Please use this identifier to cite or link to this item: http://hdl.handle.net/10397/26948
Title: Why do venture capital firms exist : an institution-based rent-seeking perspective and Chinese evidence
Authors: Lu, H 
Tan, Y
Huang, H 
Keywords: China
Institutions
Rent-seeking
Strategy
Venture capital
Issue Date: 2011
Publisher: Springer
Source: Asia Pacific Journal of Management, 2011, p. 1-16 How to cite?
Journal: Asia Pacific Journal of Management 
Abstract: This paper is a theory development to Amit, Brander, and Zott (1998, Journal of Business Venturing, 13: 441-466) on the nature of venture capital firms. In their paper, the authors argue that venture capital firms exist because they fill a market niche by developing the ability to overcome extreme information asymmetry embedded in high-risk entrepreneurial firms. However, this theory encounters difficulties in explaining a variety of organizational and behavioral divides among venture capitalists in different contexts and over time. In this paper, we apply the institution-based view to reveal the nature of venture capital. We argue that it is the venture capitalists' capability to capture economic rents from the institutional environment that distinguish them from other financial intermediaries. We show the connection of our perspective with the conventional view as well as the usefulness of this theory in explaining the development of the venture capital industry in China.
URI: http://hdl.handle.net/10397/26948
ISSN: 0217-4561
DOI: 10.1007/s10490-011-9262-8
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