TY - JOUR

T1 - Beyond the finance paradigm

T2 - The entrepreneurial logic of financial resource acquisition from an effectuation perspective

AU - Weigand, Christopher

PY - 2019/9/5

Y1 - 2019/9/5

N2 - This study examines the logic that entrepreneurs follow when acquiring and mobilising financial resources in the early stages of firm development. By adapting effectuation theory to the demand side of entrepreneurial finance, this study proposes an effectual logic of financial resource acquisition as a theoretical counterpart to the causal financial resource logic associated with the neoclassical finance paradigm. Effectuation provides a behavioural explanation for differences in capital acquisition and financial pecking-orders under the assumption of boundedly rational entrepreneurs. This study develops a conceptual framework which relates the application of an effectual or causal financial resource logic to specific boundary conditions, thereby strengthening the theoretical links between entrepreneurship and entrepreneurial finance. As this study goes beyond what is known from traditional corporate finance, it helps to align theoretical predictions with entrepreneurial practice and provides entrepreneurs with guidance on how to finance entrepreneurial opportunities in situations of uncertainty, risk or resource scarcity.

AB - This study examines the logic that entrepreneurs follow when acquiring and mobilising financial resources in the early stages of firm development. By adapting effectuation theory to the demand side of entrepreneurial finance, this study proposes an effectual logic of financial resource acquisition as a theoretical counterpart to the causal financial resource logic associated with the neoclassical finance paradigm. Effectuation provides a behavioural explanation for differences in capital acquisition and financial pecking-orders under the assumption of boundedly rational entrepreneurs. This study develops a conceptual framework which relates the application of an effectual or causal financial resource logic to specific boundary conditions, thereby strengthening the theoretical links between entrepreneurship and entrepreneurial finance. As this study goes beyond what is known from traditional corporate finance, it helps to align theoretical predictions with entrepreneurial practice and provides entrepreneurs with guidance on how to finance entrepreneurial opportunities in situations of uncertainty, risk or resource scarcity.

KW - Capital acquisition

KW - Capital structure decisions

KW - Effectuation

KW - Entrepreneurial finance

KW - Financial decision-making

KW - Financial resource logic

KW - New venture financing

KW - Pecking-order hypothesis

KW - Start-up financing

KW - Management studies

UR - http://www.scopus.com/inward/record.url?scp=85072392458&partnerID=8YFLogxK

U2 - 10.1504/IJEV.2019.102243

DO - 10.1504/IJEV.2019.102243

M3 - Journal articles

AN - SCOPUS:85072392458

VL - 11

SP - 440

EP - 460

JO - International Journal of Entrepreneurial Venturing

JF - International Journal of Entrepreneurial Venturing

SN - 1742-5360

IS - 5

ER -