Abstract
This study examines the influence of intra‐industry and extra‐industry networks on firm performance by using data on 1264 UK venture‐capital‐backed start‐up companies. The venture's network was operationalized by connecting together the various portfolio companies sharing the same investor. Regression results show that the venture's network has a strong impact on firm's success. Yet, whereas extra‐industry ties are directly and positively linked to the likelihood of the venture to reach a successful exit, intra‐industry ties exert a negative impact on companies' performances. However, interaction effects show that once a firm establishes a sufficient number of extra‐industry ties, it is able to profit from the network in its industry of operation. Overall, these findings show that an optimal balance of ties is achieved through a diverse set of connections incorporating both intra‐industry and extra‐industry ties. Copyright © 2013 John Wiley & Sons, Ltd.
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