An Institutional View of the Development of Venture Capital in the U.s., Europe and Asia

Professions develop isomorphic, or similar, characteristics not only within countries but also around the world. This research examines venture capital professionals in three distinct regions of the world and finds that their values are shaped by normative institutional processes. The strength of these normative processes leads to stable views on what venture capitalists believe their roles are to be in Europe, U.S., and Asia. However, how those views are implemented around the world is shaped by cognitive institutional influences in the given region of the world. Thus, Asian venture capitalists despite sharing similar views on their roles, implement those roles very differently due to the emphasis on collective action in Asia. This research represents the first examination of venture capital professionals on a worldwide basis and the first specific in-depth examination of Asian venture capital. It also provides the first international examination of professionals who share strong trade and professional associations. AN INSTITUTIONAL VIEW OF THE DEVELOPMENT OF VENTURE CAPITAL IN THE U.S., EUROPE AND ASIA Institutions are those structures that provide stability and meaning to social behavior (Scott, 1995a). A result of institutions is that organizations often develop in a similar, or isomorphic manner (Slack & Hinings, 1994). Isomorphic development has previously been noted among professionals with strong trade and professional organizations (Oliver, 1996). For example, the role of institutions in shaping similarities in the professional behavior among the medical (Freidson, 1970; Starr, 1982), and accounting professions (Mezias, 1990) has been examined. However, while this research has documented the similarities in behavior demonstrated, it has not often empirically investigated which of the multiple institutions present in the environment most directly shaped the development of these professions and explain their differences. The research that has sought to answer questions about the roles of different institutions in the development of professions has examined whether local or national institutions have the greatest impact on their development. For example, Suchman (1995) examined the development of high technology financial practices as reflected by various terms found in the legal documents of venture capital transactions. He found by examining two venture capital funds that these practices were most directly impacted by structures within a given region, Silicon Valley. In contrast, DiMaggio (1991) examined the development of United States (U.S.) art museums and the professionals associated with them through the case of the Branch Museum. He argued nationwide institutional structures shaped the development of the standards within the field, not structures in any given locale.