Date of Award
1993
Degree Type
Dissertation
Degree Name
Doctor of Philosophy
Abstract
This research extends understanding of the determinants of new venture performance by focusing on two previously unexamined factors: financing patterns and resource scarcity. It was designed to examine the relationship between financing patterns and new venture performance and, in particular, to determine if milestone-based, incremental financing patterns, which are becoming more common, are associated with higher new venture performance than other financing patterns. It also examined the relationship between resource scarcity and new venture performance.;Data were collected on forty-one independent new ventures through the venture capitalists who financed them. The researcher reviewed the venture capitalists' files to evaluate the venture, its performance, financing pattern and industry environment. The venture capitalist also evaluated the same factors through a structured interview and provided additional insights through open-ended questions. The data were analyzed to determine the performance effects of financing patterns, resource scarcity, and environmental uncertainty.;The study found no evidence of a direct relationship between the financing pattern employed and new venture performance. In particular, there was no statistically significant support for the hypothesis that milestone-based, incremental funding patterns are associated with higher levels of new venture performance than other funding patterns. It also found no evidence of a relationship between environmental uncertainty (either directly or in interaction with any other variable) and new venture performance.;However, the research provides significant evidence of an inverse relationship between resource scarcity and new venture performance. More importantly, a significant interaction between financing patterns and resource scarcity was also identified. This led to a contingency model for structuring financing. The study suggests that under conditions of high resource scarcity, milestone-based, incremental funding is associated with superior levels of new venture performance than other financing patterns. It also suggests that under conditions of low resource scarcity, one-time, up-front funding and implicit, performance-based, incremental funding patterns are associated with superior performance, rather than milestone-based, incremental funding patterns.;This study also confirms the importance of the environment as a determinant of new venture performance and the importance of resource scarcity as a relevant dimension of that environment.
Recommended Citation
Blunden, Robert George, "Financing Patterns, Resource Scarcity, And New Venture Performance" (1993). Digitized Theses. 2247.
https://ir.lib.uwo.ca/digitizedtheses/2247