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Going Public and the Enrichment of a Supportive Network

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Abstract

Past research on initial public offerings suggests that the reputation of a company positively affects the success of the offering. Success is usually measured in financial terms as if the essence of the operation lay only in the short-term inflow of money. In this paper, we investigate important albeit often neglected implications of going public by combining evidence from a series of preliminary case studies taken from the results of a survey of 57 Italian initial public offerings. Evidence from our research suggests that, besides providing an important inflow of capital, going public may actually improve the reputational and social capital of a company, by increasing its visibility, prestige and perceived trustworthiness. Therefore, going public may be an important way to support entrepreneurial activity, as it may expand and reinforce the network of relationships that offer access to external resources, complementary skills and investment opportunities.

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Ravasi, D., Marchisio, G. Going Public and the Enrichment of a Supportive Network. Small Business Economics 21, 381–395 (2003). https://doi.org/10.1023/A:1026119221991

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