Starting up and Growing New Businesses
Edited by Bart Clarysse, Juan Roure and Tom Schamp
Chapter 6: The Motivation of Entrepreneurs Toward Private Equity Financing: A Laddering Approach
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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