#56446.doc - The role of finance and entrepreneurial cognition in explaining firm growth The role of finance and entrepreneurial cognition in explaining

#56446.doc - The role of finance and entrepreneurial...

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The role of finance and entrepreneurial cognition in explaining firm growth The role of finance and entrepreneurial cognition in explaining firm growth Name Affiliation Course Tutor Date
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The role of finance and entrepreneurial cognition in explaining firm growth The role of finance and entrepreneurial cognition in explaining firm growth Introduction Many economies have declined both in debt and finance equity flowing to small and medium size enterprises as a result of the financial crisis (Cowling et al., 2014). This has as a result led to negative impacts on the firm’s performance. Funding gaps from financiers can also be a limiting factor towards growth of firms therefore restraining economic recovery. Growth is a crucial phenomenon in firms. Survival of firms depends on their ability to be part of the market and collaborate with other large companies. Growth of farms reduces the risk of closing the business (Rauch & Rijskik, 2013). This growth is also important to the stakeholders as these firms improve the economy of the nation by encouraging and emphasizing on the diversity of goods and services. The growth phenomenon of firms has been extensively analyzed within entrepreneurship. There is a great need to carry out research beyond market failure issues to get a better and deeper knowledge on the role of entrepreneurial cognition, the ownership types, and the firm life cycle stages in investment decisions and their objectives (Wright & Stigliani, 2012). There exist little knowledge on the fundamental relationship between access of external finance and growth as a result of the limitations in the current approaches to testing the financial constraints. There is an assumption that the relationship between the lack of adequate funding and business performance is a straight forward approach to identifying the various financial constraints in different markets. This however requires a careful scrutiny and understanding the role of
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The role of finance and entrepreneurial cognition in explaining firm growth Financiers in promoting growth. There is also a need to look into the relationship between non- bank financial sources and their role in promoting growth. Opportunity driven entrepreneurs have a lower risk of failure among early business stage and perceive less market competition as compared to well established business owners. Entrepreneurial finance can be termed as a process of search and matching between financiers proposing their inventive ventures and capitalists, selecting and financing the most valuable of all the projects. The amount of resources allocated for innovation can be determined along the balanced path of growth. Entrepreneurial cognition has been defined as the knowledge structures that people use to make assessments, judgments or decisions involving opportunity evaluation and venture creation and growth (Mitchell et al., 2002, p.91) influences the decision
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