Frontiers in European Entrepreneurship Research
Edited by Hans Landström, Hans Crijns, Eddy Laveren and David Smallbone
Chapter 5: Why Do They Use Financial Bootstrapping? A Quantitative Study of New Business Managers
5. Why do they use ﬁnancial bootstrapping? A quantitative study of new business managers Joakim Winborg INTRODUCTION In recent years empirical research has shown the importance of ﬁnancial bootstrapping methods for the ﬁnancing of new and small businesses (see, for example, Freear et al., 1995; Harrison and Mason, 1997; Winborg and Landström, 1997; 2001; Harrison et al., 2004; Van Auken, 2005). The study by Freear et al. (1995) was the ﬁrst empirical study to examine the importance of ﬁnancial bootstrapping for new businesses. Among other things, they found that, on average, the businesses examined managed to develop by means of bootstrapping and had no or only marginal long-term external ﬁnance, over a ﬁve-year period. A recent study by Neeley (2003) also demonstrates the important role played by ﬁnancial bootstrapping, as a large percentage of the businesses examined used bootstrapping to some extent. Moreover, the ﬁndings presented by Winborg and Landström (2001) indicate a positive inﬂuence on proﬁtability from using some kinds of ﬁnancial bootstrapping methods. The ﬁrst references to ﬁnancial bootstrapping in the literature deﬁne it as methods for securing the use of resources without relying on long-term external ﬁnance (Freear et al., 1995). Winborg (2000) argues that, on the basis of this deﬁnition, bootstrapping methods can be divided into four categories: methods that eliminate the outﬂow of ﬁnancial means, methods that minimize the outﬂow of ﬁnancial means, methods that delay the outﬂow of ﬁnancial means and, ﬁnally, methods that speed...
You are not authenticated to view the full text of this chapter or article.
Elgaronline requires a subscription or purchase to access the full text of books or journals. Please login through your library system or with your personal username and password on the homepage.
Non-subscribers can freely search the site, view abstracts/ extracts and download selected front matter and introductory chapters for personal use.
Your library may not have purchased all subject areas. If you are authenticated and think you should have access to this title, please contact your librarian.