Working with Unfamiliar Partners: Relational Embeddedness and Partner Selection in Private Equity Syndicates
Frontiers of Entrepreneurship Research 2006
13 Pages Posted: 10 Feb 2009 Last revised: 10 Mar 2009
Date Written: January 21, 2009
While one stream of research in partner selection has emphasized stability in a firm's social network, another stream has emphasized the need to expand a firm's network. In order to reconcile these two perspectives, we explore transaction, partner and industry conditions that lead firms to work with unfamiliar partners. Using a unique hand-collected dataset, results from the formation of private equity investment syndicates demonstrate that firms are more likely to select unfamiliar partners for lower levels of primary and behavioral uncertainty and higher levels of competition. Our findings provide insights in conditions that lead firms to expand their social network.
JEL Classification: M13
Suggested Citation: Suggested Citation