Edited by Anthony Bartzokas and Sunil Mani
Chapter 4: The globalization of venture capital: the cases of Taiwan and Japan
Martin Kenney, Kyonghee Han and Shoko Tanaka INTRODUCTION At the beginning of the 21st century, the importance of venture capital for the funding of new high-growth potential ﬁrms is universally recognized. Many of the deﬁning US ﬁrms of the last three decades, including 3Com, Amgen, AMD, Compaq, Cisco, Federal Express, Genentech, Intel, Oracle and Sun Microsystems, were ﬁrst funded by venture capitalists. Even more than providing funding for ﬁrms, venture capital has become a central institution in some of the most dynamic, innovative ﬁrm clusters in the world. In the last two decades, venture capital investing has diﬀused internationally: there are now 35 national venture capital associations. Though the USA continues to be the center of the venture capital industry, there are hot spots of activity in a number of developed and a few less developed nations, nearly all of which are in Asia. This chapter discusses this globalization process and then examines the growth of venture capital in two countries, Japan and Taiwan. The diversity of nations in terms of their national systems of innovation, levels of entrepreneurship, political economic development, varying labor practices, corporate ownership regulations, educational achievement and business cultures means that each country’s venture capital industry has a diﬀerent evolutionary trajectory. To understand the hybridization of venture capital in diﬀerent environments, we ﬁrst construct an ideal type of venture capital drawn from the US experience. This chapter has seven sections. The ﬁrst section discusses the history, development and operation of venture capital...
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