Managers’ Mobility as a Bridge to Alliance Formation: A Study of Venture Capital Syndication

While abundant evidence has highlighted the importance of resource dependency and social networks in inter-firm alliance formation, the potential obstacles for them to take effect remain unanswered. In this study, we contend that information asymmetry resulting from the geographic distance and competitive concerns induced by status similarity pose two obstacles for a pair of firms to form alliances. Managers’ mobility plays an active role in addressing the two concerns and bridging isolated firms. Using investment data of 1,015 venture capital (VC) firms in China over 1985-2016, we find that both geographic distance and status similarity between a pair of VC firms decrease the likelihood of syndication between them. The mobility of venture capitalists serves as a bridge by weakening the negative effects of geographic distance and status similarity on VC syndication.