{"title":"No risk no funding The distinct effects of institutional strength and institutional stability on venture capital investments","authors":"Felix Hoch, Todor S. Lohwasser","doi":"10.1504/ijev.2023.130707","DOIUrl":null,"url":null,"abstract":"Research on the impact of institutions on venture capital investments has revealed a puzzling picture. While institutional theory predicts that higher developed institutions should promote investments, the empirical evidence for venture capital investments is surprisingly ambiguous. This study connects the institution-based view and the unique characteristics of venture capital investors by examining the distinct effects of institutional strength and institutional stability on venture capital investments. Empirical results from 58,062 individual companies, nested in 104 countries, show that ventures attract higher investments in countries with higher institutional strength but lower institutional stability. However, both institutional strength and institutional stability increase the survivability of those funded ventures. Hence, we promote a dynamic perspective on institutional effects for founders, investors, and policy-makers, since these institutional effects differ between institutional strength and stability as well as between different firm characteristics, strategies, and performance dimensions.","PeriodicalId":45588,"journal":{"name":"International Journal of Entrepreneurial Venturing","volume":"21 1","pages":"0"},"PeriodicalIF":1.4000,"publicationDate":"2023-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"1","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"International Journal of Entrepreneurial Venturing","FirstCategoryId":"1085","ListUrlMain":"https://doi.org/10.1504/ijev.2023.130707","RegionNum":0,"RegionCategory":null,"ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q3","JCRName":"MANAGEMENT","Score":null,"Total":0}
引用次数: 1
Abstract
Research on the impact of institutions on venture capital investments has revealed a puzzling picture. While institutional theory predicts that higher developed institutions should promote investments, the empirical evidence for venture capital investments is surprisingly ambiguous. This study connects the institution-based view and the unique characteristics of venture capital investors by examining the distinct effects of institutional strength and institutional stability on venture capital investments. Empirical results from 58,062 individual companies, nested in 104 countries, show that ventures attract higher investments in countries with higher institutional strength but lower institutional stability. However, both institutional strength and institutional stability increase the survivability of those funded ventures. Hence, we promote a dynamic perspective on institutional effects for founders, investors, and policy-makers, since these institutional effects differ between institutional strength and stability as well as between different firm characteristics, strategies, and performance dimensions.
期刊介绍：
The journal name relates to Harvard Business School''s understanding of "The Entrepreneurial Venture" (Sahlmann/Stevenson/Roberts/Bhidé), the concept of entrepreneurship not only limited to new ventures/start-ups, but further understood as the concentration of opportunity/growth/value creation regardless of company size, age or kind. Hence, IJEV addresses organisational processes surrounding these concepts: from an idea to an innovation. To bridge the gap between innovation and entrepreneurship research, IJEV emphasises implications of this new knowledge for researchers, managers, public policy makers and business educators. Topics covered include: -Opportunity: identification; recognition; creation; selection; exploitation -Growth: management of rapidly growing enterprises; control -Value creation: for owners; for customers; other stakeholders; society -Entrepreneurship and intrapreneurship -New venture creation -Management of technology and innovation -New product development and creativity -SME management -Entrepreneurial and small enterprise finance -Crowdsourcing and crowdfunding -Family business -Gender and diversity -Global entrepreneurship and internationalisation -Public policy, the economy, and the small enterprise -Business and organisational failure
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