Abstract
Drawing on learning theory, the attention-based view of the firm, and decision-making literature, this study examines the impact of venture capital firms (VCFs) on the performance of ventures that have undergone a change in their business model. Unique primary and secondary data obtained from 156 venture capital–backed portfolio companies (PFCs) reveal a curvilinear relationship between VCFs’ investment focus on business model change and PFC performance. Up to a certain point, increased investment focus enhances PFC performance; beyond that point, further increases in investment focus reduce PFC performance though. The addition of new managers not only increases PFC performance but also moderates the curvilinear relationship between VCF investment focus and PFC performance. These results have important implications for theory and practice.
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