Turning a curse into a blessing: Contingent effects of geographic distance on startup–VC partnership performance

Abstract

This study aims to unravel the dynamic effect of geographic distance on startup–VC partnership performance by incorporating the possibility of accessibility improvement triggered by China's high-speed railway (HSR) during the partnership. We find that the negative effect of geographic distance is significantly weakened when HSR becomes available after the startup–VC partnership formation. We draw on the relational view to explore what types of geographically distant startup–VC partners can benefit more from HSR technology advancement. Results indicate that startup–VC partners that rely heavily on knowledge-sharing, have more complementary resources, or have more complex governance structures can better leverage the improved accessibility from HSR to transform the disadvantages of the long-distance to advantages.