Understanding venture capital in East Asia: the impact of institutions on the industry today and tomorrow

Venture capital in East Asia has played a significant economic role in the region's development and is expected to play an even more significant role in the future. However, our understanding of the industry remains very limited. It is known that institutions present in East Asia shape the behavior of organizations that are present in the region. This article examines how institutions, particularly those related to the regulatory environment and culture of East Asia, shape the venture capital industry and create differences from the venture capital industry in the West. These differences are true despite the fact that many venture capitalists have been trained in Western venture capital firms and share similar beliefs about how venture investments are to be made. The article concludes with a research agenda for building a fuller understanding of how venture capital works in East Asia and what outside investors and firms need to familiarize themselves with. (C) 2003 Elsevier Inc. All rights reserved.