Venture capitalists' decision policies across three countries: an institutional theory perspective

Abstract

This paper examines the influence of economic institutions upon venture capitalists’ (VCs) decision policies. We conducted policy-capturing experiments on 119 VCs across three countries, representing distinct economic institutions (US, mature market economy; South Korea, emerging economy; and China, transitional economy). Results show that VCs in rules-based market economies (US) rely upon market information to a greater extent than VCs in emerging economies (Korea), and Chinese VCs (transitional economy) weight human capital factors more heavily than either US or Korean VCs. Findings suggest that, although professional institutions may dictate which information is included in VC decision policies, the extent to which that information is emphasized is determined partly by the economic institution in which the decision-maker operates. Journal of International Business Studies (2007) 38, 691–708. doi:10.1057/palgrave.jibs.8400291