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The entrepreneur’s mode of entry: the effect of social and financial capital

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  • Françoise Bastié

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  • Sylvie Cieply

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  • Pascal Cussy

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    Abstract

    This article uses a French database of firms set up in 1998 to investigate the determinants of takeovers versus startups as a mode of entry. It focuses on two determinants that previous research has not fully analyzed: social capital and financial capital. Our findings suggest social capital affects the mode of entry. They show that entrepreneurs with social capital are more likely to create new firms from scratch than to take over existing firms. We confirm the effect of financial capital on the mode of entry. Bank loans are more often associated with takeovers than with startups and low initial wealth is more often associated with startups than with takeovers. These results show that finance affects the mode of entry. Copyright Springer Science+Business Media, LLC. 2013

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    File URL: http://hdl.handle.net/10.1007/s11187-011-9391-y
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    Bibliographic Info

    Article provided by Springer in its journal Small Business Economics.

    Volume (Year): 40 (2013)
    Issue (Month): 4 (May)
    Pages: 865-877

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    Handle: RePEc:kap:sbusec:v:40:y:2013:i:4:p:865-877

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    Web page: http://www.springerlink.com/link.asp?id=100338

    Related research

    Keywords: Entry mode; Nascent entrepreneurs; Startup; Business takeover; Financial capital; D21; D82; L29; L26;

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    13. Birley, Sue, 1985. "The role of networks in the entrepreneurial process," Journal of Business Venturing, Elsevier, vol. 1(1), pages 107-117.
    14. Erik Hurst & Annamaria Lusardi, 2004. "Liquidity Constraints, Household Wealth, and Entrepreneurship," Journal of Political Economy, University of Chicago Press, vol. 112(2), pages 319-347, April.
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