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Entrepreneurs and the Process of Obtaining Resources

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  • Thomas Hellmann

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." Copyright 2007, The Author(s) Journal Compilation (c) 2007 Blackwell Publishing.

Suggested Citation

  • Thomas Hellmann, 2007. "Entrepreneurs and the Process of Obtaining Resources," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 16(1), pages 81-109, March.
  • Handle: RePEc:bla:jemstr:v:16:y:2007:i:1:p:81-109
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    Citations

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    Cited by:

    1. Andres Almazan & Javier Suarez & Sheridan Titman, 2009. "Firms' Stakeholders and the Costs of Transparency," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 18(3), pages 871-900, September.
    2. Catherine Casamatta & Carole Haritchabalet, 2014. "Dealing with Venture Capitalists: Shopping Around or Exclusive Negotiation," Review of Finance, European Finance Association, vol. 18(5), pages 1743-1773.
    3. Rin, Marco Da & Hellmann, Thomas & Puri, Manju, 2013. "A Survey of Venture Capital Research," Handbook of the Economics of Finance, Elsevier.
    4. Tania Babina & Paige P. Ouimet & Rebecca Zarutskie, 2017. "Going Entrepreneurial? IPOs and New Firm Creation," Finance and Economics Discussion Series 2017-022, Board of Governors of the Federal Reserve System (U.S.).
    5. Kim, Jin-Hyuk & Wagman, Liad, 2014. "Portfolio size and information disclosure: An analysis of startup accelerators," Journal of Corporate Finance, Elsevier, vol. 29(C), pages 520-534.
    6. Schwienbacher, Armin, 2013. "The entrepreneur's investor choice: The impact on later-stage firm development," Journal of Business Venturing, Elsevier, vol. 28(4), pages 528-545.
    7. BELLEFLAMME, Paul & LAMBERT, Thomas & SCHWIENBACHER, Armin, 2011. "Crowdfunding: tapping the right crowd," CORE Discussion Papers 2011032, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    8. Hochberg, Yael V. & Lindsey, Laura A. & Westerfield, Mark M., 2015. "Resource accumulation through economic ties: Evidence from venture capital," Journal of Financial Economics, Elsevier, vol. 118(2), pages 245-267.
    9. van Werven, Ruben & Bouwmeester, Onno & Cornelissen, Joep P., 2015. "The power of arguments: How entrepreneurs convince stakeholders of the legitimate distinctiveness of their ventures," Journal of Business Venturing, Elsevier, vol. 30(4), pages 616-631.
    10. Bruno Biais & Enrico Perotti, 2008. "Entrepreneurs and new ideas," RAND Journal of Economics, RAND Corporation, vol. 39(4), pages 1105-1125.
    11. Tania Babina & Paige Ouimet & Rebecca Zarutskie, 2017. "Going Entrepreneurial? IPOs and New Firm Creation," Working Papers 17-18, Center for Economic Studies, U.S. Census Bureau.

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