Resourcing new businesses: social networks, bootstrapping and firm performance

Jones, Oswald; Jayawarna, Dilani

doi:10.1080/13691061003658886

Cited by 112 publications

(109 citation statements)

References 63 publications

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“…The latter are particularly important for resourcing new ventures (Jones and Jayawarna 2010), although past entrepreneurial experience does not have a significant impact (Grichnik et al 2014).…”

Section: Resourcing High-technology Start-upsmentioning

confidence: 99%

“…Bootstrapping techniques are used in firms of all ages (Ebben and Johnson 2006), and are more intensely used by nascent entrepreneurs (Grichnik et al 2014) and in new enterprises (Jones and Jayawarna 2010). It is therefore postulated that bootstrapping is used by necessity, although a number of studies suggest that, judiciously applied, bootstrapping is an effective resource management strategy (Vanacker et al 2011).…”

Section: Resourcing High-technology Start-upsmentioning

confidence: 99%

“…Firm owners are often restricted in their resourcing options, however, and resources are perceived as scarce, particularly for new firms (Jones and Jayawarna 2010). Firm owners respond to these challenges by adopting bootstrapping techniques, which are used by the vast majority of new ventures (Freear, Sohl, and Wetzel 1995;Harrison and Mason 1997).…”

Section: Resourcing High-technology Start-upsmentioning

confidence: 99%

“…A barrier to this expansion, however, is the ability of firm founders to acquire adequate finance for their nascent ventures (Basu and Parker 2001;North, Baldock, and Ekanem 2010). This is particularly evident for founders lacking a track record in entrepreneurship (Jones and Jayawarna 2010), adopting unproven or untested technologies (Westhead and Storey 1997). These firms are seldom financed from formal external sources (Mason and Harrison 1999), and may be restricted to the firm founder's personal resources (Blumberg and Letterie 2008), and those accessible from established networks (Jones and Jayawarna 2010).…”

Section: Introductionmentioning

confidence: 99%

“…This is particularly evident for founders lacking a track record in entrepreneurship (Jones and Jayawarna 2010), adopting unproven or untested technologies (Westhead and Storey 1997). These firms are seldom financed from formal external sources (Mason and Harrison 1999), and may be restricted to the firm founder's personal resources (Blumberg and Letterie 2008), and those accessible from established networks (Jones and Jayawarna 2010). Firm founders, therefore, often make optimal use of minimal resources in starting and developing their businesses (Baker and Nelson 2005).…”

Section: Introductionmentioning

confidence: 99%

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Seeding the cloud: financial bootstrapping in the computer software sector

Bhaird

Lynn

2015

Venture Capital

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Seeding the cloud: Financial bootstrapping in the computer software sector.This study investigates resourcing of computer software companies that have adopted cloud computing for the development and delivery of application software. Use of this innovative technology potentially impacts firm financing because the initial infrastructure investment requirement is much lower than for packaged software, lead time to market is shorter, and cloud computing supports instant scalability. We test these predictions by conducting in-depth interviews with founders of 18 independently owned nascent enterprises, of which three quarters have adopted cloud computing. We identify particular bootstrapping methods used by start-ups in the computer software sector. Cloud computing enables firms to develop and launch products with minimal resources, reducing barriers to entry, with consequent increased competition. The primary business bootstrapping technique is foregoing wages, supplemented by small amounts of grant funding. Customers are a source of knowledge and expertise for product development, which occurs in an iterative process. Product bootstrapping techniques have changed in response to technological innovation, although methods to acquire tangible assets are identical over time. Astutely applied, financial bootstrapping is a resource management strategy essential to the growth and survival of high technology firms.Keywords: software industry; bootstrapping; cloud computing; social networks; private equity; business angels; disruptive innovation IntroductionHigh technology based firms are an important source of employment creation, economic growth and technological innovation (Colombo et al. 2010;Freear, Sohl, and Wetzel 2002;North, Baldock, and Ullah 2013;Rasmussen and Sørheim 2012). Central to the development of a high technology small firm sector is a considerable level of start-up activity and new firm formation. A barrier to this expansion, however, is the ability of firm founders to acquire adequate finance for their nascent ventures (Basu and Parker 2001;North, Baldock, and Ekanem 2010). This is particularly evident for introduction of technological innovation for new firms in the computer software sector.We contextualise our findings in relation to the literature by comparing bootstrapping techniques used by firms in our sample with those used by computer software firms studied by Wetzel (1995), andGirling (2004).We address the dearth in the literature identified by Grichnik et al. (2014) Resourcing implications for software firms adopting cloud computingCloud computing refers to applications delivered as services over the internet, and the hardware and systems software in datacentres that provide those services (Armbrust et al. 2009). Thus, cloud computing may be conceptualised as a combination of three layers of abstraction: software-as-a-service (SaaS), platform-as-a-service (PaaS), and infrastructure-as-a-service (IaaS) (Weinhardt et al, 2009, Vaquero et al, 2008. The first layer is the focus of our study, and ...

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Section: Resourcing High-technology Start-upsmentioning

confidence: 99%

Section: Resourcing High-technology Start-upsmentioning

confidence: 99%

Section: Resourcing High-technology Start-upsmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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Seeding the cloud: financial bootstrapping in the computer software sector

Bhaird

Lynn

2015

Venture Capital

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Small beer? peer‐to‐peer lending in the craft beer sector

et al. 2019

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Start‐up financing: How founders finance their ventures' early stage

2018

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Although the entrepreneurship literature has advanced our understanding of start‐up financing, little is known about the mechanisms founders use to finance the beginning of a venture. Drawing upon resource‐based view, this study relocates bootstrapping is a strategic choice rather than a necessity. By analysing the financial behaviour of 3,017 new business owners, we reveal owner‐financed bootstrapping is a strategic choice rather than a necessity. We also demonstrate related techniques that are used independent of industry, initial capital, financing difficulties, and impeded revenues.

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Resourcing new businesses: social networks, bootstrapping and firm performance

Cited by 112 publications

References 63 publications

Seeding the cloud: financial bootstrapping in the computer software sector

Seeding the cloud: financial bootstrapping in the computer software sector

Small beer? peer‐to‐peer lending in the craft beer sector

Start‐up financing: How founders finance their ventures' early stage

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