Summary  

Our study, recently published in the Journal of Management Studies, examines how firm status transfers, or, more plainly, how a firm’s high network status in one market leads to high network status in another market. We posit that an important underlying mechanism is the mediating role of the status of common partners in partner selection.  

What did we study, and why does it matter? 

Firms gain status and credibility by doing business and forming connections in their home market. But can this homegrown advantage help when expanding abroad—especially when forming that first key partnership in a foreign market? 

Most firms struggle with liabilities of foreignness—the challenges of entering an unfamiliar market when seeking opportunities abroad. Critically, forging the first key partnership is often done without local recognition or trust. Understanding whether and how firms can leverage their home status abroad can help managers make smarter entry decisions and establish stronger partnerships in new markets. 

How did we study this? 

We analyzed a global dataset of 1,398 syndicated venture capital (VC) investments from 1994 to 2011, tracking 806 VC firms as they entered 24 foreign markets. Our data revealed that among VCs that expanded across borders: 

• 18.6% of firms entered two new host countries. 

• 17.7% made more than two international moves. 

This broad dataset allowed us to explore how firms transfer their home market advantage when forming their first partnerships in foreign markets. 

What did we find? 

A firm’s home country status advantage travels best through its existing network. Specifically, high status foreign firms with high-status common partners—those who have relationships with prospective partners in the foreign market—are more likely to form ties with high-status local firms. 

In other words, your home country network can open doors abroad, but only if you’re well-connected to the right kind of partners. 

Why do these findings matter, and for whom? 

These insights are valuable for: 

• Executives and managers planning market entry strategies, as well as investment professionals selecting partners in foreign markets. Understanding the role of common partners in status transfer can help them make more informed decisions about international expansion and improve their chances of securing strong local partnerships. 

• Venture capital (VC) fund managers expanding into cross-border investments. Network status is a crucial firm resource in the venture capital industry, and our findings highlight how a common partner can help you transfer such accumulated social network advantage when fund managers are expanding investments across borders.  

What are the key takeaways? 

1. Leverage your home network when expanding abroad. Your existing partners—especially those who are internationally active—can help you gain credibility in and access to a foreign market. 

2. Build a strong domestic network before going international. The quality of your home country partnerships impacts your ability to connect with top-tier local firms abroad. 

3. Think beyond direct ties—your indirect connections matter. Your home country status can be a powerful asset, but it travels through your shared partners, not in isolation. High home country status does not guarantee status transfer to new markets abroad. 

By strategically tapping into your domestic networks, firms can turn home market success into a competitive advantage when entering new markets. Who you know at home influences who you can reach abroad.