Financial bootstrapping among Costa Rican small businesses: an exploratory study

Abstract

This study identifies and analyzes the financial bootstrapping techniques commonly used by small businesses in Costa Rica. The empirical application uses a unique sample of 161 Costa Rican SMEs for 2017. The results of the parallel factor analysis reveal that the analyzed SMEs adopt different types of bootstrapping techniques primarily related to the owners, customers, and alliances that facilitate the joint utilization of facilities and other assets. Entrepreneurs bootstrap their businesses to reduce the reliance on external financing. In this sense, the results of this study show that, rather than simply using what entrepreneurs are familiar with (e.g., credit from family or friends), Costa Rican small business managers are exploring and actively using a wide array of alternative methods in order to access financial resources.