Scandinavian Working Papers in Economics

Working Papers,
Swedish Entrepreneurship Forum

No 2012:17: Institutions and Venture Capital

Josh Lerner () and Joacim Tåg ()
Additional contact information
Josh Lerner: Harvard Business School, Postal: Rock Center for Entrepreneurship, Boston, Massachusetts 02163 USA
Joacim Tåg: Research Institute of Industrial Economics, Postal: Research Institute of Industrial Economics (IFN), Box 55665, SE-102 15 Stockholm

Abstract: We survey the literature on venture capital and institutions and present a case study comparing the development of the venture capital market in the US to Sweden. Our literature survey underscores that the legal environment, financial market development, the tax system, labor market regulations, and public spending on research and development correlates with venture capital activities across countries. Our case study suggests these institutional differences led to the later development of an active venture capital market in Sweden compared to the US. In particular, a later development of financial markets and a heavier tax burden for entrepreneurs have played a key role.

Keywords: Financial market development; Institutions; IPOs; Labor markets; Legal environment; R&D; Taxation; Stock markets; Venture Capital. [Running Title: Spinoffs in Sweden]

JEL-codes: E02; G24; G28; N20; O16; O43; O57

31 pages, August 8, 2013

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