Should business angels diversify their investment portfolios to achieve higher performance? The role of knowledge access through co-investment networks.

Item Type Journal paper
Abstract

This paper investigates the performance effects of business angel portfolio industry diversification. Using a unique bi-annual panel dataset of 142 members of a professional angel investment platform and their portfolio returns between 2013 and 2017, we consider the costs and benefits of diversifying investments into various industries. Drawing upon theoretical arguments about distant search, we theorize and find a nonlinear (S-shaped) relationship between portfolio industry diversification and performance. Further, we pay specific attention to a proposed overdiversification effect that takes place at high levels of portfolio industry diversification and show that this effect is moderated by individuals' access to industry knowledge through their co-investment networks. For business angels who have a central position within a diverse network of industry specialists, the overdiversification effect is less pronounced.

Authors Antretter, Torben; Siren, Charlotta; Grichnik, Dietmar & Wincent, Joakim
Journal or Publication Title Journal of Business Venturing
Language English
Subjects business studies
HSG Classification contribution to scientific community
Refereed Yes
Date 5 September 2020
Place of Publication Journal of Business Venturing
Number of Pages 19
Publisher DOI 10.1016/j.jbusvent.2020.106043
Depositing User Corinne Metzger-Wyder
Date Deposited 06 Oct 2020 12:49
Last Modified 31 Oct 2020 12:48
URI: https://www.alexandria.unisg.ch/publications/261137

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Citation

Antretter, Torben; Siren, Charlotta; Grichnik, Dietmar & Wincent, Joakim (2020) Should business angels diversify their investment portfolios to achieve higher performance? The role of knowledge access through co-investment networks. Journal of Business Venturing,

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https://www.alexandria.unisg.ch/id/eprint/261137
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