Institutions and the internationalization of US venture capital firms

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.

International experience and FDI location choices of Chinese firms: The moderating effects of home country government support and host country institutions

“…Previous research indicates that host country institutions affect MNEs' organizational capabilities to access external resources and take risk in a host country and, therefore, also affect MNEs' entry decisions (Guler & Guillén, 2010). Host country institutions also affect knowledge access capabilities of firms, significantly shaping firms' market entry strategies .…”

“…Quality of host country institutions may play a more important role in attracting relatively less experienced Chinese MNEs (Guler & Guillén, 2010). In other words, Chinese MNEs' FDI decisions to invest in developed countries may be highly contingent on host government policies toward their FDI and well-established market supporting institutions (Schwens & Kabst, 2011).…”

The global field of multi-family offices: An institutionalist perspective

“…Guler and Guillén (2010), referring to the cross-border expansion of U.S.-based venture capital companies, reveal that past international experience might lead to learning and a subsequent adjustment of strategies. Multi-family offices that have accumulated international experience may have adopted organisational forms and activities that differ from those adopted by competitors that focus on the domestic market or have just started to internationalise.…”

“…There is a controversial debate whether organisational fields, as they mature, are characterised by uniform homogeneity in forms and practices (DiMaggio and Powell, 1983) or by heterogeneity on the field level and homogeneity on the level of sub-fields (Quirke, 2013 To the extent that a global organisational field is characterised by clusters of homogeneity, different factors may drive their distinctiveness, such as the embeddedness in national environments (Casper and Hancké, 1999) or the degree of international experience (Guler and Guillén, 2010). Thus, our third research question is: which factors are driving cluster distinctiveness?…”

The Internationalization of Venture Capital and Private Equity

“…A study by Guler and Guillen (2005) Tables 4 and 5 show modified specifications which contain moving averages of the deal volumes and counts between the two countries over the previous two years (t-1 and t-2). In columns three and four, the venture capital regressions contain either the lagged volumes or lagged counts of the venture capital deals between country i and j as well as the lagged volumes or counts of the venture capital deals from all other source countries (all not j) to the destination countries.…”