TY - JOUR

T1 - Does syndication with local venture capitalists moderate the effects of geographical and institutional distances?

AU - Tykvová, Tereza

AU - Schertler, Andrea

PY - 2014/12/1

Y1 - 2014/12/1

N2 - Venture capitalists (VCs) face additional risks and costs when they invest in firms located in geographically remote countries or in countries whose institutions differ substantially from those in their home countries. Our study considers foreign VCs ' prospect of overcoming these investment obstacles as a rationale for syndicating with local VCs from the investment countries. Through such syndication, foreign VCs may obtain easier access to investment opportunities, improve the risk allocation and face lower information costs. Using a novel dataset of worldwide deals, we draw a diametrically opposed picture for the two kinds of distance: our results lend support to the conjecture that the obstacles of great institutional distance cannot be overcome with the help of a local VC, whereas those of great geographical distance can.

AB - Venture capitalists (VCs) face additional risks and costs when they invest in firms located in geographically remote countries or in countries whose institutions differ substantially from those in their home countries. Our study considers foreign VCs ' prospect of overcoming these investment obstacles as a rationale for syndicating with local VCs from the investment countries. Through such syndication, foreign VCs may obtain easier access to investment opportunities, improve the risk allocation and face lower information costs. Using a novel dataset of worldwide deals, we draw a diametrically opposed picture for the two kinds of distance: our results lend support to the conjecture that the obstacles of great institutional distance cannot be overcome with the help of a local VC, whereas those of great geographical distance can.

KW - Management studies

KW - Venture Capital

KW - Internationalization

KW - Syndication

KW - Geographical and Institutional Distance

KW - Experience

KW - Moderating Effect

KW - Entrepreneurship

UR - http://www.scopus.com/inward/record.url?scp=84912090140&partnerID=8YFLogxK

U2 - 10.1016/j.intman.2014.09.001

DO - 10.1016/j.intman.2014.09.001

M3 - Journal articles

AN - SCOPUS:84912090140

VL - 20

SP - 406

EP - 420

JO - Journal of International Management

JF - Journal of International Management

SN - 1075-4253

IS - 4

ER -