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    Venture Capitalists' Decision to Withdraw: The Role of Portfolio Configuration From a Real Options Lens

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    Issue Date
    2012
    Author
    Li, Yong
    Chi, Tailan
    Publisher
    Social Science Research Network
    Type
    Article
    Article Version
    Scholarly/refereed, author accepted manuscript
    Published Version
    http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2036399
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    Abstract
    When does a venture capital firm withdraw from an investment project prior to its completion? This study offers a real options view on this decision by examining the contingent effects of portfolio configuration. We explore how project withdrawal can be influenced by two distinct dimensions of portfolio configuration, portfolio focus in a strategic domain and portfolio diversity across multiple domains. The empirical analysis shows that while portfolio focus weakens the negative effect of industry-level uncertainty on a venture capitalist’s propensity to withdraw from a project, portfolio diversity strengthens the effect of uncertainty. This study informs current research on the boundary of real options theory and sheds light on the behavior of venture capitalists in financing entrepreneurship.
    Description
    This is the author's final draft. The publisher's official version is available from: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2036399.
    URI
    http://hdl.handle.net/1808/11022
    Collections
    • Center for East Asian Studies Scholarly Works [352]
    • School of Business Scholarly Works [216]
    Citation
    Chi, Tailan. (2012) Venture Capitalists' Decision to Withdraw: The Role of Portfolio Configuration From a Real Options Lens. Strategic Management Journal.

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    Contact KU ScholarWorks
    785-864-8983
    KU Libraries
    1425 Jayhawk Blvd
    Lawrence, KS 66045
    785-864-8983

    KU Libraries
    1425 Jayhawk Blvd
    Lawrence, KS 66045
    Image Credits
     

     

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