entrepreneurs' searching for capital through their network ties
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Entrepreneurs’ searching for capital through their network ties: An empirical study in the
Greek semiconductor industry
Master Thesis
Coach: Dr. Willem Hulsink
Co-Reader: Dr. Vareska Van de Vrande
MscBA Entrepreneurship and New Business Venturing
Rotterdam 2008
Nikolaos Nakos
MscBA Entrepreneurship and New Business Venturing
Entrepreneurs’ searching for capital through their network ties: An empirical study in the
Greek semiconductor industryStartup entrepreneur: the person who sets up a
new company
MscBA Entrepreneurship and New Business Venturing
Entrepreneurs’ searching for capital through their network ties: An empirical study in the
Greek semiconductor industry
seed capital : financial resources that entrepreneurs need at the initial stages of
their firm to conduct a market research,buy equipments and
facilities and pay the operational costs
MscBA Entrepreneurship and New Business Venturing
Entrepreneurs’ searching for capital through their network ties: An empirical study in the
Greek semiconductor industryNetwork ties: Strong
ties (Family,Friends,close (ex)colleagues )
Weak ties (business contacts, acquaintances)
MscBA Entrepreneurship and New Business Venturing
Entrepreneurs’ searching for capital through their network ties: An empirical study in the
Greek semiconductor industry
The empirical setting: high-tech Greek firms
which design microprocessors for several applications
Purpose & value of the study
the use of social networks influence the new venture creation process
the use of social networks can lead entrepreneurs to resources
Financial resources are fundamental for the startup of a firm
Relarionship between social networks and financial resources
This relationship is understudied
The first research ever made in the Greek Semiconductor industry
Purpose & value of the study
the use of social networks influence the new venture creation process
the use of social networks can lead entrepreneurs to resources
Financial resources are fundamental for the startup of a firm
Relarionship between social networks and financial resources
This relationship is understudied
The first research ever made in the Greek Semiconductor industry
Main research question: How startup entrepreneurs of the high-tech sector use their
network ties to get access to sources of capital?
Theoretical Concepts
Entrepreneurship
Human Capital
Social Capital
The strength of ties
Sources of Funding
35 firms & 15 research institutes
organizations: Hellenic Semiconductor association & Corallia (Clustering initiative)
700 employees
60 mil. € turnover
30 mil. € investments
Future projections: 150 companies & > 300 mil. € turnover in 2012
The Greek Semiconductor Industry
Qualitative method
Comparative case study (Within & cross case analysis)
Semi-structured interview
Methodology
Research Design
Measuring networks ties (Granovetter, 1973)
Frequency of contact
Emotional intensity of the relationship
Degree of intimacy
Reciprocal commitments within the relationship
The Case Studies
7 Case Studies
Founding year from 2000 to 2007
Specialized in designing services & consulting
Founder’s Background: Master & PHD studies in electronic engineering, no prior entrepreneurial experience, some of them prior working experience
Located in the two main technological centers of Greece: Attica & Patras
Analysis
CompaniesType of Ties
Strong Ties Weak Ties
ALMA TechnologiesBootstrapping:
- Family’s funds- Co-founders’ funds
-
Diaplous Ltd. Bootstrapping:Co-founders’ funds -
Elxys Innovations Bootstrapping:Co-founders’ funds -
InAccess Networks Bootstrapping:Co-founders’ funds
European and State subsidies
Think Silicon Bootstrapping:Co-founders’ funds -
Analogies S.A. Bootstrapping:Co-founders’ funds
Private equity company
& European and State subsidies
Helic Bootstrapping: Family’s funds
Venture Capital Company
The firms were founded by teams of engineers
Additional members in the founders’ team brought financial resources
Bootstrapping methods appearedin all cases
Weak ties were used only in the private - financed firms
The use of strong ties lead to the acquisition of capital through bootstrapping
Weak ties found to be significant for the acquisition of external financing (equity finance)
Entrepreneurs who did not raise funds from investors did not make use of weak ties
Weak ties are more important than strong ties for the acquisition of external financing at the startup stage
Findings
Limitations & Further Research
Limitations
Single static point of time
Identification criteria of ties
Time & resource restrictions
No previous research in the specific context
Conduct the research in other emerging economies like Balkans and Eastern Europe
Measure the influence of human capital
Implications for nascent entrepreneurs
Further Research
Keep your contacts warm!
entrepreneurship
strong tiesweak ties
networksbootstrapping startups
venture capital
human capital
social capital
high - tech
Greece
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