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Entrepreneurs are at the core of economic development in that they start new businesses or make existing firms grow. To fulfill this important role, entrepreneurs need access to finance. Owing to information asymmetry and the relatively high risk associated with business start-ups, many financiers shy away from engaging in relationships with firms during the early stages of their development. Based on the existing body of knowledge on the financing of entrepreneurship, we know that insider finance is of paramount importance in the early stages of firms’ development. We expand this knowledge base by analyzing the influence of house prices on business start-ups across municipalities in Sweden. In our analysis, we include data from all municipalities in Sweden. Our data on house prices and control variables are collected in period one, and our data on the frequency of start-ups are collected in period two. We find that rising house prices in a municipality lead to a higher frequency of start-ups. In our regression analysis, we find that a 1% increase in house prices leads to a 0.14% increase in start-ups. Our findings are in line with the limited international research that has been previously conducted, and for this reason, they could be seen as a vital addition to the existing body of knowledge within the area of entrepreneurship and regional development.

n its normal context, a mentor is a trusted senior person who provides guidance and support to the protégé by keeping the best interest of the pro tégé in mind at all times. Earlier research has indicated that business angels are perceived as men tors by venture members, especially CEOs. An argument put forward in this paper is that an in vestor does not always have the protégé’s best interests in mind and, at times, prioritizes the re turn on investment instead. In some situations, this role conflict might become severe. If the busi ness angel continues in the mentor role, the protégé might take the venture on a very costly and risky course of action, whereas if the business angel switches to the investor role and simply veto es the idea of the CEO through the authority of being a major owner, the venture might be saved from the same costly adventures, but the protégé can be severely dismayed. Presumably, switc hing from the role of mentor to that of investor in this fashion would destroy the trust he ld by the protégé that the business angel really had the protégé’s best interests in mind, and would have repercussions on the relationship for a long time afterwards. This role conflict between being both an investor a nd a mentor is explored in the paper. Based on information gathered from semi-structured face-t o-face interviews with 9 business angels, an image emerges wherein the business angel remains in the mentoring role for as long as possible, given the perceived costs. The paper suggests that in order to understand what perceived costs mean for an investor, the concept of affordable los s (Sarasvathy, 2001) is of great use.One of the implications of affordable loss for an entrepreneur is envisioning the worst-case scenario and the money lost in that case (Dew, Sarasvathy, Read, & W iltbank, 2009). For a business angel, affordable loss could mean the same: the business a ngel could picture the cost of the worst-case scenario by studying the current course of action a nd decide whether it is affordable or not. As long as the worst-case cost associated with a certa in course of action is lower than the affordable loss, the business angel will continue to fulfill t he role of mentor in support of the venture chief executive officer (CEO). However, if the cost excee ds the affordable loss limit, the business angel will switch to the monitoring role, thereby prohibi ting this course of action.

Business angels fulfil an important economic role in society by getting involved in early-stage ventures. This dissertation aspires to advance our knowledge of the governance strategies used by business angels in the venture relationship, based on the idea that the choice of governance strategies depends on the individual venture but is also shaped by the strategies adopted by any business angel network (BAN) the business angel is part of. Major findings are twofold. First, the analysis suggests that governance strategies are role-contingent. The role of the business angel vis-a-vis the venture changes, typically from outsider to insider, as the relationship transitions through different stages. Business angels should only use governance strategies that are perceived as legitimate for their role. Moreover, all strategies do not mix well and some may even neutralize each other when used together. The impact of the BAN on the action of the individual business angel is not straightforward: the formalization of a BAN will certainly restrict individual action, but, on the other hand, it seems that the BAN can also be useful for managing conflicts. Second, results indicate that conceptualizing the long-term dynamic of the investor-venture relationship in terms of any single theoretical perspective, be it agency theory, procedural justice, or norm-based influence, is too simplistic. The utility of each theoretical perspective is role-contingent: a business angel in the outsider role is better understood with agency theory, whereas a business angel in the insider role is better understood with norm-based influence theory. The empirical data on individual business angels comes mainly from 30 interviews with 21 business angels, and some supplementary data. The analysis of BANs is made differently and based on a different data set consisting of approximately 150 interviews with BAN members, civil servants, politicians, banks, accountants, and entrepreneurs. QC 20141104

In its normal context, a mentor is a trusted senior person who provides guidance and support to the protégé by keeping the best interest of the protégé in mind at all times. Earlier research has indicated that business angels are perceived as mentors by venture members, especially CEOs. An argument put forward in this paper is that an investor does not always have the protégé’s best interests in mind and, at times, prioritizes the return on investment instead. In some situations, this role conflict might become severe. If the business angel continues in the mentor role, the protégé might take the venture on a very costly and risky course of action, whereas if the business angel switches to the investor role and simply vetoes the idea of the CEO through the authority of being a major owner, the venture might be saved from the same costly adventures, but the protégé can be severely dismayed. Presumably, switching from the role of mentor to that of investor in this fashion would destroy the trust held by the protégé that the business angel really had the protégé’s best interests in mind, and would have repercussions on the relationship for a long time afterwards. This role conflict between being both an investor and a mentor is explored in the paper. Based on information gathered from semi-structured face-to-face interviews with 9 business angels, an image emerges wherein the business angel remains in the mentoring role for as long as possible, given the perceived costs. The paper suggests that in order to understand what perceived costs mean for an investor, the concept of affordable loss (Sarasvathy, 2001) is of great use.One of the implications of affordable loss for an entrepreneur is envisioning the worst-case scenario and the money lost in that case (Dew, Sarasvathy, Read, & Wiltbank, 2009). For a business angel, affordable loss could mean the same: the business angel could picture the cost of the worst-case scenario by studying the current course of action and decide whether it is affordable or not. As long as the worst-case cost associated with a certain course of action is lower than the affordable loss, the business angel will continue to fulfill the role of mentor in support of the venture chief executive officer (CEO). However, if the cost exceeds the affordable loss limit, the business angel will switch to the monitoring role, thereby prohibiting this course of action. QC 20141029

This paper studies the effects of bank branch accessibility on new firm formation in different industries after the closures of bank branches between 2007 and 2013. Spatial Durbin models are used for a panel dataset of two years — 2007 and 2013 — at the municipal level in all 290 Swedish municipalities. Potential endogeneity issues are controlled for by using an instrumental variable approach to estimate proximity to bank branches. Proximity to bank branches influences new firm formation in some industries in Swedish municipalities, with more pronounced effects in capital-intensive industries, such as manufacturing, ‘transport and communications’, and ‘education, health, and others’, as indicated by the results of using a proxy for proximity to bank branches weighted by firm population. The results of using the proxy for proximity to bank branches weighted by labour population show significant negative effects of proximity to bank branch on new firm formation in the ‘education, health and others’ industry. This study shows that it is important to consider the effects of proximity to bank branches on new firm formation in some industries that are more capital intensive. Policy-makers can use the findings of this research to design policies to increase entrepreneurship in certain industries. QC 20211124

In this paper, the effect of local entrepreneurial attitudes and proximity to bank branches on new firm formation in different industries is analysed using spatial Durbin models for a panel dataset of two years — 2007 and 2013 on the municipal level. Previous studies have shown that a high level of regional social legitimacy increases the demand for entrepreneurship due to perceivably better access to resources and the entrepreneur has also higher confidence in his ability to run a business in the area (Kibler, Kautonen, and Fink 2014). Furthermore, previous studies has also shown that the proximity of banks is important for local entrepreneurial activity (Agarwal and Hauswald 2010; Backman 2015; Backman and Wallin 2018; Ho and Berggren 2020). It is also noted that every entrepreneurial ecosystem in each municipality is unique and can be industry specific. The results from our spatial models show that an increase in the local public attitudes has positive significant effects on new firm formation in these following industries: manufacturing, construction and ‘financial and business services’ industries. Our results also show that when weighted mean distance to the nearest bank branch doubled, there is a 4.5% decrease in the total number of new firms formed. Weighted mean distance to the nearest bank branch has also been shown to lower new firm formation especially in two industries — ‘financial and business services’ and ‘education, health and others’.