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The influence of financial 'skin in the game' on new venture creation
Pace University, USA.
College of Charleston, USA.
Copenhagen Business School, Denmark ; California Lutheran University, USA.
2015 (English)In: Academy of Entrepreneurship Journal, ISSN 1087-9595, E-ISSN 1528-2686, Vol. 21, no 2, 1-14 p.Article in journal (Refereed) Published
Abstract [en]

A common theme in entrepreneurship research is that the founder must be committed in order for a new venture to succeed. Although investments of time and sweat equity can indicate commitment, external stakeholders may prefer founders who have made a significant, personal financial stake in their nascent ventures. This personal financial commitment is known as "skin in the game." Founders that invest more of their own money into their ventures signal greater commitment to potential business partners, suppliers, and resource providers.This study examines the amount of personal funds invested by 1,214 nascent entrepreneurs in the United States, between the years of 2005 and 2012. Findings demonstrate that the dollar amount of personal money invested prior to launch does not significantly impact the creation of new firms. However, nascent entrepreneurs that invest larger amounts as a proportion of their net income are more likely to succeed and are less likely to disengage from the process. Personal funds invested as a proportion of net income may therefore be a better measure of future success than the precise amount. This study also shows that the founder's human capital, perceptions of community support, and industry characteristics influence startup outcomes.

Place, publisher, year, edition, pages
2015. Vol. 21, no 2, 1-14 p.
National Category
Economics and Business
Research subject
Economy, Ledarskap, entreprenörskap och organisation
Identifiers
URN: urn:nbn:se:lnu:diva-64328OAI: oai:DiVA.org:lnu-64328DiVA: diva2:1098293
Available from: 2017-05-23 Created: 2017-05-23 Last updated: 2017-05-23Bibliographically approved

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Gartner, William B.
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CiteExportLink to record
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Citation style
  • apa
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  • vancouver
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Language
  • de-DE
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  • Other locale
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