Organizational homophily of family firms: The case of family corporate venture capital

Figures & data

Figure 1. Research gap in the context of literature in the field of homophily research.

Figure 2. Research model illustrating the relationships studied.

Table 1. Definition of variables.

Variable	Definition
Dependent variable
Family CVC	A binary variable that equals 1 for corporate venture capitalists included in the NRG Metrics Family Firms Dataset and 0 otherwise, following for example Duran and Mingo (2022).
Independent variables
Similar investment experience	A binary variable that equals 1 if the overall quantity of investment experience of the corporate venture capitalist matches that of the most experienced coinvestor within a 10 percent margin of deviation and 0 otherwise. For the calculation of investment experience, see partner investment experience.
Similar industry experience	A binary variable that equals 1 if the investment experience of the corporate venture capitalist within the target industry matches that of the most experienced coinvestor within a 10 percent margin of deviation and 0 otherwise. For the calculation of industry experience, see partner industry experience.
Similar specialization	A binary variable that equals 1 if the degree of specialization of the corporate venture capitalist matches that of the most specialized coinvestor within a 10 percent margin of deviation and 0 otherwise. For the calculation of specialization, see partner specialization.
Moderator variable
Syndicate size	A metric variable counting the number of investors participating in each deal.
Control variables
Partner investment experience	A metric variable of the number of investments made by the most experienced coinvestor, calculated on a 10-year rolling window.
Partner industry experience	A metric variable of the number of investments made by the most experienced coinvestor in the target industry, calculated on a 10-year rolling window.
Partner specialization	A ratio variable with a scale of 0 to 1 that reflects the proportional experience of the most experienced coinvestor within the present industry, measured against all previous investments of said coinvestor, calculated on a 10-year rolling window. We follow the methodology of Nörthemann (2022) in calculating the index.
CVC age (log)	A metric variable representing the log of 1 plus the number of years between the founding date of the corporate venture capitalist and the deal date.
Lone founder firm	A binary variable that equals 1 if the parent company was founded by a lone founder (i.e., no other parties than the founder were involved, particularly no relatives of the founder) and 0 otherwise.
Nonfamily CVC in deal	A binary variable that equals 1 if a family corporate venture capitalist and a nonfamily corporate venture capitalist have invested in the same deal and 0 otherwise.
Deal size (log)	A metric variable calculated as the log of 1 plus the disclosed sum of equity and debt of the deal at the deal date.
Crisis years	A binary variable that equals 1 if the deal took place in a year affected by an economic crisis (i.e., the financial crisis years 2007 and 2008 or the COVID-19 pandemic years 2020 and 2021) and 0 otherwise.
Cross-border	A binary variable that equals 1 if the target venture and CVC investor do not have the same home country and 0 otherwise.
Venture metropolis	A binary variable that equals 1 if the home city of the target venture is a metropolis (i.e., at least 1 million inhabitants) and 0 otherwise.
Venture stage	An ordinal variable that depicts the venture’s stage at the deal date. It ranges from 1 to 4, with the following values: 1 (seed), 2 (early stage), 3 (later stage), and 4 (expansion).
Venture industry	A set of binary variables for each primary industry category in our data set. They equal 1 if the venture operates in that specific category and 0 otherwise. We used the SIC codes available via the Private Equity Module of the London Stock Exchange Group and assigned them to the 10 broader SIC divisions.
Venture country	A set of binary variables for the home country of each of the ventures in our sample.
CVC country	A set of binary variables for the home country of each of the CVC investors in our sample.

Note: This table displays the measurement of all variables used in our econometric models. To analyze the characteristics that impact the likelihood of a family corporate venture capitalist’s investment participation, we used a binominal logit model.

Table 2. Summary statistics.

VARIABLES	Observations	Mean	Std. Dev.	Minimum	Maximum	#True (dummies)
Family CVC	3,130	.350	.477	0	1	1095
Similar investment experience	3,130	.143	.350	0	1	448
Similar industry experience	3,130	.296	.457	0	1	928
Similar specialization	3,130	.283	.451	0	1	887
Syndicate size	3,130	6.303	4.545	2	66	n/a
Partner investment experience	3,130	211.237	315.493	0	2318	n/a
Partner industry experience	3,130	5.257	17.060	0	314	n/a
Partner specialization	3,130	.104	.222	0	1	n/a
CVC age	3,130	29.933	23.856	0	159	n/a
Lone-founder firm	3,130	.275	.447	0	1	861
Nonfamily CVC in deal	3,130	.216	.411	0	1	675
Deal size	3,130	44473588	2.054e + 08	0	5.500e + 09	n/a
Crisis years	3,130	.361	.480	0	1	1130
Cross-border	3,130	.349	.477	0	1	1091
Venture metropolis	3,130	.326	.469	0	1	1021
Venture stage	3,130	2.904	.975	1	4	n/a

Note: This table shows summary statistics for all variables used in our models (except the dummy variables controlling for venture industry, venture country, and CVC country).

Table 3. Correlation table.

VARIABLES	(1)	(2)	(3)	(4)	(5)	(6)	(7)	(8)	(9)	(10)	(11)	(12)	(13)	(14)	(15)	(16)
(1) Family CVC	1.000
(2) Similar investment experience	0.048*	1.000
(3) Similar industry experience	0.144*	0.480*	1.000
(4) Similar specialization	0.156*	0.488*	0.928*	1.000
(5) Syndicate size	−0.023	−0.057*	−0.166*	−0.175*	1.000
(6) Partner investment experience	0.121*	−0.232*	−0.146*	−0.155*	0.151*	1.000
(7) Partner industry experience	0.087*	−0.096*	−0.184*	−0.182*	0.084*	0.269*	1.000
(8) Partner specialization	0.084*	−0.118*	−0.256*	−0.271*	0.227*	0.197*	0.369*	1.000
(9) CVC age	0.225*	−0.087*	−0.144*	−0.131*	0.078*	−0.119*	−0.089*	−0.128*	1.000
(10) Lone-founder firm	0.432*	0.018	0.105*	0.113*	0.026	0.158*	0.047*	0.080*	0.006	1.000
(11) Nonfamily CVC in deal	0.490*	0.030	0.064*	0.074*	0.177*	0.083*	0.088*	0.078*	0.080*	0.225*	1.000
(12) Deal size	0.079*	−0.023	0.032	0.035	0.092*	0.040*	0.052*	0.002	0.019	0.097*	0.067*	1.000
(13) Crisis years	−0.009	0.044*	0.000	0.009	0.026	−0.043*	−0.011	0.004	0.027	0.006	0.033	0.009	1.000
(14) Cross-border	0.152*	0.061*	0.112*	0.122*	0.022	0.007	−0.021	0.041*	−0.021	0.171*	0.092*	0.107*	0.016	1.000
(15) Venture metropolis	0.047*	0.056*	0.080*	0.093*	0.005	−0.076*	−0.057*	0.001	−0.022	0.046*	0.023	0.064*	0.006	0.116*	1.000
(16) Venture stage	0.047*	0.012	−0.016	−0.005	0.000	0.046*	0.019	0.009	−0.005	−0.001	0.038*	0.049*	0.038*	0.076*	0.028	1.000

Note: This table displays pairwise correlations for the variables of key interest (except the dummy variables controlling for venture industry, venture country, and CVC country). * designates a 5% significance level.

Table 4. Binominal logistic regression on family corporate venture capitalist’s investment participation after nearest-neighbor matching.

VARIABLES	(1)	(2)	(3)	(4)	(5)	(6)	(7)
Similar investment experience		0.7284** (0.2224)			0.6069* (0.2392)
Similar industry experience			1.1672** (0.1598)			0.8405** (0.1824)
Similar specialization				1.2532**			0.8389**
				(0.1618)			(0.1708)
Similar investment experience x syndicate size					−0.0563 (0.0548)
Similar industry experience x syndicate size						−0.1129* (0.0519)
Similar specialization x syndicate size							−0.1346** (0.0448)
Syndicate size					−0.1520**	−0.1324**	−0.1309**
					(0.0209)	(0.0175)	(0.0175)
Partner investment experience	0.0010** (0.0002)	0.0010** (0.0002)	0.0010** (0.0002)	0.0010** (0.0002)	0.0013** (0.0002)	0.0013** (0.0002)	0.0013** (0.0002)
Partner industry experience	0.0073*	0.0076*	0.0106**	0.0103**	0.0069*	0.0096**	0.0094**
	(0.0032)	(0.0032)	(0.0035)	(0.0034)	(0.0034)	(0.0035)	(0.0035)
Partner specialization	0.7738**	0.7461*	1.2201**	1.2638**	1.3936**	1.7190**	1.7365**
	(0.2936)	(0.2953)	(0.2994)	(0.3013)	(0.3038)	(0.3088)	(0.3118)
CVC age (log)	1.2220**	1.2433**	1.3334**	1.3387**	1.3355**	1.4172**	1.4204**
	(0.0989)	(0.1001)	(0.1045)	(0.1050)	(0.1036)	(0.1094)	(0.1096)
Lone-founder firm	2.0083**	1.9904**	1.9392**	1.9369**	1.9724**	1.9452**	1.9441**
	(0.1473)	(0.1478)	(0.1514)	(0.1518)	(0.1499)	(0.1530)	(0.1537)
Nonfamily CVC in deal	3.0180**	3.0095**	2.9788**	2.9870**	3.3719**	3.3321**	3.3407**
	(0.1487)	(0.1485)	(0.1474)	(0.1477)	(0.1622)	(0.1622)	(0.1626)
Deal size (log)	−0.0323**	−0.0311**	−0.0285**	−0.0276**	−0.0120	−0.0097	−0.0087
	(0.0102)	(0.0102)	(0.0106)	(0.0107)	(0.0112)	(0.0115)	(0.0116)
Crisis years	−0.0428	−0.0247	0.0148	0.0184	0.0086	0.0534	0.0592
	(0.1230)	(0.1234)	(0.1248)	(0.1248)	(0.1275)	(0.1282)	(0.1282)
Cross-border	−1.0718**	−1.0512**	−1.0764**	−1.1032**	−1.0827**	−1.0933**	−1.1225**
	(0.2430)	(0.2462)	(0.2464)	(0.2480)	(0.2479)	(0.2477)	(0.2493)
Venture metropolis	0.0920	0.1013	0.0846	0.0826	0.1204	0.1088	0.1104
	(0.1419)	(0.1422)	(0.1467)	(0.1468)	(0.1485)	(0.1523)	(0.1522)
Venture stage	0.0920	0.0866	0.1124†	0.1085†	0.0954	0.1193†	0.1172†
	(0.0598)	(0.0602)	(0.0615)	(0.0615)	(0.0619)	(0.0629)	(0.0629)
Venture industry dummies	yes	yes	yes	yes	yes	yes	yes
Venture country dummies	yes	yes	yes	yes	yes	yes	yes
CVC country dummies	yes	yes	yes	yes	yes	yes	yes
Observations	3,130	3,130	3,130	3,130	3,130	3,130	3,130
Wald chi^2	1,142	1,105	1,121	1,120	1,107	1,122	1,136
Prob > chi^2	0	0	0	0	0	0	0
Pseudo R^2	0.491	0.493	0.506	0.507	0.516	0.526	0.527
AIC	2,202	2,195	2,145	2,139	2,107	2,066	2,061

Note: In this table, we present the results of binominal logistic regressions with the likelihood of a family corporate venture capitalist’s investment participation as the dependent variable. As independent variables, we use similarity in investment experience, industry experience, and specialization and interaction terms with the variable syndicate size, which reflects the number of investors who participated in each deal. Heteroskedasticity-robust standard errors are reported in parentheses, significance is marked by † at 10%, * at 5%, and ** at 1%. The constant is included in the models but not shown. One asterisk (*) indicates 5% significance, and two asterisks (**) indicate 1% significance.

Table 5. Binominal probit regression on family corporate venture capitalists’ investment participation after nearest-neighbor matching.

VARIABLES	(1)	(2)	(3)	(4)	(5)	(6)	(7)
Similar investment experience		0.4022** (0.1246)			0.3196* (0.1327)
Similar industry experience			0.6598**			0.4743**
			(0.0850)			(0.0938)
Similar specialization				0.7091**			0.4630**
				(0.0865)			(0.0926)
Similar investment experience x syndicate size					−0.0321 (0.0296)
Similar industry experience x syndicate size						−0.0599* (0.0258)
Similar specialization x syndicate size							−0.0755** (0.0246)
Syndicate size					−0.0863**	−0.0748**	−0.0738**
					(0.0103)	(0.0096)	(0.0096)
Partner investment experience	0.0005** (0.0001)	0.0006** (0.0001)	0.0006** (0.0001)	0.0006** (0.0001)	0.0008** (0.0001)	0.0007** (0.0001)	0.0007** (0.0001)
Partner industry experience	0.0042*	0.0043*	0.0060**	0.0058**	0.0040*	0.0055**	0.0054**
	(0.0018)	(0.0018)	(0.0019)	(0.0019)	(0.0019)	(0.0020)	(0.0020)
Partner specialization	0.4110**	0.3981*	0.6667**	0.6924**	0.7695**	0.9532**	0.9621**
	(0.1574)	(0.1580)	(0.1607)	(0.1620)	(0.1628)	(0.1656)	(0.1670)
CVC age (log)	0.6418**	0.6520**	0.7034**	0.7056**	0.7048**	0.7484**	0.7491**
	(0.0502)	(0.0505)	(0.0536)	(0.0539)	(0.0528)	(0.0558)	(0.0560)
Lone-founder firm	1.1168**	1.1049**	1.0750**	1.0723**	1.1014**	1.0832**	1.0815**
	(0.0774)	(0.0778)	(0.0790)	(0.0792)	(0.0789)	(0.0797)	(0.0801)
Nonfamily CVC in deal	1.7184**	1.7128**	1.7017**	1.7048**	1.9203**	1.8981**	1.9022**
	(0.0814)	(0.0815)	(0.0816)	(0.0819)	(0.0882)	(0.0881)	(0.0885)
Deal size (log)	−0.0176**	−0.0170**	−0.0157*	−0.0152*	−0.0059	−0.0048	−0.0042
	(0.0060)	(0.0060)	(0.0061)	(0.0062)	(0.0064)	(0.0065)	(0.0066)
Crisis years	−0.0129	−0.0026	0.0216	0.0238	0.0148	0.0410	0.0448
	(0.0675)	(0.0676)	(0.0681)	(0.0681)	(0.0691)	(0.0695)	(0.0696)
Cross-border	−0.5880**	−0.5846**	−0.5815**	−0.5951**	−0.6076**	−0.5981**	−0.6122**
	(0.1342)	(0.1369)	(0.1374)	(0.1386)	(0.1393)	(0.1393)	(0.1407)
Venture metropolis	0.0644	0.0698	0.0616	0.0590	0.0781	0.0714	0.0705
	(0.0773)	(0.0773)	(0.0795)	(0.0797)	(0.0800)	(0.0821)	(0.0822)
Venture stage	0.0552†	0.0518	0.0650†	0.0628†	0.0555	0.0684*	0.0673*
	(0.0329)	(0.0330)	(0.0335)	(0.0335)	(0.0339)	(0.0342)	(0.0343)
Venture industry dummies	yes	yes	yes	yes	yes	yes	yes
Venture country dummies	yes	yes	yes	yes	yes	yes	yes
CVC country dummies	yes	yes	yes	yes	yes	yes	yes
Observations	3,130	3,130	3,130	3,130	3,130	3,130	3,130
Wald chi^2	1,491	1,466	1,494	1,492	1,479	1,504	1,493
Prob > chi^2	0	0	0	0	0	0	0
Pseudo R^2	0.488	0.491	0.504	0.506	0.515	0.525	0.526
AIC	2,213	2,206	2,152	2,146	2,113	2,070	2,065

Note: In this table, we present the results of binominal probit regressions with the likelihood of a family corporate venture capitalist’s investment participation as the dependent variable. As independent variables, we use similarity in investment experience, industry experience, and specialization and interaction terms with the variable syndicate size, which reflects the number of investors who participated in each deal. Heteroskedasticity-robust standard errors are reported in parentheses, significance is marked by † at 10%, * at 5%, and ** at 1%. The constant is included in the models but not shown. One asterisk (*) indicates 5% significance, and two asterisks (**) indicate 1% significance.

Duran, P., & Mingo, S. (2022). Publicly-listed family-controlled firms and corporate venture capital: A socioemotional wealth approach. Academy of Management Proceedings, 2022(1), 14337. https://doi.org/10.5465/AMBPP.2022.14337abstract

 Google Scholar

Nörthemann, A. (2022). Industry-specific specialization in venture capitalists’ internationalization decisions. Journal of Business Economics. Advance online publication. 93(5), 891–927. https://doi.org/10.1007/s11573-022-01129-1

 Google Scholar