Management Papers

Document Type

Journal Article

Date of this Version

2-2010

Publication Source

Journal of International Business Studies

Volume

41

Issue

2

Start Page

185

Last Page

205

DOI

10.1057/jibs.2009.35

Abstract

In recent years, venture capital firms have increasingly turned to foreign countries in search of investment opportunities. The cross-border expansion of venture capital firms presents an interesting case of internationalization, because they are at variance with both conventional portfolio and direct investment models. Given the specific nature of venture capital investing, a new theoretical perspective is needed to understand foreign venture capital investments. This paper contributes to international business research by examining the features of the institutional environment that influence venture capital firms’ foreign market entry decisions, and how their effect changes as firms acquire experience. We report results on 216 American venture capital firms potentially investing in 95 countries during the 1990–2002 period. We find that venture capital firms invest in host countries characterized by technological, legal, financial, and political institutions that create innovative opportunities, protect investors’ rights, facilitate exit, and guarantee regulatory stability, respectively. We also find that as firms gain more international experience, they are more likely to overcome constraints related to these institutions.

Copyright/Permission Statement

This is a post-peer-review, pre-copyedit version of an article published in Journal of International Business Studies. The definitive publisher-authenticated version is available online at: http://link.springer.com/article/10.1057%2Fjibs.2009.35.

Keywords

institutional context, venture capital, longitudinal (or time-series) research design

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Date Posted: 27 November 2017

This document has been peer reviewed.