Network Triads: Transitivity, Referral and Venture Capital Decisions in China and Russia

• Published in: Journal of international business studies Vol. 38; no. 6; pp. 998 - 1012
• Main Author: Batjargal, Bat
• Format: Journal Article
• Language: English
• Published: Basingstoke Palgrave Macmillan Journals 01-11-2007; Palgrave Macmillan
• Series: Journal of International Business Studies
• Subjects: Business structures; Business studies; Capital budgeting; Capitalism; Capitalization; China; Collaboration; Corporate finance; Dyadics; Economic networks; Entrepreneurs; Equity; Equity funds; Financing methods; Friendship; Investment decisions; Investments; Investors; Limited liability companies; Modeling; Multinational corporations; Organization theory; Private equity; Product development; Russian Federation; Social networks; Startups; Studies; Third party; Trust; Venture capital; China; Russia
• ISSN: 0047-2506; 1478-6990
• DOI: 10.1057/palgrave.jibs.8400302

This article examines the effects of dyadic ties and interpersonal trust on referrals and investment decisions of venture capitalists in the Chinese and Russian contexts. The study uses the postulate of transitivity of social network theory as a conceptual framework. The findings reveal that referee-venture capitalist tie, referee-entrepreneur tie, and interpersonal trust between referee and venture capitalist have positive effects on referrals and investment decisions of venture capitalists. The institutional, social and cultural differences between China and Russia have minimal effects on referrals. Interpersonal trust has positive effects on investment decisions in Russia.