Foreign Ventures Research Articles

Helping women rise: Foreign venture capital and female entrepreneurship

Access to external funding is a primary obstacle for female entrepreneurs must overcome. We hypothesize that the alignment in risk preferences between foreign venture capital firms (VCs) and female entrepreneurs makes foreign VCs more likely to hedge their cross-border investment risk by selecting female entrepreneurs, who tend to be risk-averse. Using a sample of 6,168 investment events involving VCs from 43 countries and regions investing in Chinese startups, we find that purely foreign VCs are more inclined to invest in female-led startups than purely local VCs. Furthermore, the tendency of foreign VCs to invest in female entrepreneurs is particularly pronounced in early-stage startups. Additionally, we observe no significant difference between syndicates composed of both foreign and local VCs and those consisting purely of local VCs in terms of their likelihood of investing in female-led startups. This study sheds light on the remarkable contribution of foreign VCs toward fostering female entrepreneurship and promoting gender equality, thereby providing important implications for policymakers, VCs, and female entrepreneurs.

Attracting Foreign Venture Capital Investment: The Institutions that Matter Most for Emerging Economies

This study explores the critical institutions and challenges influencing the attraction of international venture capital (VC) investment in emerging economies. By examining governance indicators such as "Voice and Accountability" and "The Rule of Law," the research highlights the importance of strong democratic institutions and robust legal frameworks in creating an attractive investment environment. It also identifies the complexities of regulatory frameworks, political stability, and corruption control in this context. The findings suggest that while effective governance fosters VC investment, over-reliance on government assistance can be counterproductive. The study emphasizes the need for collaboration among governments, regulatory bodies, and local organizations to create an investor-friendly climate, unlocking the potential for innovation and economic growth in emerging markets. Further research is recommended to understand the nuanced interactions between these factors and VC investments across diverse settings.

Government venture capital funds: Balancing the impact of social and financial goals on startups

This study evaluates the policy objectives and efficacy of government venture capital funds (GVCs) on the performance of invested entrepreneurial ventures. Analyzing data from China on GVCs, private venture capital funds (PVCs), and foreign venture capital funds (FVCs), it reveals that GVC-supported firms surpass those backed solely by domestic PVCs in R&D investment, return on assets (ROA), Tobin's Q, and corporate social responsibility metrics. Acting as government stewards, GVCs effectively fulfill policy goals. Moreover, GVC-backed ventures attract more venture capital following their lead and achieve higher one-day returns at IPOs compared to firms backed solely by private VC funds.

THE PROBLEMS OF ATTRACTING VENTURE CAPITAL IN RA

The investment environment formed in RA is still not favorable for attracting foreign venture capital. An effective state policy is needed, mainly aimed not at the creation of new venture funds, but at improving the depth of the Capital Market, the most vulnerable and at the same time the most important indicator group in the "Venture Capital and Private Equity Index". The article analyzes the risks of venture capital formation and based on it, recommendations are made in the direction of measures contributing to the improvement of the investment environment in RA.
 

Antecedents of organizational ambidexterity: an empirical investigation of foreign ventures in an emerging market

PurposeThe purpose of this paper is to examine the antecedents of organizational ambidexterity of foreign ventures in an emerging market. Organizational ambidexterity, the simultaneous pursuit of exploration and exploitation, represents a key innovation strategy. Yet, the driving factors of such innovation strategies for foreign ventures competing in emerging markets have been underresearched. In this study, unpacking the construct of organizational ambidexterity into two dimensions (i.e. the combined dimension [CD] and the balance dimension [BD]), the authors aim to investigate how firm-level and industry-level factors drive foreign ventures in pursuing exploration and exploitation and maximizing the benefits of both.Design/methodology/approachThis study adopts the hierarchical multiple regression approach using a sample of foreign ventures operating in high-tech manufacturing industries in China.FindingsThe authors find that the firm-level factor of strategic flexibility leads positively to the CD of organizational ambidexterity, whereas the industry-level factor of technological turbulence has a significantly positive impact on the BD.Originality/valueThis study provides important insights into the driving factors of organizational ambidexterity for foreign ventures competing in emerging markets.

Research on withdrawal behavior of foreign venture capital under the industry development and changes-- Take SoftBank Group as an example

In recent years, due to SoftBank Group's adjustment of strategic layout, the actual proportion of investment in China has decreased. As a leader in the investment industry, SoftBank Group has helped a large number of budding Chinese enterprises such as Alibaba and Didi Chuxing expand rapidly and achieve extremely high market shares, making an important contribution to the development of China's modern service industry. Therefore, this paper intends to explore the reasons for "SoftBank's withdrawal from China" event, which will help better utilize foreign investment to promote the development of the tertiary industry and improve the contribution of the tertiary industry to China's economic progress.

Becoming global billionaires from mainland China: 2004–2018

This paper documents the increase in the number of global billionaires from mainland China between 2004 and 2018. One of the key findings is that under conditions of an open economy, grassroots billionaire entrepreneurs (e.g., Jack Ma) could mitigate political economy as well as financial frictions via capital injections from foreign venture capitalists. By building a unique database, I report that (i) the politically unconnected billionaire entrepreneurs financed by foreign venture capitalists are more likely to go public their companies outside mainland China (mainly in Hong Kong and the USA), use offshore financing vehicles, and enter the innovation sector and (ii) the politically connected global billionaire entrepreneurs, however, are closely associated with a record of state-owned enterprise (SOE) restructuring.Plain English SummaryThe increase in the number of billionaire entrepreneurs (e.g., Jack Ma) from mainland China between 2004 and 2018 is a new phenomenon, which necessitates a reassessment of the crony capitalism arguments, the types of entrepreneurs, and the sources of innovation. This paper has important implications for future research on entrepreneurship in a global economy and the design of relevant policies.

Venture capital and private equity investors, governance, and success of IPOs: Evidence from India

AbstractIn this article, we examine the role of domestic and foreign venture capital and private equity (VCPE) firms in India. We find robust evidence that portfolio firms backed by foreign VCPE firms incorporate effective governance structures after the initial public offering (IPO). Specifically, these firms are associated with smaller, more independent, and gender‐diverse boards. Furthermore, our results suggest that foreign VCPE firms continue their association with their portfolio firms in the post‐IPO period by nominating directors to the boards. Our results also suggest that portfolio firms backed by foreign VCPE firms are associated with better long‐term operating performance and profitability. This positive effect is exacerbated by the presence of independent and female directors. Collectively, our results support the view that good governance practices are key to the long‐term success of a business, especially in economies that lack good legal systems, developed financial markets, and alternative investment opportunities and where developing trust between parties in a transaction is crucial.

Analyzing the Peculiarities of the Development of IT Companies in the Wartime and Regarding the Post-War Conditions

Economic models of world development are characterized by circularity, digitalization and smartization, the active use of scientific and technological achievements in products and technologies, the focus of entrepreneurs’ attention on the creation of strategic knowledge, the formation of unique competencies, the development of new business ideas and their application to obtain competitive advantages in the market. For IT companies, solving these issues is the most urgent, since the IT industry is the most dynamic, it is developing very rapidly, changing and significantly affecting other industries. Also, it should be noted that for domestic IT companies, the conditions for their development are complicated due to hostilities on the territory of Ukraine, the need to relocate businesses, the risks of losing customers and highly qualified personnel, reduced investment in startups. Despite the fact that in 2022 the IT industry provided foreign exchange earnings to the Ukrainian economy (an increase of 5.8% compared to pre-war 2021), there is a significant slowdown in the growth rate of the IT industry compared, for example, with the period 2015-2021, when exports of computer services grew by an average of 26.8% annually. Therefore, the task of analyzing the features of the development of IT companies in the wartime and regarding the post-war conditions is important and relevant for creating security conditions and substantiating the directions of their sustainable development. The article analyzes changes at the global and international levels of the IT industry; the experience of strengthening and consolidating the largest digital IT companies in the market is considered; the negative impact of the decrease in the activity of foreign venture funds to support startups is studied; the level of the State support for enterprises of high-tech industries is characterized.

The role of foreign venture capital and foreign business angels in start-ups’ early internationalization: The case of Polish ICT start-ups

The role of foreign venture capital and foreign business angels in start-ups’ early internationalization: The case of Polish ICT start-ups

Factors Driving Venture Capital Investments in India

This study aims to investigate what factors determine venture capital investments in India. The study selects the most relevant variables categorised as the Ease of Doing Business Index (EODBI), institutional indicators and macroeconomic variables. The EODBI has been introduced for the first time in the venture capital literature, intending to capture the business environment of India. Three regression models with three different dependent variables report the ambiguous results for domestic venture capital funds (DVCF), foreign venture capital investments and total venture capital investments. The individual measure EODB, representing the overall rating of doing business in India, is not favourable for domestic funds but favours foreign investors. Enforcing contracts and trading across borders respond positively to DVCF, while registered property moves differently. Resolving insolvency positively affects all three types of investments, benefiting young investors and young entrepreneurs by exploiting venture capital. This study can be refined in several ways in terms of future research, but the biggest challenge will be collecting enough data to derive meaningful results.

Incubator role of foreign venture capital: evidence from overseas listing of enterprises

This study uses the Granger-causality test and a sub-sample time-varying rolling window to explore the dynamic relationship between foreign venture capital (FVC) and overseas listing of Chinese enterprises (COLC), and takes into account the changes of legal environment and accounting standards. The results showed that from Q1 2012 to Q4 2014, the lower the FVC, the lower the COLC. From Q1 2008 to Q4 2008, the higher the FVC, the higher the COLC. Both positive and negative effects exist from COLC to FVC. Specifically, the more listed enterprises there are, the more foreign venture capitalists trust the potential of Chinese enterprises and the market. Thus, the corresponding FVC was high. Furthermore, the negative correlation between COLC and FVC was due to political factors and epidemics. Many enterprises improve their internationalization and profitability by attracting FVC to Chinese enterprises. Therefore, this study helps foreign investors achieve a greater return on investment in China and enables enterprises to improve their international reputations and realize overseas listings. In addition, the results can provide suggestions for the government to issue relevant measures conducive to maintaining the stability of the domestic market and the balanced development of domestic and foreign markets.

Foreign Direct Investment and the Robustness of Host-Country Commitment

This paper presents a model of a forward-looking government wooing foreign direct investment by enacting policies that reflect its commitment to the foreign enterprise. The ease with which the government is able to spend or carry out economic reform to complement the foreign venture evolves over time and influences the likelihood of its sustained commitment. The domestic and external strength of the government, the stability and not necessarily the level of returns from the project, venture-specificity of government spending or reform, and public and elite attitudes toward foreign commercial entry determine how invested the government remains in the long term success of the enterprise. More committed governments tend to be stronger and prefer robust investor-regime relationships. Reform that is not designed too narrowly to favor the investor is also less likely to be reversed later. Like pro-FDI public sentiment, a noisy policy environment induces deeper government commitment.

Компанії-єдинороги як продукт успішних екосистем стартапів

The article studied the essence and history of the term "unicorn startups", identified features of the formation and development of unicorn companies, outlined the main differences between unicorn startups and traditional innovative companies. The author analyzed the geographical and sectoral features of unicorn startups, identified economic activities, and locations of the most active occurrence of unicorn digs on a global scale. The article analyzed the main factors of successful formation and development of unicorn startups, among them, identified a very important factor – the state and quality of national ecosystems of startups, that create favorable economic conditions and investment climate for the emergence and rapid development of such companies. The presence of a developed and competitive national ecosystem for the development of unicorn startups implies the availability of first-class investment venture funds with international professionals who can select potential unicorns in the early stages of the startup life cycle, provide competent management and intelligence services, also provide sufficient and necessary amounts of venture capital investment. Rapid scaling of startups is not possible without sufficient demand. Developing countries with low demand for technology and local market capacity, limited resources to build venture capital funds need to create the right legal framework to improve the investment climate, attract global venture funds and establish effective cooperation between government, business, and science within the startup ecosystem. Thus, it can be concluded that unicorn companies are the product of successful national startup ecosystems, and the factor of support, initiation, and development of national startup ecosystems is critical both for the emergence of such companies and for the successful development of the national ecosystem. Unicorns are a very important criterion for improving its position in the global ranking of ecosystems. Improving the position of national ecosystems in global rankings will contribute to the inflow of foreign venture capital, attract investors and influencers with an international name, will determine the future development of the domestic ecosystem of startups, and increase the number of unicorn startups in our country.

Foreign venture capital investing strategies in transition economies: The case of China

Foreign venture capital investing strategies in transition economies: The case of China

Organizational Ambidexterity and Its Performance Implication of Foreign Ventures in an Emerging Market

Exploration and exploitation are key innovation strategies of foreign ventures operating in emerging markets. In this study, we focus on organizational ambidexterity, the simultaneous pursuit of exploration and exploitation, and examine the effects of the combined and balance dimensions of ambidexterity on performance in emerging markets. We further investigate which dimension, the combined or balance, foreign ventures should adopt with different levels of marketing capability and strategic flexibility. Using a survey of foreign ventures operating in manufacturing industries in China, we find that both dimensions of organizational ambidexterity have no direct effects on performance. However, marketing capability and strategic flexibility moderate the organizational ambidexterity–firm performance relationship. The combined dimension can foster performance when foreign ventures have high levels of marketing capability and strategic flexibility. Interestingly, the balance dimension of organizational ambidexterity profitably contributes to performance when foreign ventures possess low levels of marketing capability and strategic flexibility.

The impact of hiring local managers on foreign venture capital performance: evidence from China

PurposeThis study examines whether recruitment of local managers helps foreign venture capital (VC) firms mitigate the liability of foreignness measured by cultural differences and improves their performance in relationship-based emerging markets such as China.Design/methodology/approachFrom a data set comprising 1,939 Chinese portfolio companies with first-round investments by 282 foreign lead VC firms during 2000–2015, the study tracks the outcome of each investment until the end of 2018 and collects the background information of partners of lead VC firms. A survival analysis using the Cox hazard model is conducted.FindingsCultural differences of the foreign VC's home country, when compared to China, positively influence the success of VC firms. Recruitment of local managers reinforces this positive influence. The influence of local manager recruitment is more pronounced for VC firms with politically connected local managers, during politically uncertain periods, in industries supported by the government, in provinces with high government intervention and in VC firms with decentralized decision rights given to local managers.Originality/valueThis research complements the international business literature on the advantages of hiring local managers and identifies the channels through which local managers help foreign VC firms obtain relationship-based resources. The findings also have practical implications for those foreign investors who intend to enter into relationship-based emerging markets.

Performance implication of exploration and exploitation in foreign markets: the role of marketing capability and operation flexibility

PurposeThe purpose of this paper is to examine the performance impact of foreign ventures' exploration and exploitation strategies in emerging markets. Exploration and exploitation represent key strategic choices and have been extensively studied in the context of domestic markets. Yet the implication of such innovation strategies for foreign ventures operating in emerging markets has been under-researched. We aim to investigate whether foreign ventures can realize the value of exploration and exploitation strategies in emerging markets and also the moderating role of marketing capability and operation flexibility to enable the implementation process.Design/methodology/approachThis study adopts the hierarchical moderated regression approach using a sample of foreign ventures operating in high-tech manufacturing industries in China.FindingsThe authors find that both exploration and exploitation have positive effects on firms' financial performance. Marketing capability strengthens the performance impact of exploration, but exhibits no such impact of exploitation. Moreover, operation flexibility positively moderates the effects of both exploration and exploitation on performance.Research limitations/implicationsThis study provides important insights into whether foreign ventures can boost performance through exploration and exploitation strategies in emerging markets as well as the implementation-level factors that can facilitate such positive effects.Originality/valueThe study is novel in revealing the moderating role of marketing capability and operation flexibility in facilitating the performance outcome of exploration and exploitation strategies.

Transformation as transnational process: German-Czech economic relations after 1989

ABSTRACT The article deals with German-Czech economic relations after 1989, focusing on foreign direct investment and joint ventures, the role of the German-Czech Chamber of Industry and Commerce as well as on German consulting assistance in the Czech Republic. It demonstrates that both sides were strongly interested in cooperating with each other, but that there were also problems and ambiguities. Due to its rather “nationalist” privatization strategy, the Czech side was generally critical of foreign interference. Regarding German-Czech economic cooperation, it had to deal with painful memories of National Socialism as well as with restitution claims by (parts of) the expelled German population group. This fuelled the fear of German “colonization”, which could only partly be dispelled by the German side. In fact, German representatives often displayed a certain superiority, but at the same time knew rather little about the Czech Republic. The article concludes that 1989 was not a caesura in every respect, but that historical legacies played an important role during the 1990s. Furthermore, the example of German-Czech economic relations refutes narratives suggesting that the East adapted or assimilated to the West and makes it clear that the post-socialist transformation was a non-linear and conflictual transnational process.

The economics of innovative startups in construction: a methodology for selecting startups to be financed by a corporate venture fund

The article addresses the future of the task of developing a diversified innovative economy in Russia by means of drawing the attention of the state (as evidenced by the establishment of numerous funds, accelerators, and business angels), Russian and foreign private investors to the venture business activity. In our country, the venture industry is at its inception, but its core players are already in place: they are Russian and foreign venture capital funds, associations of business angels, corporate venture funds, public-private venture funds and the “fund of funds” (the Russian venture company). The intensity of the venture capital investment activity is low, and there is no state support system available. Financial transformations can decelerate the slow formation of the venture industry if there is no awareness of the importance of this activity for the development of the economy of the Russian Federation. At the same time, the availability of a significant amount of innovative research, needed for commercialization, creates the need for venture financing and the future change of the venture industry. Highquality management of venture investments can be implemented within the framework of a consolidated method: investment; control; formation and increase of importance for owners, institutional investors and society.
 At the same time, the examination of the investments, that have already been made, contributes to the development of certain knowledge, skills, avoidance of fatal mistakes in the selection of projects, conclusion of agreements and management of companies.
 The conference speakers addressed the most relevant issues of construction cost examinations which are essential when the cadastral value of real estate facilities is contested in court and when causes, conditions, circumstances and the mechanism of accidents, failures, and casualties in the course of construction and operation of construction facilities are identified. Hence, the most relevant problems of forensic structural engineering and construction cost examinations were considered, and the most effective solutions were developed.