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This paper discusses an emerging heterodoxy in the academic literature on entre- preneurial technology finance that is based on the idea of "bootstrapping." Bootstrap finance is a third approach (emphasizing funding technology ventures through revenue and other non-traditional sources), alongside the orthodoxies of traditional business finance (emp...
Context in source publication
Context 1
... results call in to question the validity of the main- stream perspectives found in the academic literature and the business press on the financing of entrepreneurial technology firms. Figure 2 breaks down the information about private equity financing from Fig. 1 in detail to reveal the relative importance of venture capital financing compared with other types of private equity financing. a It shows that venture capital is responsible, on average, for 8% of financing. ...
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Citations
... Consistent with prior literature [77], entrepreneurs also demonstrated more heterogeneity in financing strategies than the culturally dominant VC-startup narrative would suggest. While some entrepreneurs conformed with institutional pressures to pursue VC funding and found benefits beyond financial capital in their partnerships with VCs, others actively avoided VC funding. ...
... Sở hữu trí tuệ được coi là một lợi thế cạnh tranh cho các doanh nghiệp, là nguồn tài nguyên đóng góp vào hiệu quả hoạt động của doanh nghiệp cần được quản trị [49]. Từ khía cạnh tài chính, sở hữu trí tuệ giúp cải thiện khả năng thu hút vốn, tăng giá trị vốn cổ phần của doanh nghiệp [50][51][52][53][54]. Từ khía cạnh phi tài chính, sở hữu trí tuệ giữ vai trò quan trọng đối với nguồn vốn con người, vốn cấu trúc và vốn quan hệ của doanh nghiệp [55], hiệu quả phát triển sản phẩm mới [56], vốn trí tuệ, vốn xã hội và định hướng khởi nghiệp [57], đổi mới sáng tạo [58]. ...
Information and Communication Technology (ICT) is a core of the knowledge economy and among the most potential industries of Vietnam for the upcoming years. As in an industry with a high content of innovation and intellectual properties, ICT firms are required to have a wise intellectual property strategy to assure their preposition and sustainable development. Meanwhile, studies on intellectual property of Vietnam have hardly touched upon the management perspective, especially the firm management perspective. Therefore, this study examines the impacts of intellectual property management on firm performance in ICT industry of Vietnam. Intellectual property management is assessed through four levels, namely Awareness, Registration, Exploitation and Management, and Protection. Four measurements of firm performance are profitability, revenue growth, market share and the ability to maintain stable jobs and benefits for employees. Data obtained from 122 Vietnamese ICT firms indicates that each level of intellectual property management has a positive impact on firm performance. The findings provide a scientific basis for improving intellectual property management of ICT firms and Vietnamese firms in general.
... Trade credit provision integrates the debt channel compared with the limited bank credit by centralizing the financing of distribution at the manufacturer (Chen, 2015). The literature on bootstrap financing offers additional value to the association between enterprise innovation activities and trade credit demand (Tomory, 2011;Willoughby, 2008). Owners of high-tech enterprises believe that bootstrap financing slows down the disbursements and improve cash inflow, and this practice is less important to owners of nontechnology-based firms (Van Auken, 2004;Van Auken, 2005). ...
This study investigates the linkage between trade credit demand and corporate innovation. The estimations are robust to a series of covariates, fixed-effect, instrumental variable modeling, and the difference-indifference approach. Our findings reveal that the nexus between enterprise innovation and trade credit demand is positive and statistically significant. The said attachment is more visible in private, financially constrained, small, and high-tech enterprises. The study also found that innovative firms relied heavily on trade-credit financing after the financial crisis of 2008. Managers should carefully design trade-credit agreements because operating suppliers have an important role in the enterprises' radical growth activities.
... However, initial literature on financial bootstrapping described it as a method which ensured that businesses used resources without depending on long-term external finances (Freear et al., 1995). To date, financial bootstrapping is not only accepted in high-tech firms, it has also been much welcomed as the main strategy of financing in the high-tech industry (Willoughby, 2008). In their research, Carter and Van Auken (1989) established that bootstrapping involved delays of payment, and this was favored by firms in situations where risk was highest. ...
... In fact, it can help to ease cash flow and address firms' resource scarcity. Previous studies EMJB 16,2 (Grichnick et al., 2014;Van Auken, 2005;Harrison et al., 2004;Willoughby, 2008) have verified the promise of the FBS to ease the uncertain situation which firms are facing. However, there continues to be a shortage in empirical research examining the FBS with outcome variables in economic downturns during civil unrests. ...
... Past studies (Bhide, 1992;Carter and Van Auken, 2005;Gray, 2007;Lahm, 2005;Lam, 2010;Lahm and Little, 2005;Van Auken and Neely, 1996;Van Auken, 2005;Harrison et al., 2004;Willoughby, 2008) have been inconsistent in their findings about strategy and outcomes, specifically bootstrapping. While some studies (Bhide, 1992, Carter andVan Auken, 2005;Gray, 2007;Lahm, 2005;Lam, 2010;Lahm and Little, 2005;Van Auken and Neely, 1996) noted positive results of bootstrapping on cash flow problems, others found the FBS to be promising when firms faced uncertainty (Van Auken, 2005;Harrison et al., 2004;Willoughby, 2008). ...
Purpose
This paper aims to examine the effect of financial bootstrapping strategies (FBS) and strategic improvisation (SI) on business performance (BP). The study enriches our understanding of the contributions of bootstrapping and improvisation strategies toward resource-constrained small businesses during real economic downturns and crises. The potential moderating effect of SI on the relationship between FBS and its dimensions and performance were also examined.
Design/methodology/approach
Using the convenience snowball sampling technique, data were collected from entrepreneurs in Tripoli, Libya. Structural equation modeling by means of partial least square bootstrapping resampling was used for the hypotheses testing of the 147 useable responses.
Findings
Statistically significant positive relationships were found in the direct relationships between bootstrapping and improvisation with performance. However, there was no significant association found between the delaying payment related bootstrapping and the owner-related bootstrapping with performance. The moderating effect of improvisation had a significant relationship between bootstrapping as an aggregate construct and its dimensions and performance.
Research limitations/implications
Due to the cross-sectional nature of this study which used a small sample that was randomly selected, generalization to the entire population of business ventures should be made with caution.
Practical implications
The negative moderation effect of improvisation on FBS-BP association suggests that entrepreneurs need to be careful in balancing the two strategies so that efforts are no wasted.
Originality/value
While business performance has been studied in various organizations, its examination with financial bootstrapping strategies as a predictor and strategic improvisation as a moderator contribute nascent theoretical insights.
... Whether due to their size, lack of business history, or structural obstruction, small business and startups simply lack the financing options available to larger firms. Therefore, many small and startup firms find their initial, and ongoing, financing, arises from the personal savings of the owners as well as their friends and families (Willoughby, 2008). ...
... Nevertheless, " business performance " and " innovation " are discrete concepts; and the literature concerned with the financial dimensions of the performance of innovative IP-intensive firms now appears, on the whole, to have embraced, at least tacitly, the conceptual distinctions between innovation potency, IP potency and business potency. Some of that literature approaches financial performance from the vantage point of the firm's ability to attract capital or increase the value of its capital stock through the strength of its intellectual property [see, e.g.: Bosworth and Rogers (2001); Bessler and Bittelmeyer (2008); Cockburn and Griliches (1988); Hsu and Ziedonis (2013); Mann and Sager (2007); Willoughby (2008)] and the general conclusion of that literature is that, in the main, intellectual property makes a positive difference to a firm's ability to attract outside investment. While the literature has not yet reached consensus on the question of whether the capital-raising benefits of intellectual property accrue to small entrepreneurial firms as much as they do to large mature firms [see, e.g., Bessen (2008); Willoughby (2008)], the general conclusion of the literature is that there is a positive relationship between a firm's intellectual repertoire—especially its patent portfolio—and its ability to raise capital, regardless of the size of the firm. ...
... Some of that literature approaches financial performance from the vantage point of the firm's ability to attract capital or increase the value of its capital stock through the strength of its intellectual property [see, e.g.: Bosworth and Rogers (2001); Bessler and Bittelmeyer (2008); Cockburn and Griliches (1988); Hsu and Ziedonis (2013); Mann and Sager (2007); Willoughby (2008)] and the general conclusion of that literature is that, in the main, intellectual property makes a positive difference to a firm's ability to attract outside investment. While the literature has not yet reached consensus on the question of whether the capital-raising benefits of intellectual property accrue to small entrepreneurial firms as much as they do to large mature firms [see, e.g., Bessen (2008); Willoughby (2008)], the general conclusion of the literature is that there is a positive relationship between a firm's intellectual repertoire—especially its patent portfolio—and its ability to raise capital, regardless of the size of the firm. The following quote from Mann and Sager (2007, p. 206), based on their own empirical research on the place of intellectual property in venture capital financing for software firms, represents the signal theme in the literature: ...
This paper reports the results of an original empirical study of the relationship between intellectual property and the financial performance of technology firms in the bioscience-technology industries. The study found a statistically significant positive relationship between the firms’ investments in intellectual property and their performance. The performance measure was based upon revenue-growth data collected from each firm, and the categories of intellectual property analysed included patents, trade secrets, trademarks, copyright and licenses to externally sourced technology. This study also found that the financial benefits of accumulating a strong intellectual property portfolio were enjoyed by technology firms regardless of whether they were strategically oriented towards R&D or strategically oriented towards the commercial production of products and services.
... Sometimes used colloquially (Godin, 1998), it is essentially concerned with the sources from which entrepreneurs with limited funds access finance for their ventures (Bhidé, 1992;Greene, Brush, & Hart, 1999;Servon, 1999;van Auken, 2005). Bootstrapping techniques aim to avoid using finance raised from external investors such as venture capital, public equity, and debt financing (Ebben & Johnson, 2006;Willoughby, 2008). Winborg and Landstrom (2001) identify six specific bootstrapping methods, namely owner financing, minimizing monies owed to the firm, sharing equipment and/or staff with other firms, delaying payment of monies owed by the firm, minimizing inventory, and subsidy finance. ...
Current theorizations of bricolage in entrepreneurship studies require refinement and development to be used as a theoretical framework for social entrepreneurship. Our analysis traces bricolage's conceptual underpinnings from various disciplines, identifying its key constructs as making do, a refusal to be constrained by limitations, and improvisation. Although these characteristics appear to epitomize the process of creating social enterprises, our research identifies three further constructs associated with social entrepreneurship: social value creation, stakeholder participation, and persuasion. Using data from a qualitative study of eight U.K. social enterprises, we apply the bricolage concept to social entrepreneurial action and propose an extended theoretical framework of social bricolage.
We contend that exploring the construct of bootstrapping could be much more nuanced and interesting than the extant literature has revealed. Unfortunately, the extant literature is stymied by conflicting theoretical as well as empirical landscapes. We address the critical lacunas in the literature by (a) situating the construct of bootstrapping in its historical, chronological context; (b) providing clarity to a construct that is currently lacking; (c) summarizing the theoretical bases which currently apply to bootstrapping; and (d) proposing signaling theory as an appropriate and complementary perspective to use when examining bootstrapping. In addition, our work identifies multiple lines of compelling and novel research that emerge from our approach to the construct of bootstrapping via signaling theory.
Analytical techniques usually employed in making project selection decisions are of strictly financial origin and, traditionally, tend to consider projects as separate entities from undertaking organizations. This fact underestimates potential negative (and pervasive) outcomes considering that binding constraints affect the whole organization in further additional developments. This paper proposes a methodological algorithm to analyze, model and quantify irreversibility aspects to integrate and support traditional financial techniques. The goal is pursued by considering widespread well-known accounting indexes, and assuming reversibility rate as time needed to return to the “optimal original state” (as defined in accounting literature) prior project investment decisions. An illustrative case is proposed to explain how the methodology can be applied since the pre-feasibility step of the management of project framework. As calculations show, such a reversibility rate can be usefully implemented to improve effectiveness of planning processes within project cost management knowledge area.
