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Institutional theory and contracting in venture capital: The Swedish experience

Isaksson, A.; Cornelius, B.; Landström, Hans LU and Junghagen, S. (2004) In Venture Capital 6(1). p.47-71
Abstract
This paper tests the tenets of institutional theory by means of an empirical study of the contractual strategies applied in the Swedish venture capital industry. Venture capitalists differ in, for example, their preferences for early or later stage investments. Some have more experience than others and some are employed by public funds while others work in non-public funds. The sector, however, was expected to be relatively homogeneous due to the small size of the industry and the cultural milieu in which it is located. This homogeneity was tested regarding the use of contractual strategies among venture capitalists in Sweden. Seventy-nine separate contractual covenants were examined in relation to distinctive sector variables, structure,... (More)
This paper tests the tenets of institutional theory by means of an empirical study of the contractual strategies applied in the Swedish venture capital industry. Venture capitalists differ in, for example, their preferences for early or later stage investments. Some have more experience than others and some are employed by public funds while others work in non-public funds. The sector, however, was expected to be relatively homogeneous due to the small size of the industry and the cultural milieu in which it is located. This homogeneity was tested regarding the use of contractual strategies among venture capitalists in Sweden. Seventy-nine separate contractual covenants were examined in relation to distinctive sector variables, structure, experience and investment preferences. The results indicate that the greatest differences in contractual strategies occur among those with differing investment preferences. There appear to be two distinct venture capital cultures controlling contractual choices in these groups. The public and the non-public sector have limited variations in their contractual choices, although public funds employ slightly more standardized strategies. Little difference was found between the contractual choices made by experienced and inexperienced venture capitalists. The findings generally conform to the outcomes predicted by institutional theory. (Less)
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author
organization
publishing date
type
Contribution to journal
publication status
published
subject
keywords
venture capital, contracts, institutional theory
in
Venture Capital
volume
6
issue
1
pages
47 - 71
publisher
Taylor & Francis
external identifiers
  • scopus:1842683291
ISSN
1369-1066
DOI
10.1080/1369106042000175582
language
English
LU publication?
yes
id
d327b5da-1ef7-43ed-8f06-3a1f194671ad (old id 3127885)
date added to LUP
2012-10-10 07:26:19
date last changed
2017-02-19 04:07:15
@article{d327b5da-1ef7-43ed-8f06-3a1f194671ad,
  abstract     = {This paper tests the tenets of institutional theory by means of an empirical study of the contractual strategies applied in the Swedish venture capital industry. Venture capitalists differ in, for example, their preferences for early or later stage investments. Some have more experience than others and some are employed by public funds while others work in non-public funds. The sector, however, was expected to be relatively homogeneous due to the small size of the industry and the cultural milieu in which it is located. This homogeneity was tested regarding the use of contractual strategies among venture capitalists in Sweden. Seventy-nine separate contractual covenants were examined in relation to distinctive sector variables, structure, experience and investment preferences. The results indicate that the greatest differences in contractual strategies occur among those with differing investment preferences. There appear to be two distinct venture capital cultures controlling contractual choices in these groups. The public and the non-public sector have limited variations in their contractual choices, although public funds employ slightly more standardized strategies. Little difference was found between the contractual choices made by experienced and inexperienced venture capitalists. The findings generally conform to the outcomes predicted by institutional theory.},
  author       = {Isaksson, A. and Cornelius, B. and Landström, Hans and Junghagen, S.},
  issn         = {1369-1066},
  keyword      = {venture capital,contracts,institutional theory},
  language     = {eng},
  number       = {1},
  pages        = {47--71},
  publisher    = {Taylor & Francis},
  series       = {Venture Capital},
  title        = {Institutional theory and contracting in venture capital: The Swedish experience},
  url          = {http://dx.doi.org/10.1080/1369106042000175582},
  volume       = {6},
  year         = {2004},
}