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Does user entrepreneurship matter for start-up financing? Evidence from Japan

Author

Listed:
  • Chong Yu

    (Graduate School of Business Administration, Kwansei Gakuin University)

  • Masatoshi Kato

    (School of Economics & Research Center for Entrepreneurship (RECENT), Kwansei Gakuin University)

Abstract

This study explores whether firms founded by user entrepreneurs have an advantage in raising external capital at start-up, distinguishing between end-user and professional user entrepreneurs. Drawing on the concept of user entrepreneurship in combination with the resource-based view of the firm, we argue that being user entrepreneurs serves as a positive signal to external providers of capital under information asymmetry. Using data based on original questionnaire survey for start-ups in Japan, it is shown that firms founded by user entrepreneurs, especially professional user entrepreneurs, are more likely to raise external capital at start-up. Furthermore, the advantage of user entrepreneurs is found to be more pronounced in firms that engaged in business-to-consumer (B2C) than in business-to-business (B2B).

Suggested Citation

  • Chong Yu & Masatoshi Kato, 2024. "Does user entrepreneurship matter for start-up financing? Evidence from Japan," Discussion Paper Series 275, School of Economics, Kwansei Gakuin University.
    • Handle: RePEc:kgu:wpaper:275
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    More about this item

    Keywords

    User entrepreneur; end-users; professional users; resource-based view; B2C;
    All these keywords.

    JEL classification:

    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General

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