Confounding market and hierarchy in venture capital governance: The Canadian immigrant investor program

Governance structure is a central feature of organization. Hybrid forms of organization - typified by governance structures from more than one organizational model - have become prominent features of the organizational landscape. This study examined the governance structure of a hybrid organizational arrangement created when a government programme was developed utilizing selected aspects of venture capitalist models of governance. Central findings include: designing appropriate governance structure is a key activity for new organizations; combining market and hierarchical forms of governance produces a confounding mix of rationalities, which is potentially dangerous for long-term survival; ambiguous control systems allow participants to pay selective attention to particular elements of governance structure; existing models of venture capital governance understate important social dimensions of governance - particularly the role of trust; hybrid organizations potentially remove the element of trust necessary for effective transactions.