Navigating investment decisions with social connectedness: Implications for venture capital
研究发现风险投资公司更倾向于投资社会连通性强的地区的企业，但这种倾向会降低成功退出的可能性，对理解资本配置的地理差异有启示。
This study examines how the geographical structure of social networks shapes venture capital (VC) investment decisions. We find that VC firms invest more in portfolio companies in socially connected regions. The effect is more pronounced among independent, smaller, less reputable, early–stage–focused VC firms and those not from a VC hub. We further document that social connectedness lowers the likelihood of a successful exit since it induces VC firms to undertake suboptimal investment decisions. Overall, our findings highlight the role of social connectedness in constituting the geographical differences in VC firms’ capital allocation and investment outcomes.