Robyn Klingler-Vidra

Building a Venture Capital Market in Vietnam: Diffusion of a Neoliberal Market Strategy to a Socialist State

Abstract Vietnam’s venture capital (VC) industry took shape in the late 1990s during a period of exceptional economic growth in the country and the development of its high-technology sector. High growth rates and technological advances have typically coincided with both strong VC market activity and state support of equity financing. This, however, has not been the case in Vietnam. In this article a policy diffusion framework is used to investigate the international and domestic origins of Vietnam’s nascent VC policies, and how they became part of the agenda of the Communist Party of Vietnam (CPV) as credit-based, rather than equity-based, solutions. The article argues that Vietnam’s heterodox approach to VC policy results from both external forces from donors and from domestic factors. In particular, Vietnamese policymakers have a preference for credit-based SME financing solutions and Vietnam’s official development assistance providers diffuse expertise on loans, not equity investments, to the Socialist Republic. The only donors recommending VC and equity-based financing in Vietnam have gone “around the state” rather than through it by working directly with the private sector. As a result, Vietnam’s SME financing initiatives have significantly diverged from international VC policy patterns.

Policies for financing entrepreneurship through venture capital: learning from the successes of Israel and Taiwan

The success of Silicon Valley as a hub for rapid-innovation growth has motivated policy-makers around the world to initiate policies trying to mimic it. These policy initiatives raise the question of whether globalisation should encourage innovation policy-makers to aim for institutional convergence and close imitation, or for institutional hybridisation and local experimentation. This paper explores this question by focusing on venture capital creation policy. Using two national cases, Israel and Taiwan, we show that policy effectiveness is not the result of simple imitation. Instead, policy performance is determined by degree of fit with local financial conditions and the position of the local ICT industry within global production networks. We then consider the implications of our study for understanding the development of national VC industries and the industries they fund. The primary message being that there is no singular model for venture capital market development. Instead, policy-makers need to understand the local context with its assets and liabilities. Of particular importance are local financing conditions, firm capabilities, and the existing position of local firms within the global production networks of the ICT industry.