Business angels and firm performance: First evidence from population data

PublikationArtikel (med peer review)
Magnus Lodefalk

Sammanfattning

Business angels dominate early-stage investment in firms, but research on their effects on firms is scarce and limited by sample selection. To address sample selection, we propose using population data and we develop an algorithm for identifying business angel investments in such data. We illustrate this novel approach by applying it to detailed and longitudinal total population data for individuals and firms in Sweden. In our application, we focus on a subset of business angels—active business angels who are themselves successful entrepreneurs with a profitable exit. We then study active business angels’ effects on firm performance, using population data. Employing a quasi-experimental estimator, we find that the business angels invest in firms that already perform above par. There is also a positive effect on subsequent growth compared with control firms. However, contrary to previous research on business angels, we cannot find any impact on firm survival. Overall, the paper underlines the need to address sample selection when studying business angels and suggests using population data for identification.

Lodefalk, M., & Andersson, F. W. (2023). Business angels and firm performance: First evidence from population data. PLoS ONE, 18(3), e0283690.


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Publiceringsår

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Sammanfattning

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Publicerat i

Ratio Working Paper Series.

Sammanfattning

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Artikel (med peer review)Publikation
Hatzigeorgiou, A., Karpaty, P., Kneller, R., & Lodefalk, M.
Publiceringsår

2024

Publicerat i

Review of World Economics, 1-29.

Sammanfattning

Offshoring continues to be an important dimension of firms’ internationalization choices. However, offshoring also increases contract enforcement costs by inhibiting the coordination and monitoring of performance. Immigrant employees may reduce such costs through their specific knowledge of the employer, their country of birth and access to foreign networks. In this paper, we investigate the role of immigrant employees within firms on firm offshoring, employing rich administrative Swedish microlevel data that include specific information about the characteristics of employees, manufacturing firms and their bilateral offshoring. Our results support the hypothesis that immigrant employees increase offshoring by lowering contract enforcement costs. Hiring one additional immigrant employee is linked to a relatively larger increase in offshoring at the intensive than the extensive margin, on average. The association to offshoring is considerably stronger for skilled immigrant employees and for contract and R&D intensive offshoring. Instrumental variable estimations demonstrate qualitatively similar results, while a placebo test with randomized immigrant employment does not generate any link between immigrants and offshoring.

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