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The authors of this comprehensive study address why it is that some small firms perform well and others don't, and whether high-performing firms share characteristics that distinguish them from low-performing firms. By exploring bundles of resources and their interaction with other factors, the authors explain important small business outcomes such as growth, performance, entrepreneurial activity, and the chance of receiving debt or equity capital. The authors find that while resources may be valuable, it is essential that small businesses have the processes to facilitate the manipulation of resources into value-creating strategies. Rather than reaching the conclusion that more is always better, the authors tease out the conditions under which certain resources are particularly valuable, as well as the conditions under which these and other resources are less valuable. The resource factors examined range from aspects of the human capital of the small business manager, such as length of education or prior experience with business start-ups, to social capital variables and firm-level resources, such as access to financial capital and competence.
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Entrepreneurial Small Businesses To Suzie, Jack and Meg Shepherd, and Maria, Elin and Nils Wiklund Entrepreneurial Small Businesses A Resource-based Perspective Dean A. Shepherd Indiana University, USA Johan Wiklund Jonkoping International Business School, Sweden Edward Elgar Cheltenham, UK • Northampton, MA, USA © Dean A. Shepherd and Johan Wiklund, 2005 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical or photocopying, recording, or otherwise without the prior permission of the publisher. Published by Edward Elgar Publishing Limited Glensanda House Montpellier Parade Cheltenham Glos GL50 1UA UK Edward Elgar Publishing, Inc. 136 West Street Suite 202 Northampton Massachusetts 01060 USA A catalogue record for this book is available from the British Library Library of Congress Cataloguing in Publication Data Shepherd, Dean A. Entrepreneurial small businesses : a resource-based perspective / Dean Shepherd, Johan Wilkund. p. cm. Includes bibliographical references. 1. Small business. 2. Entrepreneurship. 3. New business enterprises. I. Wiklund, Johan. II Title. HD62.7.S5257 2005 338.6 42–dc22 2004063602 ISBN 1 84542 018 7 Printed and bound in Great Britain by MPG Books Ltd, Bodmin, Cornwall Contents List of figures List of tables vi vii 1. 2. 3. 4. 1 12 43 5. 6. 7. 8. 9. An introduction to entrepreneurial small businesses The motivation to grow a small business Who grows small businesses and how they choose to do it The small business’s entrepreneurial orientation and knowledge-based resources The small business’s entrepreneurial orientation, financial capital and the environment Venture capitalists’ investment decision policies and maintaining a good relationship With Andrew Zacharakis Loan officers’ decision policies toward small businesses With Volker Bruns Learning from small business failure Conclusion 77 99 124 157 187 214 220 249 References Index v Figures 2.1 Theory of planned behavior for studying how growth aspirations influence actual growth 18 2.2 Interaction of aspiration and education on growth 26 2.3 Interaction of aspiration and experience on growth 26 2.4 Interaction of aspiration and dynamism on growth 27 2.5 Four types of firms in terms of resources and opportunities for growth and growth aspirations 32 4.1 Interaction of knowledge and EO on small business performance 86 4.2 Four classes of small businesses in terms of EO and knowledge-based resources 90 5.1 EO environm