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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

    ()

  • Pascal Cussy

    ()

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

Suggested Citation

  • Françoise Bastié & Sylvie Cieply & Pascal Cussy, 2013. "The entrepreneur’s mode of entry: the effect of social and financial capital," Small Business Economics, Springer, vol. 40(4), pages 865-877, May.
  • Handle: RePEc:kap:sbusec:v:40:y:2013:i:4:p:865-877 DOI: 10.1007/s11187-011-9391-y
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Rocha, Vera & Carneiro, Anabela & Amorim Varum, Celeste, 2015. "Serial entrepreneurship, learning by doing and self-selection," International Journal of Industrial Organization, Elsevier, vol. 40(C), pages 91-106.
    2. Xi, Guoqian & Block, Jörn & Lasch, Frank & Robert, Frank & Thurik, Roy, 2017. "Mode of Entry into Hybrid Entrepreneurship: New Venture Start-Up versus Business Takeover," IZA Discussion Papers 11104, Institute for the Study of Labor (IZA).
    3. Edelman, Linda F. & Manolova, Tatiana & Shirokova, Galina & Tsukanova, Tatyana, 2016. "The impact of family support on young entrepreneurs' start-up activities," Journal of Business Venturing, Elsevier, vol. 31(4), pages 428-448.
    4. Xi, Guoqian & Block, Jörn & Lasch, Frank & Robert, Frank & Thurik, Roy, 2016. "Work Experience from Paid Employment and the Path to Entrepreneurship: Business Takeover versus New Venture Start-Up," IZA Discussion Papers 9949, Institute for the Study of Labor (IZA).
    5. Jean Bonnet & Sylvie Cieply & Marcus Dejardin, 2016. "Credit rationing or overlending? An exploration into financing imperfection," Applied Economics, Taylor & Francis Journals, vol. 48(57), pages 5563-5580, December.
    6. Manolova, T. & Shirokova, G. & Tsukanova, T. & Edelman, L., 2014. "The impact of family support on young nascent entrepreneurs's start-up activities: A family embeddedness perspective," Working Papers 6381, Graduate School of Management, St. Petersburg State University.
    7. repec:kap:sbusec:v:50:y:2018:i:1:d:10.1007_s11187-017-9903-5 is not listed on IDEAS
    8. Xi, Guoqian & Block, Jörn & Lasch, Frank & Robert, Frank & Thurik, Roy, 2017. "How Does Firm Survival Differ between Business Takeovers and New Venture Start-ups?," IZA Discussion Papers 11155, Institute for the Study of Labor (IZA).
    9. Vera Rocha & Anabela Carneiro & Celeste Varum, 2015. "Entry and exit dynamics of nascent business owners," Small Business Economics, Springer, vol. 45(1), pages 63-84, June.

    More about this item

    Keywords

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

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • L29 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Other
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship

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