The Role of Small and Medium Sized Enterprises
- Studies of Small and Medium Sized Enterprises in East Asia series
Edited by Charles Harvie and Boon-Chye Lee
Chapter 15: Supporting SMEs through Venture Capital Policy
Barbara Cornelius and Sandra Van der Laan 15.1 INTRODUCTION Small and medium-sized enterprises (SMEs) are the ‘seeds’ from which an economy is grown, accounting ‘for 60–70 per cent of jobs in most OECD countries’ (O’Shea and Stevens, 1998, p. 26). The primary stumbling block for most SMEs, however, is the lack of capital and managerial expertise to support growth. To this end, developing a venture capital market is a priority in many parts of the world because venture capitalists provide both ﬁnancial and strategic assistance to new and innovative SMEs. Therefore government policies directed toward aiding and/or enhancing venture capital can result in beneﬁts for the economy as a whole. Contrasting the success of government policy initiatives in relation to venture capital is not, however, a new activity (Harper, 1991; Isaksson and Cornelius, 1998; O’Shea and Stevens, 1998; Pﬁrrmann et al., 1997; Wright et al., 1998). Contrasting business cultures in various environments has also been extensively conducted (see for example Crainer, 1999; Hofstede, 1984; Shane, 1993; McGrath et al., 1992). In this study we seek to combine the two activities by examining the relationship between venture capital, culture and successful policy making. Indeed, drawing from the vast literature available on these topics, it is apparent that a strong nexus exists between venture capital and culture (Black and Gilson, 1998; Bygrave and Timmons, 1992). Drawing conclusions about the correlation between a particular policy and the growth of venture capital cannot be justiﬁed, as neither policies nor venture...
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