Entrepreneurial venture performance and initial capital constraints

Gerrit de Wit, Niels Bosma () and Mirjam Praag

No H200205, Scales Research Reports from EIM Business and Policy Research

Abstract: We applied a novel method to evaluate the effect of capital constraints on entrepreneurial performance on a panel of 1000 Dutch entrepreneurs. We found that initial capital constraints hinder entrepreneurs in their performance (profit, duration and employment), also when we controlled for various human capital and other factors that might affect both performance and credit scoring outcomes. We used a direct individual indicator for the experience of initial capital constraints. Previous research with the same objective used indirect indicators of wealth, inheritances or windfall gains, where it remains unknown whether the entrepreneur indeed suffered from capital constraints. This drawback is not attached to our approach.

Pages: 42 pages
Date: 2002-12-05
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