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Ratio Working Paper No. 342: Business Angels and Firm Performance: First Evidence from Population Data

PublikationWorking paper
Business angels, Firm performance, Population Data, Sample selection
Ratio Working Paper No. 342
Ladda ner

Sammanfattning

Business angels dominate early stage investment in firms but research on the effects of their investment is scarce and limited by sample selection. We therefore propose an algorithm for identifying business angel investment in total population data. We apply the algorithm to study the effects of business angels on firm performance, using detailed and longitudinal total population data for individuals and firms in Sweden. Employing these data and a quasi-experimental estimator, we find that business angels engage in firms that already perform above par but that there also is a positive effect on subsequent growth, comparing with control firms. Firms with business angel investment perform better in terms of sales and employment growth and likelihood of becoming a high-growth firm. Contrary to previous research, we cannot find any impact on firm survival, however. Overall, our results underline the need to address sample selection issues both in identifying business angels and in evaluating their effects on firm performance.

Andersson, F. & Lodefalk, M. (2020). Business Angels and Firm Performance: First Evidence from Population Data. Ratio Working Paper No 342. Stockholm: Ratio.


Liknande innehåll

Working Paper No. 332: Are New Shopping Centers Drivers of Development in Large Metropolitan Suburbs? The Interplay of Agglomeration and Competition Forces
Working paperPublikation
Mihaescu, O., Korpi, M. & Öner, Ö.
Publiceringsår

2020

Publicerat i

Ratio Working Paper

Sammanfattning

We investigate to which extent shopping centers drive local economic development by studying how distance to newly established shopping centers affects the performance of incumbent firms, located in the suburbs of the three Swedish major metropolitan areas Stockholm, Gothenburg, and Malmö, 2000-2016. We use a regression setup with around 27,000 firm-year observations and explore the possible heterogeneity imposed on the results from two main elements of spatial economics theory: the size of the new retail area and the distance from the new retail area to the analyzed incumbents. We observe a clear difference in the direction of the effects of large versus small shopping centers. While competition forces are much stronger in the case of the establishment of large shopping centers, yielding a negative 5% on incumbent firm revenue and negative 3% on firm employment, results indicate the opposite pattern for smaller shopping centers; with firm revenue and firm employment increasing 4% and 3%, respectively. Moreover, we also observe that both agglomeration and competition effects attenuate sharply with distance from the new entrant, confirming one of the central premises of retail location theory. Finally, we observe that the geographical scope of the effects is much wider in the case of larger shopping centers, with estimates becoming statistically insignificant at about 9-10 km from the new entry, as compared to 3-4 km in the case of smaller retail centers.

Do Selective Industrial Policies Cause Growth? – Experiences from Sweden
RapporterPublikation
Gustavsson Tingvall, P. & Deiaco, E.
Publiceringsår

2015

Sammanfattning

Questions regarding economic growth are at the top of the economic and political agenda in Sweden today. This report provides an analysis of how selective policies supporting innovation and entrepreneurship have been implemented and their impact on firm performance, growth and competitiveness.

The report is edited by Patrik Gustavsson Tingvall and Enrico Deiaco, Director of innovation and global meeting places at Growth Analysis (Tillväxtanalys), and is largely based on ”Tillväxt genom stöd – en bok om statligt stöd till näringslivet” (Tillväxtfakta 2015).

Working Paper No. 210. Practice Makes Perfect
Working paperPublikation
Kim, P H., Wennberg, K. & Toft-Kehler, R.
Publiceringsår

2013

Sammanfattning

This study tackles the puzzle of why increasing entrepreneurial experience does not always lead to improved financial performance of new ventures. We propose an alternate framework demonstrating how experience translates into expertise by arguing that the positive experience–performance relationship only appears to expert entrepreneurs, while novice entrepreneurs may actually perform increasingly worse because of their inability to generalize their experiential knowledge accurately into new ventures. These negative performance implications can be alleviated if the level of contextual similarity between prior and current ventures is high. Using matched employee–employer data of an entire population of Swedish founder-managers between 1990 and 2007, we find a non-linear relationship between entrepreneurial experience and financial performance consistent with our framework. Moreover, the level of industry, geographic, and temporal similarities between prior and current ventures positively moderates this relationship. Our work provides both theoretical and practical implications for entrepreneurial experience—people can learn entrepreneurship and pursue it with greater success as long as they have multiple opportunities to gain experience, overcome barriers to learning, and build an entrepreneurial-experience curve.

Related content: Practice makes perfect

Kim, P H., Wennberg, K. & Toft-Kehler, R. (2013). ”Practice Makes Perfect: Entrepreneurial-Experience Curves and Venture Performance”. Ratio Working Paper No. 210.

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