Internal knowledge development and external knowledge access in venture capital investment performance

Dirk De Clercq, Dimo Dimov

Research output: Contribution to journalArticlepeer-review

126 Citations (Scopus)

Abstract

We examine the performance effects of two knowledge-driven strategies - internal knowledge development and external knowledge access through inter-firm relationships - in the context of venture capital investing. Using longitudinal data on the investments, syndication, and performance of 200 US-based venture capital firms, we find that investing in industries in which a firm has more knowledge and investing with more or familiar external partners enhances investment performance. In addition, we reveal important interactions between the two strategies, such that access to external knowledge is particularly beneficial when the investment exposes gaps in the firm's own expertise. Thus, access to external knowledge is more effective when an incongruity exists between what the firm knows and what it intends to do. We discuss the study's implications for organizational knowledge and learning, strategic alliance, and venture capital literature
Original languageEnglish
Pages (from-to)585-612
Number of pages28
JournalJournal of management studies
Volume45
Issue number3
DOIs
Publication statusPublished - 1 May 2008

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