Horse Before the Cart: Opportunity Value and the Order of Resource Accumulation

Posted: 26 Nov 2014

See all articles by Nachiket Bhawe

Nachiket Bhawe

North Carolina State University - Poole College of Management

Hans Rawhouser

Lee Business School - University of Nevada Las Vegas

Date Written: August 2011

Abstract

The process by which entrepreneurs build their companies has important implications for growth and venture performance. While the literature highlights resources that may be important for venture performance, the order by which entrepreneurs acquire such resources has received scant attention. In this paper, we develop theory for the order of resource accumulation using a simple agent based model. We validate our theory by using a cohort of new ventures that acquired two types of resources - equity resources that improve search and hiring resources that improve speed of exploitation. Early in the process of resource acquisition, acquiring search resources before speed resources leads to better performance. We also find that order of resource accumulation is especially salient for high opportunity potential.

Keywords: resource accumulation, resource based view, capability development, KFS, Kauffman Firm Survey

Suggested Citation

Bhawe, Nachiket and Rawhouser, Hans, Horse Before the Cart: Opportunity Value and the Order of Resource Accumulation (August 2011). Available at SSRN: https://ssrn.com/abstract=2530559

Nachiket Bhawe (Contact Author)

North Carolina State University - Poole College of Management ( email )

Hillsborough Street
Raleigh, NC 27695-8614
United States

Hans Rawhouser

Lee Business School - University of Nevada Las Vegas ( email )

4505 S. Maryland Parkway
Las Vegas, NV 89154
United States
702-895-1768 (Phone)
702-895-4370 (Fax)

HOME PAGE: http://www.unlv.edu/people/hans-rawhouser

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