Bringing the Stages Back in: Social Network Ties and Start-up firms' Access to Venture Capital in China

摘要

Research summarySocial networks are believed to help start-ups access venture capital (VC). However, the causal mechanisms remain unclear because social ties probably influence both a start-up's likelihood of being screened for evaluation and its likelihood of being funded. Whereas prior studies conceptualize venture financing as a single-moment event, in this article, it is theorized as a dynamic multistage process in which a screening decision precedes a funding decision. Failure to address the selection effects at each stage could lead to biased findings regarding how social ties confer advantage in venture financing. This study uses a hand-collected dataset from China to empirically examine these arguments.