Firm experience and market entry by venture capital firms (1962-2004)

Dimo Dimov, Pablo Martin De Holan

Research output: Contribution to journalArticle

29 Citations (Scopus)

Abstract

In this paper, we examine a firm's decision to enter new markets as related to the depth and breadth of its experience and the relative distance of those markets. We situate our discussion and analysis in the context of the venture capital (VC) industry, and examine whether and when US VC firms enter five high-technology investment markets through first- or later-round investments. This setting allows us to observe both the firms that chose to enter a new market and those that did not, and analyse the antecedents of these decisions. We find that VC firms overall are less likely to enter distant markets; those with broader experience are more likely to make first-round entries. In addition, VC firms with deeper investment experience are more likely to make first-round entries in proximate markets and less likely to enter distant markets and make later-round entries. These results offer interesting implications for the literature on organizational learning and entrepreneurship.
Original languageEnglish
Pages (from-to)130-161
Number of pages32
JournalJournal of management studies
Volume47
Issue number1
Early online date22 Sep 2009
DOIs
Publication statusPublished - Jan 2010

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