Overcoming Resource Constraints: The Role of Creative Resourcing and Equity Crowdfunding in Financing Entrepreneurial Ventures

This dissertation extends current knowledge about how entrepreneurs overcome resource constraints, without relying extensively on capital from “traditional” equity investors. In particular, I build on research on creative resourcing (i.e., bricolage, bootstrapping) and on literature on equity crowdfunding, to investigate (1) how do bricolage and bootstrapping affect firm-level outcomes, (2) How do top management team (TMT) attributes influence the reliance of firms on bricolage and bootstrapping, and (3) How do crowd investors (i.e. investors in equity crowdfunding) identify high-quality opportunities to invest in. The findings from the first two studies show that bootstrapping and bricolage are prevalent resourcing behaviors in small and medium-sized enterprises, and that these behaviors differentially affect firm outcomes. More specifically, bricolage enables firms to balance exploration and exploitation, and positively effects firm performance, whereas bootstrapping has a negative effect on firm performance. I also found supporting evidence that the socio-cognitive attributes of the TMTs fundamentally shape the willingness and ability of these teams to engage in bricolage and bootstrapping. The findings from the third study in my dissertation support the contention that crowd investors use heuristics (i.e. mental shortcuts aimed at reducing the effort required for a task), when evaluating investment opportunities. Most importantly, several heuristics, such as the disconfirmation and selectivity heuristics, help investors identify the more promising investment opportunities. These findings have important practical implications for investors, but also for entrepreneurs that can improve the way they interact with their (potential) investors

ADHD-like behavior and entrepreneurial intentions

Little is known about the relation between entrepreneurship and the extent of psychiatric symptoms. Validated psychiatric symptom scores are seldom used for non-clinical reasons. One prevalent symptom that deserves our interest is Attention Deficit and Hyperactivity Disorder (ADHD). ADHD is a developmental disorder characterized by inattentiveness and hyperactivity that has been linked to occupational choice and performance. Building on the person–environment fit literature, we hypothesize that individuals who exhibit behavior associated with ADHD are more likely to have entrepreneurial intentions. Using a sample of 10,104 students enrolled in higher education, we can confirm our prediction that students with a higher level of ADHD-like behavior are more likely to have entrepreneurial intentions. Additionally, we show that risk taking propensity is a mediator that partly explains this positive effect. Our study points to the importance of behavioral tendencies associated with developmental disorders, when making entrepreneurship decisions. Our study contributes to the literature on the determinants of entrepreneurship, which so far has largely neglected the effects of psychiatric symptoms on entrepreneurship

ADHD-like behavior and entrepreneurial intentions

Little is known about the relation between validated psychiatric symptoms scores and the entrepreneurial decision. Building on the Person-Environment (P-E) fit literature and using data of over 10,000 students, we test whether individuals with higher levels of attention deficit and hyperactivity (ADHD) have higher entrepreneurial career intentions compared to others. We find that students reporting higher levels of ADHD-like behavior (assessed with a symptom score on an ADHD screening scale) are more likely than their peers to display entrepreneurial intentions and become student entrepreneurs. This can be partly explained by their high need for independence and their risk tolerance

Does State Ownership Hurt or Help Minority Shareholders?

We argue that state ownership is a crucial policy instrument for alleviating what is perhaps the most important principal-principal (PP) agency problem around the globe: private benefits of control (PBC). Our results illustrate that states reduce PBC in the companies in which they acquire controlling ownership positions. We also examine how legal and political institutions influence the extent to which states accomplish this goal. Anti-self-dealing legal regulations make states more effective in their efforts to constrain PBC, while political constraints make them less effective. Regimes with high state capacity appear not to prioritize PBC reduction. We test and corroborate these ideas in a sample of 1,354 control transactions across 54 countries

The impact of stakeholders’ temporal orientaton on short- and long-term IPO outcomes: A meta-analysis

An initial public offering (IPO) represents a unique milestone in the lifecycle of a firm. Yet, our understanding of the IPO phenomenon remains incomplete and marked by mixed findings. Using meta-analytical techniques on a sample of 123 empirical studies, we examine the factors that influence the short-term outcomes (i.e., underpricing and proceeds) and the long-term outcomes (i.e., financial performance and risk) of IPO firms. Our efforts yield few significant results for antecedents that prior research had proposed as effective signals of IPO firm quality, and we thus conclude that signaling theory is limited in its ability to capture the IPO process. Our findings, however, provide preliminary support for our contention that stakeholders influence short-term IPO outcomes depending on their temporal orientation. We also find strong support for our prediction that the IPO has consequences for long-term firm development. While high underpricing positively affects long-term firm performance, it also heightens long-term firm risk. Large proceeds result in higher long-term firm performance and lower firm risk, but they come at the expense of a higher percentage of equity being traded during the IPO

Does It Pay To Be Cheap, How Financial Bootstrapping Affects The Performance of New Ventures

This paper contributes to the entrepreneurial finance literature by exploring how bootstrapping affects new venture performance. It investigates whether the use of bootstrapping is a deliberate decision and builds upon entrepreneurs’ motives to resort to bootstrapping, their growth goals and their intended sources of financing to develop a framework of bootstrapping strategies entrepreneurs employ over time. This exploratory study is based on ten case studies of new ventures that offer web-based software solutions/services or online brokerage platforms. Our findings show that the use of bootstrapping changes over the life course of the new venture. Not only does the overall use of bootstrapping decrease as the company reaches its break-even point, it also varies with the bootstrapping strategy of the entrepreneur. We find evidence of three types of bootstrapping strategies: Long Term Bootstrapping, Milestone Bootstrapping and Adaptive Bootstrapping

Does It Pay To Be Cheap, How Financial Bootstrapping Affects The Performance of New Ventures

This paper contributes to the entrepreneurial finance literature by exploring how bootstrapping affects new venture performance. It investigates whether the use of bootstrapping is a deliberate decision and builds upon entrepreneurs’ motives to resort to bootstrapping, their growth goals and their intended sources of financing to develop a framework of bootstrapping strategies entrepreneurs employ over time. This exploratory study is based on ten case studies of new ventures that offer web-based software solutions/services or online brokerage platforms. Our findings show that the use of bootstrapping changes over the life course of the new venture. Not only does the overall use of bootstrapping decrease as the company reaches its break-even point, it also varies with the bootstrapping strategy of the entrepreneur. We find evidence of three types of bootstrapping strategies: Long Term Bootstrapping, Milestone Bootstrapping and Adaptive Bootstrapping