Entrepreneurship and the Financial Community
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Entrepreneurship and the Financial Community

Starting up and Growing New Businesses

Edited by Bart Clarysse, Juan Roure and Tom Schamp

This highly accessible book brings together the insights of leading academics and researchers to promote a better understanding of the role of private equity providers in the development of growth-oriented start-ups and the management of growth processes.
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Chapter 6: The Motivation of Entrepreneurs Toward Private Equity Financing: A Laddering Approach

Gabriele Morandin, Massimo Bergami and Richard P. Bagozzi


6. The motivation of entrepreneurs towards private equity financing: a laddering approach Gabriele Morandin, Massimo Bergami and Richard P. Bagozzi 1. INTRODUCTION The purpose of this chapter is to contribute to our understanding of entrepreneurs’ motivations to engage in private equity financing. This topic has important theoretical, methodological and practical implications that we shall elaborate upon below. In addition, the subject is timely in the light of debate on the consequences of the rate of growth of firms and on the governance model of the firm. Guiso et al. (2004) claim: ‘local financial development has a positive and statistically significant effect on firm’s growth’. At the same time, other authors confirm the importance of entrepreneurial skill and motivation to venture growth, giving important implications in this regard. The topic of private equity financing has traditionally been studied from financial or business strategy perspectives, but analysis is generally lacking with respect to the reasons for or explanations of private equity financing that considers cognitive, motivational and cultural forces on decision making when the opportunities offered by advanced financial markets are absent. This is also a relevant theme from the point of view of political economy, as the limited knowledge of institutional investors and their modality of intervention represent the main obstacles for the use of innovative instruments able to support the firm’s growth and economic development. In addition to these factors, affective or emotional responses could induce mistrust and counterproductive reactions among entrepreneurs having to make...

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