Abstract
The high level of economic growth that emerging markets are experiencing lately — including Latin America — offers new opportunities for different types of investments. Private equity (PE) investments in emerging markets have risen from $3 billion in 2003 to almost $70 billion before the Great Recession of 2008–2009 (Emerging Markets Private Equity Association, 2010). In the case of Latin America, PE investments totalled more than $7 billion in 2010 (LAVCA, 2011). By private equity we mean “financing for early- and later-stage private companies from third-party investors seeking high returns based on both the risk profiles of the companies and the near-term illiquidity of these investments” (Leeds & Sunderland, 2003: 8). For instance, venture capital (VC) is a type of private equity focused on start-ups.
This is a preview of subscription content, log in via an institution to check access.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Preview
Unable to display preview. Download preview PDF.
References
Ahlstrom, D. & Bruton, G. D. (2006). Venture capital in emerging economies: Networks and institutional change, Entrepreneurship Theory and Practice 30(2): 299–320.
Aizenman, J. & Kendall, J. (2008). The internationalization of venture capital and private equity. NBER Working Paper.
Anokhin S. & Schulze, W. (2009). Entrepreneurship, innovation, and corruption. Journal of Business Venturing 24(5): 465–476.
Bruton, G. D., Ahlstrom, D. & Puky, T. (2009). Institutional differences and the development of entrepreneurial ventures: A comparison of the venture capital industries in Latin America and Asia. Journal of International Business Studies 40: 762–778.
Bruton, G., Ahlstrom, D. & Yeh, K. S. (2004). Understanding venture capital in East Asia: The impact of institutions on the industry today and tomorrow. Journal of World Business 39(1): 72–88.
Chang, Y., Kao, M., Kuo, A. & Chiu, C. (2012). How cultural distance influences entry mode choice: The contingent role of host country’s governance quality. Journal of Business Research 65(8): 1160–1170.
Cornelius, P. (2010). International investments in private equity: Asset allocation, markets, and industry structure. Burlington, MA: Academic Press.
Cuervo-Cazurra, A. & Dau, L. (2009). Promarket reforms and firm profitability in developing countries. Academy of Management Journal 52(6): 1348–1368.
Cumming, D., Fleming, G. & Schwienbacher, A. (2005). Legality and venture capital exits. Journal of Corporate Finance 12(2): 214–245.
De Clercq D., Lim, D. S. K & Oh, C. H. (2013). Individual-level resources and new business activity: The contingent role of institutional context, Entrepreneurship Theory and Practice 37(2): 303–330.
Desa, G. (2012). Resource mobilization in international social entrepreneurship: Bricolage as a mechanism of institutional transformation. Entrepreneurship Theory and Practice 36(4): 727–751.
Emerging Markets Private Equity Association. (2010). Fundraising and Investment Review. Washington, DC: Emerging Markets Private Equity Association.
Gleditsch, K. & Ward, M. (2001). Measuring space: A minimum-distance database and applications to international studies. Journal of Peace Research 38(6): 739–758.
Guler, I. & Guillen, M. F. (2010). Institutions and the internationalization of US venture capital firms. Journal of International Business Studies 41(2): 185–205.
Hoetker, G. (2007). The use of logit and probit models in strategic management research: Critical issues. Strategic Management Journal 28(4): 331–343.
Kaufmann, D., Kraay, A. & Mastruzzi, M. (2009). Governance matters VIII: Aggregate and individual governance indicators, 1996–2008. World Bank Policy Research Working Paper No. 4978.
— (2010). The Worldwide Governance Indicators: A summary of methodology, data and analytical issues. World Bank Policy Research Working Paper No. 5430.
Khoury, T. A., Junkunc, M. & Mingo, S. (in press). Navigating political hazard risks and legal system quality: Venture capital investments in Latin America. Journal of Management, DOI: 10.1177/0149206312453737.
LAVCA. (2011). 2011 Scorecard on the private equity and venture capital environment in Latin America. Latin American Private Equity & Venture Capital Association. New York.
Leeds, R. & Sunderland, J. (2003). Private equity investing in emerging markets. Journal of Applied Corporate Finance 15(4): 8–16.
Leiponen, A. & Helfat, C. E. (2010). Innovation objectives, knowledge sources, and the benefits of breadth. Strategic Management Journal 31(2): 224–236.
Lerner, J. & Schoar, A. (2005). Does legal enforcement affect financial transactions? The contractual channel in private equity. Quarterly Journal of Economics 120(1): 223–246.
Li, Y. & Zahra, S. (2012). Formal institutions, culture, and venture capital activity: A cross- country analysis. Journal of Business Venturing 27(1): 95–111.
Mingo, S. (2013). Entrepreneurial ventures, institutional voids, and business group affiliation: The case of two Brazilian start-ups, 2002–2009. Academia Revista Latinoamericana de Administración 26(1).
Norton, E. C ., Wang, H. & Ai C. (2004). Computing interaction effects and standards errors in logit and probit models. Stata Journal 4(2): 154–167.
Oh, C. H. & Oetzel, J. (2011). Multinationals’ response to major disasters: How does subsidiary investment vary in response to the type of disaster and the quality of country governance? Strategic Management Journal 32(6): 658–681.
Sorenson, O. & Stuart, T. (2001). Syndication networks and the spatial distribution of venture capital investment. American Journal of Sociology 106(6): 1546–1588.
Taussig, M. (2010). Capitalizing on weak institutions: How local resources influence private equity performance in emerging economies. Working Paper.
Vaaler, P. (2011). Immigrant remittances and the venture investment environment of developing countries. Journal of International Business Studies 42(9): 1121–1149.
Wang, C. K. & Sim, V. Y. L. (2001). Exit strategies of venture capital-backed companies in Singapore. Venture Capital 3(4): 337–358.
Wang L. & Wan, S. (2012). Economic freedom and cross-border venture capital performance. Journal of Empirical Finance 19(1): 26–50.
World Bank. (2011). World development indicators (Web-based dataset). Washington, DC: The World Bank.
Editor information
Editors and Affiliations
Copyright information
© 2013 Santiago Mingo, Francisco Morales, and Marc Junkunc
About this chapter
Cite this chapter
Mingo, S., Morales, F., Junkunc, M. (2013). Private Equity Investments in Emerging Markets, National Governance, and Geographic Distance: The Case of Latin America, 1996–2009. In: Liberman, L., Newburry, W. (eds) Internationalization, Innovation and Sustainability of MNCs in Latin America. The AIB-LAT Book Series. Palgrave Macmillan, London. https://doi.org/10.1057/9781137024138_6
Download citation
DOI: https://doi.org/10.1057/9781137024138_6
Publisher Name: Palgrave Macmillan, London
Print ISBN: 978-1-349-43848-8
Online ISBN: 978-1-137-02413-8
eBook Packages: Palgrave Business & Management CollectionBusiness and Management (R0)