Sustaining Growth and Performance in East Asia
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Sustaining Growth and Performance in East Asia

The Role of Small and Medium Sized Enterprises

Edited by Charles Harvie and Boon-Chye Lee

This third book in the series focuses on how small and medium sized enterprises (SMEs) contribute to achieving and sustaining growth and performance in their economies, as well as the ways in which governments can assist and enhance that contribution. This is of particular concern given the trauma suffered by East Asian economies in the wake of the financial and economic crisis of 1997–98.
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Chapter 15: Supporting SMEs through Venture Capital Policy

Barbara Cornelius and Sandra Van der Laan


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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