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Journal of Finance Vol. 63 No. 3 2008

Blurring Firm Boundaries: The Role of Venture Capital in Strategic Alliances

Laura Lindsey1,2,3,4,5,6

1 University of North Carolina at Chapel Hill · 2 United States Securities and Exchange Commission · 3 University of Illinois Urbana-Champaign · 4 Environmental Law Institute · 5 Cornell University · 6 Arizona State University

Abstract

This study documents a new value‐added role of venture capitalists and addresses important questions about how resources are combined to create firms. As part of the nexus of contracts surrounding a firm, strategic alliances can be viewed as relational contracts that blur firm boundaries. This paper provides evidence that alliances are more frequent among companies sharing a common venture capitalist. The effect is concentrated in alliances in which contracting problems are more pronounced, consistent with venture capitalists utilizing informational and other advantages in providing resources to firms. Further, these alliances improve the probability of exit for venture‐backed firms.

DOI
10.1111/j.1540-6261.2008.01354.x
Volume
63
Issue
3
Pages
1137-1168
Language
en
Sources
bibtex:phds-export.bib openalex crossref

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