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The purpose of this paper is to explore the extent to which various theories of capital structure “fit” in the case of new technology‐based firms.

This study uses data from the Kauffman Firm Survey, a longitudinal data set of over 4,000 firms in the USA. Descriptive statistics and multivariate results are provided.

The authors' findings reveal that new technology‐based firms demonstrate different financing patterns than firms that are not technology‐based.

Although some support was found for both the Pecking Order and Life Cycle theories, the results also indicate that technology‐based entrepreneurs are both willing and able to raise substantial amounts of capital from external sources.

Technology‐based entrepreneurs need external sources of equity, in particular, in order to launch and grow their firms.

To the authors' knowledge, this is the first article to test specific theories of capital structure using a large sample of new technology‐based firms in the USA.

The purpose of this paper is to investigate different types of investment actions undertaken by entrepreneurial firms to determine how these actions influence performance. Specifically, the effects of entrepreneurial action with regards to investments in human capital, the capabilities of the firm and the competitive dynamics of the business relative to other firms are examined. These actions are examined in conjunction with the offering of products, services or both, to determine the benefits of specific actions for firms.

The sample is taken from the confidential version of the Kauffman Firm Survey (KFS). The data are analyzed using a fixed effects model.

Results show that investment in human capital development actions and capability development actions improve firm performance. Further, investment in human capital development actions is shown to have the largest positive impact on the performance of firms that offer products only. Competitive positions actions have the greatest positive impact on firms that offer products and services.

Results contribute to multiple theoretical lenses within the context of entrepreneurship and demonstrate applicability of theory related to entrepreneurial action to other established theories. Findings also demonstrate that different entrepreneurial actions benefit firms that offer products or services in different ways. Limitations of the study are those associated with survey research generally, such as self-reported measures, non-response bias and the KFS specifically such as survivorship bias and variance in survey items across years.

The consideration of firms whose primary focus is the selling of products compared to services and how they moderate specific actions is novel and valuable. Theoretical development tying human capital, competitive dynamics and dynamic capabilities to entrepreneurial action creates new avenues for inquiry.

The purpose of this paper is to examine the status of small-business lending following the recession.

The authors survey the literature and analyze recent surveys of small-business lending.

The results reinforce the importance of owner equity as a primary source of small-business financing. In addition, the authors find that small firms have been seeking and obtaining less capital since the 2008 financial crisis.

The findings about the main sources of small-business financing will be informative when formulating financial regulation.

The available evidence suggests that new regulation of the financial services industry may be restricting access to products that small-business owners rely on and may adversely affect small banks.

The authors offer the most recent analysis of small-business financing, focusing on changes that may have been caused by the recession and major financial regulations.

The aim of the article is to establish robust linkages between internalization theory and the empirical phenomenon of international new ventures (INVs). Here, the focus is on firm-specific advantages (FSAs) critical to early new venture internationalization.

On the conceptual level, we explain how the INV literature can easily be accommodated using an internalization theory lens, and we formulate hypotheses to that effect. On the empirical level, we use the Kauffman Firm Survey (KFS) dataset, which includes a panel of 4,928 US-based new businesses founded in 2004, tracked over their early years of operations. We use logistic regressions building upon pooled cross-sections, and including lagged dependent variables.

INV-type foreign expansion is a special case of international growth, easily and credibly predicted by internalization. No new theory beyond internalization theory is needed to explain this phenomenon.

The early stages of the Uppsala model, in terms of requisite resources accumulation and recombination, may have been undertaken at the individual level, by founding entrepreneurs, in the pre-stage of the new venture, and are “invisible” when focusing on organizational experience built up in the new venture. Here, particular founding entrepreneurs’ characteristics function as FSAs.

The purpose of this paper is to answer whether the female-owned smallest firms differ from their male-owned counterparts in terms of their success and performances; if so, whether it affects banks’ loan approval decisions.

The study uses the Kauffman Firm Survey – the largest and longest longitudinal data which contain 4,928 new firms that started their business in the USA in 2004. The authors use two measures of median asset values to classify firms into smallest firm category. They use multiply imputed logit estimates to predict the probability of loan approval in each category.

The results show that female-owned smallest firms have significantly lower rate of loan approval. In addition, the study finds minority women owners face double burden. However, married women have significantly higher probability of loan approval. The authors’ results are robust.

From a public policy perspective, providing equal access to credit to women business owners, especially unmarried and/or minority women, may solve the puzzle why female-owned firms are so small.

Although many studies examined why businesses owned by women are typically smaller compared to men-owned firms, there exist limited studies on female-owned smallest firms and why they stay smaller. This study fills the gap in the literature by examining female-owned smallest businesses.

The purpose of this paper is to examine the time-series dynamics of entrepreneurship rates for different race classifications based on household characteristics over the 1996 through 2013 period.

Using microdata from the Kauffman Foundation, this study investigates the roles of unemployment, homeownership, income, immigration, education, age, gender and marital status in relation to entrepreneurship rates for different race classifications through ridge regression analysis.

Results suggest that the time-series variation in entrepreneurship rates for different race classifications are variable-dependent, moreover, the economic and statistical significance of the candidate explanatory variables are sensitive to the time period under analysis. Unemployment, homeownership, education, age and marital status are significant variables for whites while unemployment, income, immigration and gender variables are significant for blacks. For the case of Native Americans and Asians, the candidate explanatory variables do not explain the time-series variation in entrepreneurship rates for the sample periods in this study.

This study exhibits implications for public policy in helping to promote entrepreneurship at the individual level and help stimulate entrepreneurial activity as a mechanism for promoting economic growth.

The findings suggest the importance of examining entrepreneurship rates across time based on race classifications. This study highlights the importance of conducting ridge regression analysis for different sub-periods in time when assessing entrepreneurship rates.

The purpose of this paper is to investigate into the conditions under which founders’ human capital (HC) benefits new venture growth (NVG). One such condition is investigated in this study – initial assets at founding. Specifically, founding assets are hypothesized to moderate the relationship between founders’ HC and NVG.

The longitudinal panel database from the Kauffman Firm Survey for the period 2004–2011 was used to test the hypotheses. The final sample consisted of 4,923 firms, with 34,461 observations made over seven years.

The regression analysis found the effect of founders’ HC on NVG and the moderating role of founding assets in the HC–NVG relationship.

New ventures benefit even more from founders’ education level, industry and startup experiences when the startups have larger assets at founding. The effect of founders’ education and experiences on startup growth is contingent upon the initial assets at founding.

The results of this study can help practitioners and policy makers to understand the drivers of NVG and the interactions among these drivers. Growth-oriented startups may require a large investment in founding assets such as production facilities. Startups with fewer founding assets may find it particularly difficult to negotiate with external stakeholders and may face unusually intense competitive responses from competitors. Policy makers should tailor the support to the founding conditions of new firms.

The prior literature has shown mostly the independent positive effects of various resources on firm growth. This study argues and empirically shows that startups grow faster when founders with high HC have more assets to utilize. The resource-based view literature was expanded by adding important new causal mechanisms, enriching our understanding of how founders’ HC interact with founding assets, jointly affecting NVG. Like a big fish in a small pond, even highly educated and experienced entrepreneurs have limited opportunities to utilize their talents in a startup with a lower initial resource position.

This paper aims to examine how economic freedom impacts the initial choice of legal structure for startup firms. The authors do this by first exploring whether economic freedom is an essential determinant of the initial legal form of organization (LFO). The authors then explore the impact of economic freedom on firms' choice of changing their initial legal structure over time and how this change impacts their survival rate.

The authors employ a multinomial logistic regression model to measure the initial determinants of LFO by utilizing an eight-year panel data set of 4,928 startups in the USA through the Kauffman firm survey and merge it with the Economic Freedom in North American index from the Fraser Institute. The authors then employ a logistic regression model to examine the determinants facilitating a change in legal structure over time.

The results show that economic freedom is a significant determinant in the choice of legal structure. The findings also report that the majority of startups do not change their legal form, but of those that do change the legal structure show a higher survival rate.

Major limitations are the size of the data and the nature of somewhat limited economic freedom differences with the USA. More nuanced measures of economic freedom would be highly desirable.

Policymakers should take note that limited red tape, smoothly working labor markets and straightforward processes for changes of legal structures of organizations would improve survival and growth odds for entrepreneurs.

Drawing on the theory of institutions, the authors attempt to bridge a gap in the literature by explicitly analyzing the determinants of the legal structure in startups in light of economic freedom. Institutional factors do not work in isolation; therefore, the authors also employ traditional entrepreneur-specific variables that affect the choice of legal structure in addition to the institutional framework.

The purpose of this paper is to examine the effect of immigrant and ethnic enclaves on the success of entrepreneurial ventures as measured by firm profits and viability.

Data on entrepreneurs and their new firms were provided by the Kauffman Foundation and covered the years 2004-2008. These firm-level data were linked to Census 2000 Summary Files at the ZIP Code level and were used to empirically investigate the effect of enclaves.

The paper found a statistically significant negative effect of immigrant representation in an area on firm profitability. This effect operated on native, rather than immigrant, firm owners, which suggested that native-owned firms locating in immigrant enclaves may experience difficulty assimilating the benefits that enclaves offer.

Cultural connections within local communities play a key role in the success of new businesses. Potential firms should recognize the importance of these connections when making firm location decisions. Likewise, the findings suggest that connections within local communities should be considered when designing aid programs.

The authors used a unique measure of enclave representation to incorporate both immigrant, as well as ethnic, representation in the local area. The authors examined the effect of immigration on both immigrant- and native-owned firms in order to provide a broader scope and a more complete understanding of the effects of immigration on entrepreneurial ventures.

We extend theories of the firm to the entrepreneurial finance setting and argue that R&D-focused start-up firms will have a greater likelihood of financing themselves with equity rather than debt. We argue that mechanisms which reduce information asymmetry, including owner work experience and financier reputation, will increase the probability of funding with more debt. We also argue that start-ups that correctly align their financing mix to their R&D focus will perform better than firms that are misaligned. We study these ideas using a large nationally representative dataset on start-up firms in the United States.