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

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Authors

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.
Original languageEnglish
JournalJournal of International Management
Volume20
Issue number4
Pages (from-to)406-420
Number of pages15
ISSN1075-4253
DOIs
Publication statusPublished - 01.12.2014

    Research areas

  • Management studies - Venture Capital, Internationalization, Syndication, Geographical and Institutional Distance, Experience, Moderating Effect
  • Entrepreneurship

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