IDEAS home Printed from https://ideas.repec.org/a/eee/jbvent/v26y2011i1p35-48.html
   My bibliography  Save this article

Cross-border private equity syndication: Institutional context and learning

Author

Listed:
  • Meuleman, Miguel
  • Wright, Mike

Abstract

Private equity (PE) has become an increasingly international phenomenon but there is a lack of research that looks at the process by which PE firms invest across borders. We aim to fill this gap in the literature by examining the role of institutional context and organizational learning as determinants of cross-border PE syndication. We examine these issues by studying the international expansion by later-stage UK PE investors into continental Europe over the period 1990 to 2006. Our results indicate that institutional context (in terms of the number of PE firms in the local environment and the presence of investment bankers in the local market) and organizational learning (in terms of the PE firm's experience in the host country; the PE firm's multinational experience; and the number of investment managers per portfolio company; but not the presence of local offices) are significantly related to the use of cross-border syndicates. Implications for theory and practice are suggested.

Suggested Citation

  • Meuleman, Miguel & Wright, Mike, 2011. "Cross-border private equity syndication: Institutional context and learning," Journal of Business Venturing, Elsevier, vol. 26(1), pages 35-48, January.
  • Handle: RePEc:eee:jbvent:v:26:y:2011:i:1:p:35-48
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0883-9026(09)00061-5
    Download Restriction: Full text for ScienceDirect subscribers only

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Kanniainen, Vesa & Keuschnigg, Christian, 2003. "The optimal portfolio of start-up firms in venture capital finance," Journal of Corporate Finance, Elsevier, vol. 9(5), pages 521-534, November.
    2. Yael V. Hochberg & Alexander Ljungqvist & Yang Lu, 2007. "Whom You Know Matters: Venture Capital Networks and Investment Performance," Journal of Finance, American Finance Association, vol. 62(1), pages 251-301, February.
    3. Black, Bernard S. & Gilson, Ronald J., 1998. "Venture capital and the structure of capital markets: banks versus stock markets," Journal of Financial Economics, Elsevier, vol. 47(3), pages 243-277, March.
    4. Bruce Kogut & Harbir Singh, 1988. "The Effect of National Culture on the Choice of Entry Mode," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 19(3), pages 411-432, September.
    5. Douglas Cumming & Sofia Johan, 2007. "Advice and monitoring in venture finance," Financial Markets and Portfolio Management, Springer;Swiss Society for Financial Market Research, vol. 21(1), pages 3-43, March.
    6. Manigart, Sophie & De Waele, Koen & Wright, Mike & Robbie, Ken & Desbrieres, Philippe & Sapienza, Harry J. & Beekman, Amy, 2002. "Determinants of required return in venture capital investments: a five-country study," Journal of Business Venturing, Elsevier, vol. 17(4), pages 291-312, July.
    7. Rosalie L Tung & Arjen van Witteloostuijn, 2008. "From the Editors: what makes a study sufficiently international?," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 39(2), pages 180-183, March.
    8. Casamatta, Catherine & Haritchabalet, Carole, 2007. "Experience, screening and syndication in venture capital investments," Journal of Financial Intermediation, Elsevier, vol. 16(3), pages 368-398, July.
    9. Bottazzi, Laura & Da Rin, Marco & Hellmann, Thomas, 2008. "Who are the active investors?: Evidence from venture capital," Journal of Financial Economics, Elsevier, vol. 89(3), pages 488-512, September.
    10. Mike Wright, 1998. "Venture Capital and Private Equity: A Review and Synthesis," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 25(5&6), pages 521-570.
    11. Jeng, Leslie A. & Wells, Philippe C., 2000. "The determinants of venture capital funding: evidence across countries," Journal of Corporate Finance, Elsevier, vol. 6(3), pages 241-289, September.
    12. John Armour & Douglas Cumming, 2006. "The legislative road to Silicon Valley," Oxford Economic Papers, Oxford University Press, vol. 58(4), pages 596-635, October.
    13. Josh Lerner & Antoinette Schoar, 2005. "Does Legal Enforcement Affect Financial Transactions? The Contractual Channel in Private Equity," The Quarterly Journal of Economics, Oxford University Press, vol. 120(1), pages 223-246.
    14. Sophie Manigart & Koen De Waele* & Mike Wright & Ken Robbie & Philippe Desbrières & Harry Sapienza & Amy Beekman, 2000. "Venture capitalists, investment appraisal and accounting information: a comparative study of the USA, UK, France, Belgium and Holland," European Financial Management, European Financial Management Association, vol. 6(3), pages 389-403.
    15. Vernon, Raymond, 1979. "The Product Cycle Hypothesis in a New International Environment," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 41(4), pages 255-267, November.
    16. X Martin & R Salomon, 2003. "Knowledge transfer capacity and its implications for the theory of the multinational corporation," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 34(4), pages 356-373, July.
    17. Miguel Meuleman & Mike Wright & Sophie Manigart & Andy Lockett, 2009. "Private Equity Syndication: Agency Costs, Reputation and Collaboration," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 36(5-6), pages 616-644.
    18. Joshua Lerner, 1994. "The Syndication of Venture Capital Investments," Financial Management, Financial Management Association, vol. 23(3), Fall.
    19. Mike Wright & Andy Lockett, 2003. "The Structure and Management of Alliances: Syndication in the Venture Capital Industry," Journal of Management Studies, Wiley Blackwell, vol. 40(8), pages 2073-2102, December.
    20. Markus M. Mäkelä & Markku V. J. Maula, 2008. "Attracting cross-border venture capital: the role of a local investor," Entrepreneurship & Regional Development, Taylor & Francis Journals, vol. 20(3), pages 237-257, May.
    21. Kaplan, Steven N. & Martel, Frederic & Stromberg, Per, 2007. "How do legal differences and experience affect financial contracts?," Journal of Financial Intermediation, Elsevier, vol. 16(3), pages 273-311, July.
    22. Wright, Mike & Thompson, Steve & Robbie, Ken, 1992. "Venture capital and management-led, leveraged buy-outs: A European perspective," Journal of Business Venturing, Elsevier, vol. 7(1), pages 47-71, January.
    23. Meyer, Klaus E. & Estrin, Saul & Bhaumik, Sumon Kumar & Peng, Mike W., 2009. "Institutions, resources and entry strategies in emerging economies," LSE Research Online Documents on Economics 4217, London School of Economics and Political Science, LSE Library.
    24. Bygrave, William D., 1987. "Syndicated investments by venture capital firms: A networking perspective," Journal of Business Venturing, Elsevier, vol. 2(2), pages 139-154.
    25. Sapienza, Harry J. & Manigart, Sophie & Vermeir, Wim, 1996. "Venture capitalist governance and value added in four countries," Journal of Business Venturing, Elsevier, vol. 11(6), pages 439-469, November.
    26. Gorman, Michael & Sahlman, William A., 1989. "What do venture capitalists do?," Journal of Business Venturing, Elsevier, vol. 4(4), pages 231-248, July.
    27. Cumming, Douglas & Fleming, Grant & Schwienbacher, Armin, 2006. "Legality and venture capital exits," Journal of Corporate Finance, Elsevier, vol. 12(2), pages 214-245, January.
    28. Froot, Kenneth A., 1989. "Consistent Covariance Matrix Estimation with Cross-Sectional Dependence and Heteroskedasticity in Financial Data," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 24(03), pages 333-355, September.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Meuleman, Miguel & Jääskeläinen, Mikko & Maula, Markku V.J. & Wright, Mike, 2017. "Venturing into the unknown with strangers: Substitutes of relational embeddedness in cross-border partner selection in venture capital syndicates," Journal of Business Venturing, Elsevier, vol. 32(2), pages 131-144.
    2. Reddy, Kotapati Srinivasa, 2015. "Market for Corporate Control and Contractual Buyout (CoBO): A New “Collective Ownership-and-Administrative” Strategy," MPRA Paper 63937, University Library of Munich, Germany, revised 2015.
    3. Humphery-Jenner, Mark & Suchard, Jo-Ann, 2013. "Foreign VCs and venture success: Evidence from China," Journal of Corporate Finance, Elsevier, vol. 21(C), pages 16-35.
    4. Espenlaub, Susanne & Khurshed, Arif & Mohamed, Abdulkadir, 2014. "Does cross-border syndication affect venture capital risk and return?," International Review of Financial Analysis, Elsevier, vol. 31(C), pages 13-24.
    5. K.S. Reddy & En Xie & Yuanyuan Huang, 2016. "Contractual buyout - a legitimate growth model in the enterprise development: foundations and implications," International Journal of Management and Enterprise Development, Inderscience Enterprises Ltd, vol. 15(1), pages 1-23.
    6. Devigne, David & Manigart, Sophie & Wright, Mike, 2016. "Escalation of commitment in venture capital decision making: Differentiating between domestic and international investors," Journal of Business Venturing, Elsevier, vol. 31(3), pages 253-271.
    7. Khavul, Susanna & Deeds, David, 2016. "The Evolution of Initial Co-investment Syndications in an Emerging Venture Capital Market," Journal of International Management, Elsevier, vol. 22(3), pages 280-293.
    8. Tykvová, Tereza & Schertler, Andrea, 2014. "Does Syndication With Local Venture Capitalists Moderate the Effects of Geographical and Institutional Distance?," Journal of International Management, Elsevier, vol. 20(4), pages 406-420.
    9. Holloway, Isaac & Lee, Hoan Soo & Shen, Tao, 2016. "Private equity firm heterogeneity and cross-border acquisitions," International Review of Economics & Finance, Elsevier, vol. 44(C), pages 118-141.
    10. Dai, Na & Jo, Hoje & Kassicieh, Sul, 2012. "Cross-border venture capital investments in Asia: Selection and exit performance," Journal of Business Venturing, Elsevier, vol. 27(6), pages 666-684.
    11. repec:eee:corfin:v:45:y:2017:i:c:p:31-63 is not listed on IDEAS
    12. David Devigne & Tom Vanacker & Sophie Manigart & Ine Paeleman, 2013. "The role of domestic and cross-border venture capital investors in the growth of portfolio companies," Small Business Economics, Springer, vol. 40(3), pages 553-573, April.
    13. Li, Yong & Vertinsky, Ilan B. & Li, Jing, 2014. "National distances, international experience, and venture capital investment performance," Journal of Business Venturing, Elsevier, vol. 29(4), pages 471-489.
    14. Zhang, Jing & Pezeshkan, Amir, 2016. "Host country network, industry experience, and international alliance formation: Evidence from the venture capital industry," Journal of World Business, Elsevier, vol. 51(2), pages 264-277.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jbvent:v:26:y:2011:i:1:p:35-48. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dana Niculescu). General contact details of provider: http://www.elsevier.com/locate/jbusvent .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.