What is it about?
Emerging economies are characterized by the presence of institutional voids which challenge and constrain the behavior of economic agents. In this paper we report on one set of agents, angel investors, in Malaysia, which investors fear is experiencing a middle-income trap whereby economic growth and new venture formation stalls due to persistent institutional voids. In order to overcome weak institutional support, business angel investors develop informal institutions by coinvesting and networking with family members and government officials. They also conduct careful due diligence before investing and closely monitor their investee.
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Why is it important?
This research addresses this question through interviews with 19 Malaysian business angel investors in 2015, utilizing a mixed-methods approach. Results indicate that business angels in our sample generated strong returns, though they did find it a challenge to invest in and monitor new ventures in a highly uncertain and competitive environment where there is high political uncertainty, weak legal and financial support for investors and SMEs.
Perspectives
Being 1 of the co-authors and involvement in this article was a great pleasure. This article also lead to people interested in this type of research contacting me and ultimately to a greater involvement in entrepreneurship and venture capital research.
PC Lai
University of Malaya
Read the Original
This page is a summary of: Beyond institutional voids and the middle-income trap: The emerging business angel market in Malaysia, Asia Pacific Journal of Management, September 2017, Springer Science + Business Media,
DOI: 10.1007/s10490-017-9535-y.
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