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Initial Capital Constraints hinder Entrepreneurial Venture Performance

Author

Listed:
  • Mirjam van Praag

    (FEWEC, University of Amsterdam)

  • Gerrit de Wit

    (EIM, Zoetermeer)

  • Niels Bosma

    (EIM, Zoetermeer)

Abstract

This article investigates empirically whether and to what extent initial capital constraints hinder entrepreneurial performance once the venture has been started. Prior empirical research in this area could investigate this issue only indirectly by lack of data. The key contribution of this article is that the authors are able—due to their comprehensive data set—to measure the influence of capital constraints more directly. The authors find that initial capital constraints during the start-up phase of business have quite a substantial negative influence on performance as measured by the survival probability of the venture and entrepreneurial earnings. These results appear quite robust. This discussion paper has resulted in a publication in The Journal of Private Equity , Winter 2005, 9(1), 36-44.

Suggested Citation

  • Mirjam van Praag & Gerrit de Wit & Niels Bosma, 2003. "Initial Capital Constraints hinder Entrepreneurial Venture Performance," Tinbergen Institute Discussion Papers 03-047/3, Tinbergen Institute, revised 19 Nov 2004.
    • Handle: RePEc:tin:wpaper:20030047
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    File URL: https://papers.tinbergen.nl/03047.pdf
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    References listed on IDEAS

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    Cited by:

    1. Werner Hölzl & Peter Huber & Serguei Kaniovski & Michael Peneder, 2006. "Teilstudie 20: Neugründung und Entwicklung von Unternehmen," WIFO Studies, WIFO, number 27459, March.
    2. Werner, Arndt, 2011. "Abbruch und Aufschub von Gründungsvorhaben: Eine empirische Analyse mit den Daten des Gründerpanels des IfM Bonn," IfM-Materialien 209, Institut für Mittelstandsforschung (IfM) Bonn.

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    More about this item

    Keywords

    entrepreneurship; small business founders; success; venture performance; wealth/capital/borrowing constraint.;
    All these keywords.

    JEL classification:

    • G3 - Financial Economics - - Corporate Finance and Governance
    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor
    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior

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