Institutional Distance and Cross-Border Venture Capital Investment Flows

Abstract

Cross

Why do entrepreneurs refuse venture capital?

“…In the same vein, it would also be interesting to analyze whether the institutional heterogeneity of VC investors which is found to impact differently many dimensions of the investees (e.g., Bertoni et al, 2013) may also affect VC refusal patterns. Second, it is necessary to deeply investigate how the political, cultural, legal, and institutional barriers may shape the behaviors of entrepreneurs and VCs when interacting in entrepreneurial finance markets (Moore et al, 2015). Finally, research is needed to understand how entrepreneurs may deal with corporate governance problems with VCs.…”

Institutional Seed Financing, Angel Financing, and Crowdfunding of Entrepreneurial Ventures: A Literature Review

“…Balboa and Martí, 2001;Cumming et al, 2010;Félix et al, 2007;Groh and von Liechtenstein, 2009;Nahata et al, 2015;Romain and van Pottelsberghe de la Potterie, 2004). Another more recent study on cross-border determinants was conducted by Moore et al (2015) who identify that normative and cultural-cognitive distinctions between countries can lead to less cross-border VC activity; where normative differences are those of social norms, values, and beliefs and cultural-cognitive differences between the knowledge and understanding of people between countries. Regulative differences, however, are found to be insignificant.…”

Business group internationalization: choosing a host country according to institutional distance

“…As such, the domestic environment makes firms more selective when choosing their host countries (Mishra & Daly, 2007). Thus, institutional differences may influence the objective of firms' internationalization (Moore, Payne, Bell, & Davis, 2015), as well as the entry mode in the new markets (Xu & Shenkar, 2002), the adoption of policies and practices (Kostova & Roth, 2002) and their performance (Zaheer & Mosakowski, 1997).…”

“…Generically speaking, institutional difference is the individual and collective difference among regulatory, normative and cognitive aspects of the home and host countries (Moore et al, 2015). Estimating this distance is important, as it permits to understand which entry mode strategy can be matched to the institutional distance, so as to guarantee a competitive edge to firms abroad (Hernandez & Nieto, 2015).…”

“…Estimating this distance is important, as it permits to understand which entry mode strategy can be matched to the institutional distance, so as to guarantee a competitive edge to firms abroad (Hernandez & Nieto, 2015). Furthermore, through this measure, it is possible to analyze firms' level of complexity in emerging markets, as institutions are usually weaker and more complex in said markets (Moore et al, 2015). In this sense, there is evidence that the greater the institutional distance, the more difficulty the foreign subsidiary will face in instituting legitimacy and transferring routines to its headquarters (Kostova & Zaheer, Marina A.…”