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3 Effectuation and entrepreneurial finance

  • Sussie Morrish
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De Gruyter Handbook of Entrepreneurial Finance
This chapter is in the book De Gruyter Handbook of Entrepreneurial Finance

Abstract

Financial assets are critical to the performance of any venture and financing is one of the most significant decisions an entrepreneur has to make. While studies show that ventures need adequate financial resources to survive and grow, many successful ventures have been spawned with very scant resources. Entrepreneurs launch ventures using creative ways to start generating revenue and cash flow quickly. The means that one possesses can dictate their ability to gather and allocate much needed resources. This activity is at the heart of effectuation. Effectuation is centered in a logic of control rather than prediction. It has gained popularity among researchers in understanding the entrepreneurial decision-making process. This chapter explores effectuation and how it influences entrepreneurial financing decisions with a focus on the core principles that guide the practice. A set of future research agenda to advance the field is proposed.

Abstract

Financial assets are critical to the performance of any venture and financing is one of the most significant decisions an entrepreneur has to make. While studies show that ventures need adequate financial resources to survive and grow, many successful ventures have been spawned with very scant resources. Entrepreneurs launch ventures using creative ways to start generating revenue and cash flow quickly. The means that one possesses can dictate their ability to gather and allocate much needed resources. This activity is at the heart of effectuation. Effectuation is centered in a logic of control rather than prediction. It has gained popularity among researchers in understanding the entrepreneurial decision-making process. This chapter explores effectuation and how it influences entrepreneurial financing decisions with a focus on the core principles that guide the practice. A set of future research agenda to advance the field is proposed.

Chapters in this book

  1. Frontmatter I
  2. Acknowledgments V
  3. Contents VII
  4. Editor and contributor biographies XI
  5. Introduction 1
  6. Part I: The individual level
  7. Introduction 13
  8. 1 The role of founders’ tangible resources in founding new ventures 15
  9. The bootstrapping-bricolage interface 37
  10. 3 Effectuation and entrepreneurial finance 55
  11. 4 Portfolio entrepreneurs: The role of risk 75
  12. Part II: The inner circle
  13. Introduction 89
  14. 5 Informal financing of entrepreneurs 91
  15. 6 Funding entrepreneurs within business groups: An emerging market view 107
  16. 7 How business incubators and accelerators finance startups 119
  17. Part III: The wider world
  18. Introduction 137
  19. 8 Formal debt as a source of entrepreneurial finance 139
  20. 9 Microfinance and entrepreneurial finance: A review and future research agenda 153
  21. 10 Venture capital as a source of entrepreneurial finance 171
  22. 11 Corporate venture capital: A literature review and research agenda 195
  23. 12 The role of business angels in the new financial landscape 223
  24. 13 Government financing of startups 245
  25. 14 Family offices as startup investors: A synergetic relationship of the old and new economy? 265
  26. Part IV: Emerging perspectives
  27. Introduction 291
  28. 15 A scoping review of most influential entrepreneurial finance studies in developing countries 293
  29. 16 Conceptualizing gender in entrepreneurial finance: Past trends, current developments and future opportunities 317
  30. 17 Indigenous entrepreneurial finance: Mapping the landscape with Canadian evidence 335
  31. 18 Financing entrepreneurs in post-conflict and disaster zones 359
  32. 19 Ethics and entrepreneurial finance 375
  33. Conclusion 391
  34. List of figures 401
  35. List of tables 403
  36. Index 405
https://doi.org/10.1515/9783110726312-005

Chapters in this book

  1. Frontmatter I
  2. Acknowledgments V
  3. Contents VII
  4. Editor and contributor biographies XI
  5. Introduction 1
  6. Part I: The individual level
  7. Introduction 13
  8. 1 The role of founders’ tangible resources in founding new ventures 15
  9. The bootstrapping-bricolage interface 37
  10. 3 Effectuation and entrepreneurial finance 55
  11. 4 Portfolio entrepreneurs: The role of risk 75
  12. Part II: The inner circle
  13. Introduction 89
  14. 5 Informal financing of entrepreneurs 91
  15. 6 Funding entrepreneurs within business groups: An emerging market view 107
  16. 7 How business incubators and accelerators finance startups 119
  17. Part III: The wider world
  18. Introduction 137
  19. 8 Formal debt as a source of entrepreneurial finance 139
  20. 9 Microfinance and entrepreneurial finance: A review and future research agenda 153
  21. 10 Venture capital as a source of entrepreneurial finance 171
  22. 11 Corporate venture capital: A literature review and research agenda 195
  23. 12 The role of business angels in the new financial landscape 223
  24. 13 Government financing of startups 245
  25. 14 Family offices as startup investors: A synergetic relationship of the old and new economy? 265
  26. Part IV: Emerging perspectives
  27. Introduction 291
  28. 15 A scoping review of most influential entrepreneurial finance studies in developing countries 293
  29. 16 Conceptualizing gender in entrepreneurial finance: Past trends, current developments and future opportunities 317
  30. 17 Indigenous entrepreneurial finance: Mapping the landscape with Canadian evidence 335
  31. 18 Financing entrepreneurs in post-conflict and disaster zones 359
  32. 19 Ethics and entrepreneurial finance 375
  33. Conclusion 391
  34. List of figures 401
  35. List of tables 403
  36. Index 405
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