Network Triads: Transitivity, Referral and Venture Capital Decisions
in China and Russia
William Davidson Institute Working Paper No. 752, (February 2005)Abstract
This article examines effects of dyadic ties and interpersonal trust in referrals and investment decisions of venture capitalists in the Chinese and Russian contexts. The study uses the postulate of transitivity of social network theory as a conceptual framework. The findings reveal that referee-venture capitalist tie, referee-entrepreneur tie, and interpersonal trust between referee and venture capitalist have positive effects on referrals and investment decisions of venture capitalists. The institutional, social and cultural differences between China and Russia have minimal effects on referrals. Interpersonal trust has positive effects on investment decisions in Russia.