National distances,international experience,and venture capital investment performance |
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Authors: | Yong Li Ilan B Vertinsky Jing Li |
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Institution: | 1. School of Management, State University of New York at Buffalo, 326 Jacobs Management Center, Amherst, NY 14260, USA;2. Sauder School of Business, The University of British Columbia, 2053 Main Mall, Vancouver, BC V6T 1Z2, Canada;3. Beedie School of Business, Simon Fraser University, 8888 University Drive, Burnaby, BC V5A 1S6, Canada |
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Abstract: | 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. |
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Keywords: | Venture capital Institutional distance Cultural distance International experience Exit |
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