Initial Capital Constraints hinder Entrepreneurial Venture Performance

Mirjam Praag, Gerrit de Wit (gdw@eim.nl) and Niels Bosma (n.s.bosma@uu.nl)
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Gerrit de Wit: EIM, Zoetermeer

No 03-047/3, Tinbergen Institute Discussion Papers from Tinbergen Institute

Abstract: This article investigates empirically whether and to what extent initial capital constraints hinder entrepreneurial performance once the venture has been started. Prior empirical research in this area could investigate this issue only indirectly by lack of data. The key contribution of this article is that the authors are able—due to their comprehensive data set—to measure the influence of capital constraints more directly. The authors find that initial capital constraints during the start-up phase of business have quite a substantial negative influence on performance as measured by the survival probability of the venture and entrepreneurial earnings. These results appear quite robust.

This discussion paper has resulted in a publication in The Journal of Private Equity , Winter 2005, 9(1), 36-44.

Keywords: entrepreneurship; small business founders; success; venture performance; wealth/capital/borrowing constraint. (search for similar items in EconPapers)
JEL-codes: G3 J2 L2 (search for similar items in EconPapers)
Date: 2003-06-13, Revised 2004-11-19
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:tin:wpaper:20030047

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