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The Development of Social Capital and Financing of Entrepreneurial Firms: From Financial Bootstrapping to Bank Funding

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  • Sara Jonsson
  • Jessica Lindbergh

Abstract

This paper uses a three–dimensional perspective on social capital to investigate how entrepreneurs develop their social capital when relying on bootstrapping strategies becomes insufficient and financing needs to be acquired from external debt and equity financiers. Findings from six case studies of entrepreneurs in the fashion industry show that to acquire funding, due to perceived deficiency in the existing network, entrepreneurs develop the structural dimension by adding relationships based on function. However, when seeking financial information that is perceived as sufficient in the existing network, they do so by developing cognitive and relational dimensions to preexisting network ties.

Suggested Citation

  • Sara Jonsson & Jessica Lindbergh, 2013. "The Development of Social Capital and Financing of Entrepreneurial Firms: From Financial Bootstrapping to Bank Funding," Entrepreneurship Theory and Practice, , vol. 37(4), pages 661-686, July.
    • Handle: RePEc:sae:entthe:v:37:y:2013:i:4:p:661-686
    DOI: 10.1111/j.1540-6520.2011.00485.x
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    2. Tomasz Mickiewicz & Frederick Wedzerai Nyakudya & Nicholas Theodorakopoulos & Mark Hart, 2017. "Resource endowment and opportunity cost effects along the stages of entrepreneurship," Small Business Economics, Springer, vol. 48(4), pages 953-976, April.
    3. Zwane, Bonginkosi Keith & Nyide, Celani John, 2017. "SMME attitudes towards financial bootstrapping: A perspective from a developing economy," Business and Economic Horizons (BEH), Prague Development Center (PRADEC), vol. 13(3).
    4. Butticè, Vincenzo & Croce, Annalisa & Ughetto, Elisa, 2021. "Network dynamics in business angel group investment decisions," Journal of Corporate Finance, Elsevier, vol. 66(C).
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    6. Salvatore Di Novo & Giorgio Fazio & Jonathan Sapsed & Josh Siepel, 2022. "Starving the golden goose? Access to finance for innovators in the creative industries," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 46(2), pages 345-386, June.
    7. Paula Rodríguez-Modroño, 2021. "Non-standard work in unconventional workspaces: Self-employed women in home-based businesses and coworking spaces," Urban Studies, Urban Studies Journal Limited, vol. 58(11), pages 2258-2275, August.
    8. Bonginkosi Zwane & Celani Nyide, 2017. "SMME attitudes towards Financial Bootstrapping: A perspective from a developing economy," Proceedings of Business and Management Conferences 5607468, International Institute of Social and Economic Sciences.
    9. Bonginkosi Keith Zwane, & Celani John Nyide, 2017. "SMME attitudes towards financial bootstrapping: A perspective from a developing economy," Business and Economic Horizons (BEH), Prague Development Center, vol. 13(3), pages 347-356, July.
    10. Dragos Ilie, 2015. "Credits and Bank Guarantee Letters in Entrepreneurship Development During Crisis," The AMFITEATRU ECONOMIC journal, Academy of Economic Studies - Bucharest, Romania, vol. 17(38), pages 212-212, February.
    11. Mansi Singh & Sanjay Dhir & Harsh Mishra, 2024. "Synthesizing research in entrepreneurial bootstrapping and bricolage: a bibliometric mapping and TCCM analysis," Management Review Quarterly, Springer, vol. 74(1), pages 487-520, February.
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    13. Dharmani, Pranav & Das, Satyasiba & Prashar, Sanjeev, 2021. "A bibliometric analysis of creative industries: Current trends and future directions," Journal of Business Research, Elsevier, vol. 135(C), pages 252-267.
    14. Cristiano Bellavitis & Christian Fisch & Rod B. McNaughton, 2022. "COVID-19 and the global venture capital landscape," Small Business Economics, Springer, vol. 59(3), pages 781-805, October.

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