Institutional theory and contracting in venture capital: The Swedish experience

A. Isaksson, B. Cornelius, Hans Landström, S. Junghagen

Research output: Contribution to journalArticlepeer-review


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.
Original languageEnglish
Pages (from-to)47-71
JournalVenture Capital
Issue number1
Publication statusPublished - 2004

Bibliographical note


Subject classification (UKÄ)

  • Economics and Business
  • Social Sciences Interdisciplinary

Free keywords

  • venture capital
  • contracts
  • institutional theory


Dive into the research topics of 'Institutional theory and contracting in venture capital: The Swedish experience'. Together they form a unique fingerprint.

Cite this