Title: Small-world networks, absorptive capacity and firm performance: evidence from the US venture capital industry

Authors: Bilian Ni Sullivan; Yi Tang

Addresses: Department of Management of Organizations, School of Business and Management, Hong Kong University of Science and Technology, Clear Water Bay, Kowloon, Hong Kong. ' Faculty of Business, Department of Management and Marketing, Hong Kong Polytechnic University, Hung Hom, Kowloon, Hong Kong

Abstract: A small-world network is a locally clustered network with short path lengths connecting different clusters. In this study, we explore contingent factors that affect the impact of small-world networks on firm performance, maintaining that benefits from such networks may depend on a firm's absorptive capacity to recognise and assimilate external information and knowledge. Using a sample of US Venture Capital (VC) firms from 1995 to 2003, we find that small-world networks have a positive impact on firm performance and this positive impact varies with multiple determinants of a firm's absorptive capacity. Implications of these findings for organisational learning and interfirm network studies are discussed.

Keywords: interfirm networks; small-world networks; venture capital; firm performance; organisational learning; absorptive capacity; USA; United States; clusters.

DOI: 10.1504/IJSCM.2012.046509

International Journal of Strategic Change Management, 2012 Vol.4 No.2, pp.149 - 175

Published online: 31 Dec 2014 *

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