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Early-stage finance: exploring the financial context of small and young knowledge-intensive firms
Linköping University, Department of Management and Economics. Linköping University, The Institute of Technology.
2005 (English)Licentiate thesis, comprehensive summary (Other academic)
Abstract [en]

This thesis essentially explores early-stage finaneing of small and young knowledge-intensive finns. The three studies underlying the thesis deal with the entrepreneurs' attitudes to financing and the creation of spin-affs in a corporate venture capital setting. The major questions posed in the thesis embrace:

  • What variables underlying the business creation process govern the elementary logic behind the entrepreneur's perceived importance of different actors as financiers?
  • Do cognition elements of risk and contral influence the entrepreneur's attitudes towards financing?
  • What is the strategic and financial logic behind a large public corporation initiative to continuously create internal and non-strategic ventures?

In the pursuit of answering the above research questions two survey studies and one case study were accomplished. Interesting findings cornprise the significance of the business context, the novelty of the venture idea, existing financing, the entrepreneur's extent of self-efficacy and expectations on externai financiers in determining the entrepreneur's attitudes towards financing.

Another insight uncovered in this thesis is the delicate balance between generating short-term financial gains through the creation of non-strategic internal ventures, and at the same time sustaining overall business strategy. In certain conditions, it might even be possible that such venturing activities might function as a strategic trash can reinforcing the business strategy pursued, and at the same time generate short-term profits.

Place, publisher, year, edition, pages
Linköping: Linköping University Electronic Press , 2005. , 67 p.
Series
Linköping Studies in Science and Technology. Thesis, ISSN 0280-7971 ; 1222Dissertations from the International Graduate School of Management and Industrial Engineering, ISSN 1402-0793 ; 99
National Category
Social Sciences
Identifiers
URN: urn:nbn:se:liu:diva-65869Local ID: LiU-TEK-LIC-2005:74ISBN: 91-85457-95-7 (print)OAI: oai:DiVA.org:liu-65869DiVA: diva2:399747
Presentation
2005-02-25, Terrafirman Hus Terra, Campus Valla, Linköpings universitet, Linköping, 13:15 (English)
Supervisors
Available from: 2011-02-23 Created: 2011-02-23 Last updated: 2016-05-04Bibliographically approved
List of papers
1. The logic of the entrepreneur: implications of the entrepreneur's perception of early-stage financing
Open this publication in new window or tab >>The logic of the entrepreneur: implications of the entrepreneur's perception of early-stage financing
2005 (English)In: International Journal of Entrepreneurship and Innovation, ISSN 1465-7503, E-ISSN 2043-6882, Vol. 6, no 2, 85-95 p.Article in journal (Refereed) Published
Abstract [en]

A general and well known problem on the financial market today is the lack of capital for new ventures. Knowledge on how to overcome the financial gap and deliver proper financial solutions for such firms is also scarce. This paper focuses on the perceived importance of early-stage financing to the entrepreneur. The data used emanate from a survey of 165 knowledge-intensive ventures, located in the areas around six universities in Sweden. The study shows that an ambition to grow in general, and on the international market in particular, and a business concept not exclusively offering services and localization in a business incubator are the main attributes that explain differences in perception of external actors as sources of financing. The authors found that it was important to use a holistic approach when studying ventures, taking into account a broad set of variables dealing with venture characteristics, the entrepreneur and external relations.

National Category
Social Sciences
Identifiers
urn:nbn:se:liu:diva-32326 (URN)10.5367/0000000053966867 (DOI)18218 (Local ID)18218 (Archive number)18218 (OAI)
Available from: 2009-10-09 Created: 2009-10-09 Last updated: 2017-12-13
2. Entrepreneurs' attitudes to financing: An exloratory study of its determinants
Open this publication in new window or tab >>Entrepreneurs' attitudes to financing: An exloratory study of its determinants
(English)Manuscript (preprint) (Other academic)
Abstract [en]

This paper relies on a theoretical framework of psychology, decision theory and behavioural economics to explore determinants of the entrepreneur's resistance to external financing. The aim of our study is to shed light on whether variables, connected to risk and control, are related to attitudes to external financing. These variables refer to risk propensity, the tendency to feel anticipatory regret in decision-making and preferences to choose situations associated with a high level of control. The study showed that risk attitude of the entrepreneur and the extent of regretful thinking only explained a trivial amount of the attitudes to financing. However moderate, the correlation between self-efficacy and attitude to venture capital revealed the strongest relationship among the variables of risk and control in this study. We also investigated whether the expectation from external financing and other business related variables might explain attitudes to external sources of financing. For instance, it was found that the entrepreneurs with higher expectations from external equity financing and those using external equity financing tended to hold more positive attitudes. Moreover, the entrepreneurs tended to perceive the consequences of external financing to be small.

National Category
Economics and Business
Identifiers
urn:nbn:se:liu:diva-99935 (URN)
Available from: 2013-10-23 Created: 2013-10-23 Last updated: 2013-10-23
3. Non-strategic spin-offs: the use of corporate venturing in developing and supporting nascent ventures
Open this publication in new window or tab >>Non-strategic spin-offs: the use of corporate venturing in developing and supporting nascent ventures
2007 (English)In: New Technology Based Firms in the New Millennium, ISSN 1876-0228, Vol. 5, 157-173 p.Article in journal (Refereed) Published
Abstract [en]

This paper analyzes the emergence of sponsored spin-offs where the parent firm retains partial ownership. A sponsored spin-off is a spin-off, which has received active support from the parent organization. The paper analyzes this emergence in a corporate venturing setting and targets the competitive advantages and disadvantages of corporate venturing (over e.g. traditional venture capitalists) in the early business creation process. The research object is a large multi-technology firm in Sweden, which has incorporated the use of sponsored spinoffs in thiir corporate venturing activities. Four interviews were carried out with respondents from the corporate venturing unit and two spin-off firms.

In this paper we develop a model based on increasing costs to decrease information asymmetries between the corporate venturing unit and external actors when more resources are devoted to developing and supporting the nascent venture. The model illustrates the competitive advantage of corporate venturing units in early stage development of internal non-strategic ventures and the emergence of sponsored spin-offs from such non-strategic ventures, where the parent firm retains partial ownership. Corporate venturing units have an informational advantage over external actors such as venture capitalists concerning e.g. technological due diligence of internal ventures. This advantage is however limited to developing and supporting early stage (nascent) ventures.

The challenge for real life firms is to estimate when they no longer can profit from the information asymmetry, i.e. when the cost for further venture development has reached some critical level. The analysis presented here illustrates how a low-cost/low risk corporate venturing strategy can force the corporate venturing unit to 'guesstimate' this point. In relation to this, we suggest an explanation of the creation of sponsored spin-offs based on an interpretation of sponsored spin-offs as an emergent phenomenon, caused by relatively simple environmental restrictions (low cost/low risk), rather than a carefully planned- for strategy.

Place, publisher, year, edition, pages
Elsevier Science ltd, 2007
National Category
Engineering and Technology
Identifiers
urn:nbn:se:liu:diva-59498 (URN)000281438300010 ()
Available from: 2010-09-17 Created: 2010-09-17 Last updated: 2013-10-23

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