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Rational actors, knowledgeable agents: extending pecking order considerations of new venture financing to incorporate founder experience, knowledge and networks

Research output: Contribution to journalJournal article

Published

Journal publication date08/2009
JournalInternational Small Business Journal
Journal number4
Volume27
Number of pages26
Pages470-495
Original languageEnglish

Abstract

Standard explanations of the decisions made by new firm founders when acquiring financing to start ventures tend to refer to the efficiency and economic rationales underpinning such choices. In this article, pecking order approach is applied to 26 cases of new venture creation to test such 'rational actor' approaches.When pecking order considerations are extended to incorporate previous experiences of acquiring finance and perceptions of the ease and feasibility of doing so, a fuller explanation of decisions and patterns in new venture financing emerges.A key implication of this analysis is the need to consider the experiential and knowledge base of founders when seeking to understand the dynamics and drivers of new business funding.