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Title: Institutionally embedded venture capital : experience from Taiwan
Author: Ho, J. C. R.
Awarding Body: University of Cambridge
Current Institution: University of Cambridge
Date of Award: 2002
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This research investigates Taiwanese venture capital (VC) from the perspective of social institutions. In particular, we explore the influence of social institutions (e.g. VC firm position in the industry network and relational norms) on venture capitalist's contracting behaviours and entrepreneur-venture capitalist relationships. The distinctive features of this research, compared to previous work, highlight the understanding of: - How do Taiwanese VCs structure their investment contracts (i.e. investment tools and constraining covenants included in contracts?) What are the significant explanatory variables determining their choice of investment tools? - Do relational norms between entrepreneurial and VC firms have post-investment efficiency implications? - What are the significant factors promoting VC-backed entrepreneur cooperation? We conducted three questionnaire surveys in Taiwan. Results from the analysis show that: - Instead of convertible security, the main investment tool in Taiwan is common security. Experienced VCs or VC firms with higher centrality in the industry network tend to invest in common stock. Compared to previous works on VC contracts. Taiwanese contracts contain less constraining covenants and appear to be consistent with relational contracting theory. - Building relational norms facilitates conflict resolution and reduces negotiation costs between entrepreneurs and venture capitalists, thus, enhancing VC post-investment efficiency. The process is partially mediated by the level of inter-organizational trust. - Entrepreneurs tend to cooperate with VC firms with higher degree centrality in the syndicated investment network. There is positive relation between relational norms and entrepreneur's propensity to cooperate. Overuse of constraining terms, however, undermines cooperative relationships.
Supervisor: Not available Sponsor: Not available
Qualification Name: Thesis (Ph.D.) Qualification Level: Doctoral
EThOS ID:  DOI: Not available