Host country network, industry experience, and international alliance formation: Evidence from the venture capital industry

Abstract

Integrating resource dependence and social network theories, we investigate how foreign firms’ position in alliance network in host country influences their further allying with firms from the host and home countries. We introduce network centrality as a factor that influences two competing forces in alliance formation: willingness and attractiveness. Furthermore, we argue that foreign firms suffering from a low network centrality may find it easier to enhance their network position if they have industry experience. Our analysis of data on US venture capital firms’ investment in China supports our theoretical framework. Theoretical and managerial implications of our findings are discussed.