Spiky globalization of venture capital investments: the influence of prior human networks

Abstract

AbstractWe demonstrate a spiky globalization pattern in the cross‐border spread of venture capital: rather than being uniformly distributed, cross‐border venture capital flows are unevenly distributed, in that certain regions of the U.S. display particularly intense linkages with certain foreign nations. We posit that such spiky globalization of venture capital is driven by the spiky globalization pattern of prior human networks between locations, and we provide empirical results supportive of our hypothesis. Specifically, we reason that immigrant entrepreneurs inherently tend to collocate with each other in their host nation, thus advantaging certain regions in the competition to act as sources and destinations of cross‐border venture capital. This study sheds new light on geographical patterns in international venture capital and entrepreneurship. Copyright © 2010 Strategic Management Society.