Abstract
We examine the neglected question concerning how varying institutional distance between potential partners in different countries influences the role of relational embeddedness in cross-border partner selection decisions. We develop an integrative perspective where the institutional context in which partner selection decisions occur defines boundary conditions to the relational embeddedness approach to partner selection decisions. We construct a unique, novel dataset from various sources, comprising 1021 venture capital investments in 12 European countries in which 391 different local venture capital investors invited 302 different foreign investors from 14 European countries. Adopting a case-control analytical approach we find that the effect of relational embeddedness on partner selection is positively moderated by the regulatory, cognitive and normative distance between the institutions in which the local and foreign partners operate
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