Working with Unfamiliar Partners : Relational Embeddedness and Partner Selection in Private Equity Syndicates

While one stream of research in partner selection has emphasized stability in a firm's social network, another stream has emphasized the need to expand a firm's network. In order to reconcile these two perspectives, we explore transaction, partner and industry conditions that lead firms to work with unfamiliar partners. Using a unique hand-collected dataset, results from the formation of private equity investment syndicates demonstrate that firms are more likely to select unfamiliar partners for lower levels of primary and behavioral uncertainty and higher levels of competition. Our findings provide insights in conditions that lead firms to expand their social network