A Longitudinal Study on the Relationship Between Financial Bootstrapping and New Venture Growth
Entrepreneurship and Regional Development, Forthcoming
Posted: 24 Dec 2010
Date Written: June 24, 2010
While bootstrap finance is widely used in entrepreneurial ventures, both scholars and practitioners have presented conflicting views on the relation between financial bootstrapping and venture growth. This paper empirically investigates the association between bootstrap strategies used at startup and subsequent venture growth. For this purpose, we use a longitudinal database comprising data from both questionnaires and financial accounts of 214 new ventures. Findings demonstrate that the association between financial bootstrapping and venture growth is either non-existent or positive. More specifically, new ventures that use more owner funds, employ more interim personnel, encourage customers to pay more quickly and apply for more subsidy programs exhibit higher growth over time. We discuss the managerial and policy implications of these results and suggest avenues for future research.
Keywords: entrepreneurial finance, financial bootstrapping, startups, growth
JEL Classification: D81, G31, G32
Suggested Citation: Suggested Citation