focus from network consequences to

network formationDivide into two papers: one on determinants of

VC syndication network, and the other on the effects of network on firm performance

Second attemptMore: the effects of social networks (e.g.,

network positions)Less: Network formation and network evolutionResearch strategy: analogy

CVC, IVC+CVC, CVC Hierarchy, network, market Concurrent make-and-buy decision

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

Third attemptMore: the effects of social networks (e.g.,

network positions)Less: Network formation and network evolutionNetwork formation

Repeated ties Reciprocity Common third party

Research strategy: What has been ignored? Compare interpersonal and interorganizational Homophily

Homophily as an interorganizational networking principleHomophily at the interorganizational levelWhy interesting?

Taken-for-granted assumption: embeddednessSo what?

Target: embeddedness cannot correctly depict network structure or network evolution

Positioning Explaining “hybrid network”

Analytical strategy Comparing pure homophilious and heterophilous

network

Hypotheses generationCounter-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