Comparing venture capital syndication and its outcomes in the USA and China: an institutional theory perspective

초록

Purpose This study aims to explore how institutional environments shape the effectiveness of venture capital (VC) syndication by comparing the USA and China − representative cases of rule- and relationship-based systems, respectively. VC syndication is often touted for enabling resource pooling, risk sharing and performance-enhancing collaboration, yet its outcomes may vary significantly depending on institutional constraints. This study investigates whether syndication − especially global syndication and investor experience − improves startup exit performance across contrasting governance contexts. By doing so, this study contributes to institutional theory by examining the boundary conditions under which syndication strategies enhance or hinder entrepreneurial outcomes in deep-tech industries like semiconductors. Design/methodology/approach Using a unique data set from CB Insights, the authors analyze 11,545 VC investment rounds across 1,391 startups in the semiconductor sectors of the USA and China. They develop institutionalized hypotheses linking syndication features to startup exit probabilities and use logistic regression and IV-Probit models to assess robustness and address endogeneity concerns. The models are estimated separately by country to capture institutional variation. They examine both structural aspects of syndication − such as syndicate size and foreign investor participation − and relational characteristics, such as average and variance of investor experience, to evaluate how these factors interact with national institutional contexts. Findings The results highlight the contingent value of VC syndication. In the USA, global syndication is positively associated with startup exit success, reflecting the role of formal institutions in facilitating cross-border collaboration. However, syndicate size and investor experience show limited or inconsistent effects. In contrast, in China, both domestic and global syndication are negatively related to exit outcomes, likely due to coordination difficulties and institutional frictions. Investor experience has mixed effects, with closed guanxi networks sometimes constraining broader strategic support. These findings suggest that syndication’s benefits are not universal but depend heavily on institutional fit and trust mechanisms. Originality/value This study advances institutional theory by identifying how VC syndication outcomes depend on the alignment between syndicate structure and institutional context. The authors introduce the concept of institutional friction as a moderating force that can invert the expected benefits of syndication in relationship-based economies. The findings highlight that global syndication enhances success in rule-based settings but may underperform where informal governance dominates. The research offers actionable insights for policymakers and practitioners by showing that syndication strategies must be tailored to institutional realities. It also contributes empirically to the understudied intersection of venture finance, institutional voids and cross-border entrepreneurial ecosystems.

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