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Impact of financial risk on the operation of Start-ups

Author

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  • Ryszard PUKALA

    (Bronislaw Markiewicz State Higher School of Technology and Economics in Jaroslaw (PWSTE), Jaroslaw, Poland)

Abstract

The aim of this study is to analyse the impact of financial risk on the operation of innovative, high-risk enterprises – start-ups. Through advanced technologies and focusing on individual needs of recipients, such enterprises certainly fit the concept of the fourth industrial revolution. As part of their operational process start-ups are exposed to a broad spectrum of risks, among which the financial risks are particularly disruptive. With a clear objective of identifying financial risks that have the greatest impact on the operation of such enterprises, the study applied a questionnaire that used CAWI and CAPI methods and covered 202 start-ups active in Poland. The results of the questionnaire were subject to a statistical analysis to determine financial risks that influence the activity of start-ups to the greatest extent. The most important risks include the loss of financial liquidity and the lack of funds for continuing the development of an enterprise or a product. Therefore, we should assume that the innovative activity conducted by start-ups not only represents a method of gaining competitive advantage, but it is very often essential for the purpose of surviving on the market. Therefore, identifying operational risks and acting to limit their negative impact form an important aspect of the operation of start-ups.

Suggested Citation

  • Ryszard PUKALA, 2021. "Impact of financial risk on the operation of Start-ups," Access Journal, Access Press Publishing House, vol. 2(1), pages 40-49, January.
    • Handle: RePEc:aip:access:v:2:y:2021:i:1:p:40-49
    DOI: 10.46656/access.2021.2.1(4)
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    References listed on IDEAS

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    1. Mayers, David & Smith, Clifford W, Jr, 1982. "On the Corporate Demand for Insurance," The Journal of Business, University of Chicago Press, vol. 55(2), pages 281-296, April.
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    More about this item

    Keywords

    risk; start-up; innovative enterprise; corporate finance; risk management;
    All these keywords.

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General

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