How Do Venture Capital Firms Manage Their Ego Networks for Sustainable Development?

In the context of rapidly developing emerging industries, shifting investment hotspots, and a turbulent external environment, investment institutions continuously adjust and manage their ego network strategies to ensure survival and promote sustainable development. The long-term development and competitiveness of venture capital (VC) firms largely depend on their ability to generate excess returns and achieve successful exits, such as IPOs and mergers and acquisitions. This study focuses on venture capital ego networks from a dynamic perspective. From both the node and tie dimensions, it systematically examines the effects of ego network dynamics—growth and diversity—on investment performance. It further explores the underlying mechanisms through network stability and information diffusion. Based on empirical analysis using Wind database data from 2013 to 2022, we find that the growth of VC ego networks has a significant negative effect on investment performance, and this effect works through reduced network stability. In contrast, ego network diversity shows a significant positive effect on investment performance, with project information diffusion playing a mediating role. Based on the above findings, we suggest that venture capital firms should shift their ego network management strategy from blind and simple “rapid expansion” to quality-focused “careful cultivation”. While maintaining the stability of their ego networks, firms should also pay attention to the diversity of relationship configurations, so as to better transform network resources into investment performance and promote the growth and sustainable development of venture capital firms.