When capital does not matter: How entrepreneurship training buffers the negative effect of capital constraints on business creation
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When capital does not matter : How entrepreneurship training buffers the negative effect of capital constraints on business creation. / Bischoff, Kim Marie; Gielnik, Michael Marcus; Frese, Michael.
In: Strategic Entrepreneurship Journal, Vol. 14, No. 3, 01.09.2020, p. 369-395.Research output: Journal contributions › Journal articles › Research › peer-review
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TY - JOUR
T1 - When capital does not matter
T2 - How entrepreneurship training buffers the negative effect of capital constraints on business creation
AU - Bischoff, Kim Marie
AU - Gielnik, Michael Marcus
AU - Frese, Michael
N1 - Special issue: Emerging market entrepreneurship
PY - 2020/9/1
Y1 - 2020/9/1
N2 - Research summary: Entrepreneurship training is an effective means to promote business creation. We examine the effect of entrepreneurship training in conjunction with capital constraints, which entrepreneurs frequently experience in the context of developing countries and emerging economies. We develop a theoretical model that explains how entrepreneurship training attenuates the negative effect of capital constraints on business creation by developing financial mental models. To test our model, we conducted two longitudinal, randomized field experiments in developing countries. Our studies show a moderation effect of entrepreneurship training on the relationship between capital constraints and business creation. Results reveal that financial mental models mediated this moderation. The study demonstrates the role that entrepreneurship training plays in dealing with capital constraints in entrepreneurship in developing countries and emerging economies.Managerial summary: A major barrier for entrepreneurship is capital constraints. In the context of developing countries and emerging economies, where people experience severe capital constraints, the common thinking suggests improving access to capital as the major solution for overcoming capital constraints in business creation. Our study provides empirical evidence for a different point of view: It emphasizes the importance of entrepreneurship training as an effective means to cope with capital constraints when starting businesses. Our findings show that entrepreneurship training reduces the negative effect of capital constraints on business creation through financial mental models. This implies that entrepreneurship training improves participants' financial mental models and hence supports them in starting businesses despite capital constraints. Consequently, we recommend promoting entrepreneurship training to overcome capital constraints in business creation.
AB - Research summary: Entrepreneurship training is an effective means to promote business creation. We examine the effect of entrepreneurship training in conjunction with capital constraints, which entrepreneurs frequently experience in the context of developing countries and emerging economies. We develop a theoretical model that explains how entrepreneurship training attenuates the negative effect of capital constraints on business creation by developing financial mental models. To test our model, we conducted two longitudinal, randomized field experiments in developing countries. Our studies show a moderation effect of entrepreneurship training on the relationship between capital constraints and business creation. Results reveal that financial mental models mediated this moderation. The study demonstrates the role that entrepreneurship training plays in dealing with capital constraints in entrepreneurship in developing countries and emerging economies.Managerial summary: A major barrier for entrepreneurship is capital constraints. In the context of developing countries and emerging economies, where people experience severe capital constraints, the common thinking suggests improving access to capital as the major solution for overcoming capital constraints in business creation. Our study provides empirical evidence for a different point of view: It emphasizes the importance of entrepreneurship training as an effective means to cope with capital constraints when starting businesses. Our findings show that entrepreneurship training reduces the negative effect of capital constraints on business creation through financial mental models. This implies that entrepreneurship training improves participants' financial mental models and hence supports them in starting businesses despite capital constraints. Consequently, we recommend promoting entrepreneurship training to overcome capital constraints in business creation.
KW - Entrepreneurship
KW - emerging economics
KW - entrepreneurship training
KW - financial capital
KW - mental model
KW - new venture creation
KW - Business psychology
UR - http://www.scopus.com/inward/record.url?scp=85090135767&partnerID=8YFLogxK
U2 - 10.1002/sej.1364
DO - 10.1002/sej.1364
M3 - Journal articles
VL - 14
SP - 369
EP - 395
JO - Strategic Entrepreneurship Journal
JF - Strategic Entrepreneurship Journal
SN - 1932-4391
IS - 3
ER -