title: Primary status, complementary status, and organizational survival in the U.S. venture capital industry.
abstract: We introduce a distinction between two kinds of status and examine their effects on the exit rates of organizations investing in the U.S. venture capital industry. Extending past work on status-based competition, we start with a simple baseline: we describe primary status as a network-related signal of an organization's quality in a leadership role, that is, as a function of the degree to which an organization leads others that are themselves well regarded as lead organizations in the context of investment syndicates. Combining Harary's (1959) image of the elite consultant with Goffman's (1956) concept of "capacity-esteem," we then discuss complementary status as an affiliation-based signal of an organization's quality in a supporting role. We measure complementary status as a function of the extent to which an organization is invited into syndicates by well-regarded lead organizations-that is, by those possessing high levels of primary status. Findings show that, conditioning on primary status, complementary status reduces the rate at which venture capital organizations exit the industry. Consistent with the premise that these kinds of status correspond to different roles and market identities, we also find that complementary status attenuates (and ultimately reverses) the otherwise favorable effect of primary status on an organization's life chances. Theoretically and methodologically oriented scope conditions, as well as implications for future research, are discussed.
authors.affiliation: ESMT European School of Management and Technology, Schlossplatz 1, 10178 Berlin, Germany. Electronic address: matthew.bothner@esmt.org.
authors.forename: Matthew S
authors.initials: MS
authors.lastname: Bothner
authors.affiliation: Korea University Business School, 145 Anam-ro, Seongbuk-gu, Seoul 136-701, Republic of Korea. Electronic address: youngkyu_kim@korea.ac.kr.
authors.forename: Young-Kyu
authors.initials: YK
authors.lastname: Kim
authors.affiliation: Graduate School of Culture Technology, Korea Advanced Institute of Science and Technology, 291 Daehak-ro, Yuseong-gu, Daejeon 305-701, Republic of Korea.
authors.forename: Wonjae
authors.initials: W
authors.lastname: Lee
mesh_terms: D002202:Capital Financing; D006801:Humans; D007221:Industry; D007449:Investments; D009938:Organizations; D014481:United States
keywords: Firm survival; Networks; Status; Venture capital