Journal of International Business Studies

, Volume 41, Issue 2, pp 185–205 | Cite as

Institutions and the internationalization of US venture capital firms

  • Isin Guler
  • Mauro F Guillén


In recent years, venture capital firms have increasingly turned to foreign countries in search of investment opportunities. The cross-border expansion of venture capital firms presents an interesting case of internationalization, because they are at variance with both conventional portfolio and direct investment models. Given the specific nature of venture capital investing, a new theoretical perspective is needed to understand foreign venture capital investments. This paper contributes to international business research by examining the features of the institutional environment that influence venture capital firms’ foreign market entry decisions, and how their effect changes as firms acquire experience. We report results on 216 American venture capital firms potentially investing in 95 countries during the 1990–2002 period. We find that venture capital firms invest in host countries characterized by technological, legal, financial, and political institutions that create innovative opportunities, protect investors’ rights, facilitate exit, and guarantee regulatory stability, respectively. We also find that as firms gain more international experience, they are more likely to overcome constraints related to these institutions.


institutional context venture capital longitudinal (or time-series) research design 



We thank the Area Editor and two anonymous reviewers for valuable suggestions and comments. Funding from the Mack Center for Technological Innovation at the Wharton School is greatly appreciated. Gary Dushnitsky, Vit Henisz, Steve Kobrin, Robert Salomon, Harry Sapienza, Adrian Tschoegl and seminar participants at the Academy of Management Meetings, the universities of Maryland, Michigan, and Southern California, Harvard Business School and The Wharton School provided excellent comments and suggestions on various versions of this draft.


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Copyright information

© Academy of International Business 2009

Authors and Affiliations

  1. 1.Kenan-Flager Business School, University of North CarolinaChapel HillUSA
  2. 2.The Wharton School of the University of PennsylvaniaPhiladelphiaUSA

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