Private equity and innovation : assessing the impact of private equity investments on Scandinavian portfolio companies

Abstract

We investigate the impact private equity disbursements have on innovation in Scandinavia, using an empirical methodology developed by Kortum and Lerner (2000). Our sample consists of PE disbursements, R&D expenditures and granted patents in Norway, Sweden and Denmark from 1997-2009. Private equity accounted for 12% of patents granted in Scandinavia, while the ratio of private equity to R&D was above 20%. Our findings are contradictory to previous empirical studies and imply that private equity was less potent than R&D in creating innovation from 1997-2009.