National Distances, International Experience, and Venture Capital Investment Performance
State University of New York at Buffalo
University of British Columbia (UBC) - Sauder School of Business
Simon Fraser University
August 18, 2013
Journal of Business Venturing, Forthcoming
This study examines how the performance of cross-border venture capital investments is affected by national institutional and cultural distances between the environments of venture capitalists (VCs) and investee ventures. We propose that institutional and cultural distances will decrease VCs’ effectiveness in conducting venture capital activities and negatively affect investment performance in terms of exit success, and obtain supportive evidence while controlling for geographic distance. We further analyze how VCs can use their international experience to mitigate the negative consequences of national distances. We find that while broad international experience in diverse countries attenuates the deleterious effects of institutional distance in a significant way, it does not have a similar impact in attenuating the negative effects of cultural distance.
Number of Pages in PDF File: 44
Keywords: venture capital, institutional distance, cultural distance, geographic distance, international experience, exit
Date posted: August 19, 2013 ; Last revised: September 23, 2013
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