Springer Nature is making SARS-CoV-2 and COVID-19 research free. View research | View latest news | Sign up for updates

Human capital and the internationalisation of venture capital firms

Abstract

We examine the neglected area of internationalisation by VCs. Using a representative sample of 195 VCs, we show that the decision of a European VC firm to invest internationally is driven by its human resources. Having more VC executives in general and more VC executives with previous international experience in specific, results in a higher probability of investing internationally. In contrast, more VC executives with experience in the VC industry or with an engineering background lead to a higher probability of remaining domestic.

This is a preview of subscription content, log in to check access.

References

  1. Amit, R., Brander, J., & Zott, C. (1998). Why do venture capital firms exist? Theory and Canadian evidence. Journal of Business Venturing, 13, 441–466.

  2. Andersson, S. (2004). Internationalisation in different industrial contexts. Journal of Business Venturing, 19, 851–875.

  3. Barney, J. (1991). Firm resources and sustained competitive advantage. Journal of Management, 17, 99–120.

  4. Baygan, G., & Freudenberg, M. (2000). The internationalisation of venture capital activity in OECD countries: Implications for measurement and policy. STI Working Papers 2000/7, OECD.

  5. Bloodgood, J. M., Sapienza, H. J., & Almeida, J. G. (1996). The internationalisation of new high-potential U.S. ventures: Antecedents and outcomes. Entrepreneurship Theory and Practice, 20(4), 61–76.

  6. Botazzi, L., da Rin, M., & Hellmann, T. (2004). The changing face of the European venture capital industry: Facts and analysis. Journal of Private Equity, 7, 26–53.

  7. Bruton, G. D., Fried, V. H., & Manigart, S. (2005). Institutional influence on the worldwide expansion of venture capital. Entrepreneurship Theory and Practice, 29, 737-760.

  8. Buckley, P. J., Pass, C. L., & Prescott, K. (1992). The internationalization of service firms: A comparison with the manufacturing sector. Scandinavian International Business Review, 1(1), 39–56.

  9. Dimov, D. D., & Shepherd, D. A. (2005). Human capital theory and venture capital firms: Exploring “home runs” and “strike outs”. Journal of Business Venturing, 20, 1–21.

  10. Dixit, A., & Jayaraman, N. (2001). Internationalisation strategies of private equity firms. Journal of Private Equity, 5(1), 40–54.

  11. Etemad, H. (2004). Internationalisation of small and medium-sized enterprises: A grounded theoretical framework and overview. Canadian Journal of Administrative Sciences, 21(1), 1–21.

  12. EVCA (2004). EVCA yearbook 2004: Annual survey of Pan-European private equity & venture capital activity. Zaventem: EVCA.

  13. Gimeno, J., Folta, T. B., Cooper, A. C., & Woo, C. Y. (1997). Survival of the fittest? Entrepreneurial human capital and the persistence of underperforming firms. Administrative Science Quarterly, 42, 750–783.

  14. Hall, G., & Tu, C. (2003). Venture capitalists and the decision to invest overseas. Venture Capital, 5, 181–190.

  15. Hymer, S. H. (1960). The international operations of national firms: A study of foreign direct investment. Cambridge, Massachusetts: MIT.

  16. Jääskeläinen, M., & Maula, M. (2005). The effects of direct and indirect foreign venture capital ties on exit market selection and exit modes. Paper proposal submitted to the 25th Annual International Conference of the Strategic Management Society. Orlando, USA.

  17. Johanson, J., & Vahlne, J. (1977). The internationalization process of the firm—A model of knowledge development and increasing foreign market commitments. Journal of International Business Studies, 8, 23–32.

  18. Kenney, M., Han, K., & Tanaka, S. (2002). Adapting to strange environments:Venture capital in Japan, Korea and Taiwan. Paper presented at the 2002 Annual Meeting of the Academy of International Business. San Juan, Puerto Rico.

  19. Leeds, R., & Sunderland, J. (2003). Private equity investing in emerging markets. Journal of Applied Corporate Finance, 15(4), 111–119.

  20. Lockett, A., Murray, G., & Wright, M. (2002). Do UK venture capitalists still have a bias against invest in new technology firms? Research Policy, 31, 1009–1030.

  21. Madsen, T. K., & Servais, P. (1997). The internationalisation of born globals: An evolutionary process? International Business Review, 6, 561–583.

  22. Meyer, J. E., & Shao, J. J. (1995). International venture capital portfolio diversification and agency costs. Multinational Business Review, 3, 53–58 (Spring).

  23. Oviatt, B. M., & McDougall, P. P. (1997). Challenges for internationalisation process theory: The case of international new ventures. Management International Review, 37(2), 85–99.

  24. Sapienza, H., Manigart, S., & Vermeir, W. (1996). Venture capitalist governance and value-added in four countries. Journal of Business Venturing, 11, 439–470.

  25. Sorenson, O., & Stuart, T. E. (2002). Syndication networks and the spatial distribution of venture capital investment. American Journal of Sociology, 106, 1546–1586.

  26. Westhead, P., Wright, M., & Ucbasaran, D. (2001). The internationalisation of new and small firms: A resource-based view. Journal of Business Venturing, 16, 333–358.

  27. Wright, M., Lockett, A., & Pruthi, S. (2002). Internationalisation of Western venture capitalists into emerging markets: Risk assessment and information in India. Small Business Economics, 19, 13–29.

  28. Wright, M., Pruthi, S., & Lockett, A. (2005). International venture capital research: From cross-country comparisons to crossing countries. CMBOR Occasional Paper.

Download references

Author information

Correspondence to Mike Wright.

Rights and permissions

Reprints and Permissions

About this article

Cite this article

Manigart, S., Collewaert, V., Wright, M. et al. Human capital and the internationalisation of venture capital firms. Int Entrep Manag J 3, 109–125 (2007). https://doi.org/10.1007/s11365-006-0021-0

Download citation

Keywords

  • Venture capital
  • Internationalisation
  • Human capital