Institutions and Venture Capital

36 Pages Posted: 5 Jan 2012

See all articles by Josh Lerner

Josh Lerner

Harvard Business School - Finance Unit; Harvard University - Entrepreneurial Management Unit; National Bureau of Economic Research (NBER)

Joacim Tåg

Research Institute of Industrial Economics (IFN)

Date Written: January 3, 2012


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

JEL Classification: E02, G24, G28, N20, O16, O43, O57

Suggested Citation

Lerner, Josh and Tåg, Joacim, Institutions and Venture Capital (January 3, 2012). IFN Working Paper No. 897, Available at SSRN:

Josh Lerner

Harvard Business School - Finance Unit ( email )

Boston, MA 02163
United States
617-495-6065 (Phone)
617-496-7357 (Fax)


Harvard University - Entrepreneurial Management Unit

Cambridge, MA 02163
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Joacim Tåg (Contact Author)

Research Institute of Industrial Economics (IFN) ( email )

Box 55665
Grevgatan 34, 2nd floor
Stockholm, SE-102 15

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