LAUSR

This study examines how firms' network ties interact with their level of specialization in affecting the risk of failure in the U.S. venture capital (VC) industry. Testing my hypotheses on data spanning 41 years, I find that there is an inverted J-shaped relationship between the degree of VC firms' specialization and the risk of failure and that this pattern is moderated by firms' portfolio homogeneity. I further find that VC firms depend on their network ties in avoiding failure, that this effect is stronger for generalist VC firms than specialist firms, and that ties to specialist VC firms reduce the risk of failure of generalist firms with heterogeneous portfolios the most. These results advance our understanding of the joint effects of specialization and network connections on firm survival and, more broadly, of the interdependence of generalist and specialist organizations.