No risk no funding? The distinct effects of institutional strength and institutional stability on venture capital investments
by Felix Hoch; Todor S. Lohwasser
International Journal of Entrepreneurial Venturing (IJEV), Vol. 15, No. 2, 2023

Abstract: Research on the impact of institutions on venture capital investments has revealed a puzzling picture. While institutional theory predicts that higher developed institutions should promote investments, the empirical evidence for venture capital investments is surprisingly ambiguous. This study connects the institution-based view and the unique characteristics of venture capital investors by examining the distinct effects of institutional strength and institutional stability on venture capital investments. Empirical results from 58,062 individual companies, nested in 104 countries, show that ventures attract higher investments in countries with higher institutional strength but lower institutional stability. However, both institutional strength and institutional stability increase the survivability of those funded ventures. Hence, we promote a dynamic perspective on institutional effects for founders, investors, and policy-makers, since these institutional effects differ between institutional strength and stability as well as between different firm characteristics, strategies, and performance dimensions.

Online publication date: Wed, 03-May-2023

The full text of this article is only available to individual subscribers or to users at subscribing institutions.

 
Existing subscribers:
Go to Inderscience Online Journals to access the Full Text of this article.

Pay per view:
If you are not a subscriber and you just want to read the full contents of this article, buy online access here.

Complimentary Subscribers, Editors or Members of the Editorial Board of the International Journal of Entrepreneurial Venturing (IJEV):
Login with your Inderscience username and password:

Username:        Password:          Forgotten your password?

Want to subscribe?
A subscription gives you complete access to all articles in the current issue, as well as to all articles in the previous three years (where applicable). See our Orders page to subscribe.

If you still need assistance, please email subs@inderscience.com