Venture capitalist entrepreneurial orientations in developing environments

This exploratory research examines the entrepreneurial orientation (EO)---firm performance relationship of venture capitalists (VCs) in a developing country. VCs are professional investors that raise money primarily from financial institutions such as pension funds and insurance companies. They pool the monies they raise to create their own VC funds. The monies in these funds are then used for investing in growth oriented entrepreneurial firms that are assessed as having the potential to provide significant returns. By raising money from others to invest in entrepreneurial opportunities, VCs can be considered to act entrepreneurially. EO has been the subject of a number of studies that have examined the underlying dimensions of the EO construct and its relationship with the performance of entrepreneurial firms. EO refers to the processes, practices, and decision-making activities employed by entrepreneurs that lead to new entry. EO is a determinant of performance contingent upon contextual variables such as environmental types (e.g. the volatility and dynamism of environments) and organizational types (e.g., organically versus simply structured firms). This research builds upon prior EO research and extends this to VCs in a developing country. Limited VC EO research in developed countries has been undertaken (e.g., in Australia and Japan) where business environments tend to be relatively stable (when compared to developing countries). No research of this nature, however, has been undertaken of VCs operating in a developing country. The results of studies in developed countries, however, may not be generalizable to developing countries. In developing countries, environmental forces tend to be dynamic and, at times, unstable where information availability may be asymmetric and change and uncertainty are the business norms. These environmental types require firms that are highly entrepreneurial in nature.