Institutions and the Internationalization of the US Venture Capital Firms

Journal of International Business Studies, Vol. 41: 185-205, 2010

47 Pages Posted: 11 Nov 2016 Last revised: 29 Nov 2016

See all articles by Isin Guler

Isin Guler

University of North Carolina (UNC) at Chapel Hill - Kenan-Flagler Business School

Mauro F. Guillen

University of Pennsylvania - Management Department

Date Written: 2010

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.

Suggested Citation

Guler, Isin and Guillen, Mauro Federico, Institutions and the Internationalization of the US Venture Capital Firms (2010). Journal of International Business Studies, Vol. 41: 185-205, 2010 , Available at SSRN: https://ssrn.com/abstract=2864597

Isin Guler (Contact Author)

University of North Carolina (UNC) at Chapel Hill - Kenan-Flagler Business School ( email )

McColl Building
Chapel Hill, NC 27599-3490
United States

Mauro Federico Guillen

University of Pennsylvania - Management Department ( email )

The Wharton School
Philadelphia, PA 19104-6370
United States
215-573-6267 (Phone)
215-326-3205 (Fax)

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