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Entrepreneurs' attitudes to financing: An exloratory study of its determinants
Linköping University, Department of Management and Economics. Linköping University, Faculty of Arts and Sciences.
Center for Economic Psychology, Stockholm School of Economics, Stockholm.
Linköping University, Department of Management and Economics, Business Administration. Linköping University, Faculty of Arts and Sciences.
(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
URN: urn:nbn:se:liu:diva-99935OAI: diva2:658920
Available from: 2013-10-23 Created: 2013-10-23 Last updated: 2013-10-23
In thesis
1. Early-stage finance: exploring the financial context of small and young knowledge-intensive firms
Open this publication in new window or tab >>Early-stage finance: exploring the financial context of small and young knowledge-intensive firms
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.
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
urn:nbn:se:liu:diva-65869 (URN)LiU-TEK-LIC-2005:74 (Local ID)91-85457-95-7 (ISBN)LiU-TEK-LIC-2005:74 (Archive number)LiU-TEK-LIC-2005:74 (OAI)
2005-02-25, Terrafirman Hus Terra, Campus Valla, Linköpings universitet, Linköping, 13:15 (English)
Available from: 2011-02-23 Created: 2011-02-23 Last updated: 2016-05-04Bibliographically approved

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