Bootstrapping and the financial condition of small firms

Abstract

If you would like to write for this, or any other Emerald publication, then please use our Emerald for Authors service information about how to choose which publication to write for and submission guidelines are available for all. Please visit www.emeraldinsight.com/authors for more information. About Emerald www.emeraldinsight.comEmerald is a global publisher linking research and practice to the benefit of society. The company manages a portfolio of more than 290 journals and over 2,350 books and book series volumes, as well as providing an extensive range of online products and additional customer resources and services.Emerald is both COUNTER 4 and TRANSFER compliant. The organization is a partner of the Committee on Publication Ethics (COPE) and also works with Portico and the LOCKSS initiative for digital archive preservation. AbstractPurpose -The purpose of this paper is to investigate relationships between financial condition and the use of bootstrapping in small firms. Design/methodology/research -A total of 901 manufacturing firms were selected from a comprehensive financial database containing income statement and balance sheet records. Surveys were sent to each of these firms and 186 firms returned usable surveys. Survey responses on bootstrapping techniques were compared with financial data for these 186 firms. Both the initial financial status and the financial status of these firms two years later were analyzed. Findings -The results indicate that highly levered, illiquid, and underperforming firms were more likely to use certain bootstrapping methods than other firms, and that the methods they used may have been detrimental to future firm performance.Research limitations/implications -The findings support a resource dependence model and raise questions as to why financially constrained firms chose to use particular bootstrapping methods. Generalizability of the study is limited due to the homogeneous sample of manufacturing firms and due to the sample and recall biases associated with surveys. Practical implications -Small business owners should understand the options available for bootstrapping as well as the importance of proactive as opposed to reactive financial strategy. Originality/value -This is one of the first empirical studies that investigates the relationship between financial condition and bootstrapping, and it provides insight into how and when small firms bootstrap as well as some potential implications of bootstrapping on firm outcomes.

Gender and Alternative Start-Up Business Funding

“…The three bootstrap factors were labelled 'jointutilizatio n', 'payment-related' and 'owner-related'. Similar factors have been extracte d by other researchers (Ebben & Johnson, 2006;Ebben, 2009). These factors were tested for gender differences, as shown in Table 2.…”

Theorizing Pada Teori Pengelolaan Modal Kerja: Relasi Aset Lancar Dan Kewajiban Lancar

“…Dari hasil pengamatannya keduanya menemukan duapuluh sembilan teknik bootstrapping yang dapat dikelompokkan dalam enam metoda: owner-provided resources and financing; account receivables management; sharing or borrowing of resources from other firms; delaying payments; minimization of resources invested in stock through formal routines; use of government subsidies. Berbagai metoda bootstrapping tersebut tidak digunakan bersama-sama tetapi bersifat kondisional pada kondisi unik yang dihadapi oleh entrepreneur (Ebben 2009). …”

Private Sector Development in West Africa

“…Morrisset (2001) argues that an improvement of business environments boosting their level of international competitiveness will attract FDI. Start-ups especially small firms are faced with costly financing of projects as information asymmetries cause banks and investors to attach high interest rates to mitigate potential risks (Eben 2008). Some have argued the developing financial markets in SSA are key to unlocking growth by surmounting the challenge of capital constraints.…”