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Beyond the finance paradigm: the entrepreneurial logic of financial resource acquisition from an effectuation perspective

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  • Christopher Weigand

Abstract

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.

Suggested Citation

  • Christopher Weigand, 2019. "Beyond the finance paradigm: the entrepreneurial logic of financial resource acquisition from an effectuation perspective," International Journal of Entrepreneurial Venturing, Inderscience Enterprises Ltd, vol. 11(5), pages 440-460.
  • Handle: RePEc:ids:ijeven:v:11:y:2019:i:5:p:440-460
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    Cited by:

    1. Lijun Zhang & Wenlin Gao & Xiaoxiao Ma & Rongrong Gong, 2023. "Relationship between Disaster Shock Experience and Farmers’ Entrepreneurial Inclination: Crisis or Opportunity?," Agriculture, MDPI, vol. 13(7), pages 1-26, July.
    2. Hor, Shoon Chan (Timothy) & Chang, Artemis & Torres de Oliveira, Rui & Davidsson, Per, 2021. "From the theories of financial resource acquisition to a theory for acquiring financial resources - how should digital ventures raise equity capital beyond seed funding," Journal of Business Venturing Insights, Elsevier, vol. 16(C).

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