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Entrepreneurs and the Process of Obtaining Resources

Thomas Hellmann ()

Journal of Economics & Management Strategy, 2007, vol. 16, issue 1, 81-109

Abstract: This paper examines the process of how entrepreneurs assemble resources. In the model, the entrepreneur's challenge is to convince two complementary resource providers to commit their resources to a new venture. Before committing their resources, one of them needs to perform a costly evaluation. The entrepreneur has a problem with getting sufficient attention, because each provider has an incentive to wait and free‐ride on the other's evaluation. For some parameters the entrepreneur solicits both partners with equal intensity (“knocking on every door”); for others, the entrepreneur always solicits the same partner (“pestering”). For many but not all parameter ranges, the process of assembling resources takes too much time relative to what is socially efficient. The model thus explores what factors facilitate or hinder the creation of new firms.

Date: 2007
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https://doi.org/10.1111/j.1530-9134.2007.00133.x

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