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Bootstrapping practice and motivations for its use in micro, small and medium enterprises

Fitzsimons, Margaret (2018) Bootstrapping practice and motivations for its use in micro, small and medium enterprises. PhD thesis, Dublin City University.

Abstract
Bootstrapping is a set of techniques used by entrepreneurs to minimise the need for cash by securing resources at little or no cost, and by applying strategies to acquire resources without using external finance. To date the link between bootstrapping practices and working capital management has received scant attention. This study addresses this knowledge gap by analysing the role of bootstrapping in micro, small and medium-sized enterprises (MSMEs), based on survey evidence from 167 owners in Ireland.The study is the first to show a direct link between the practice of bootstrapping and the cash conversion cycle. Prior research on bootstrapping has focused on accessing finance through resourceful means such as private funding and cost reduction to limit the need for outside finance. It identifies two bootstrapping methods using factor analysis: (1) delaying payments and owner-related bootstrapping, and (2) customer related bootstrapping. Both of these factors relate to the cash conversion cycle and working capital management. Secondly, the analysis of bootstrapping motivations finds that if risk management is the owners’ main motive for using bootstrapping, then they will use owner-related and delaying payments bootstrapping. The use of these methods signifies self-reliance and a strong desire to manage operations internally, reinforced by the financial preferences of MSME owner/managers who show a reluctance to borrow externally or cede control to access finance. Thirdly, this is the first study to examine the differences in the usage of bootstrapping across different business size classes. It finds that micro businesses are constrained and more dependent on delaying payments and owner-related bootstrapping in place of external finance. This research confirms that bootstrapping should be included on the curriculum for small-business training programmes.
Metadata
Item Type:Thesis (PhD)
Date of Award:November 2018
Refereed:No
Supervisor(s):Hogan, Teresa and Flood, Barbara
Subjects:Business > Accounting
Business > Economics
Business > Finance
DCU Faculties and Centres:DCU Faculties and Schools > DCU Business School
Use License:This item is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 3.0 License. View License
ID Code:22626
Deposited On:16 Nov 2018 16:05 by Teresa Hogan . Last Modified 16 Nov 2022 04:30
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