| Article ID: | iaor20061548 |
| Country: | United States |
| Volume: | 15 |
| Issue: | 2 |
| Start Page Number: | 159 |
| End Page Number: | 172 |
| Publication Date: | Mar 2004 |
| Journal: | Organization Science |
| Authors: | Batjargal Bat, Liu Mannie (Manhong) |
| Keywords: | organization, developing countries |
This article examines the effect of entrepreneurs' social capital on investment decisions of venture capitalists. The empirical data are composed of 158 venture capital decisions in the People's Republic of China. We found that entrepreneurs' social capital has significant effects on investment selection decisions of venture capitalists in interaction with growth potential and technology/products of the venture. We also found that strong ties between entrepreneurs and venture capitalists have significant direct effects on investment process decisions such as contractual covenants, investment delivery, and venture valuation.