The impact of improvisation and financial bootstrapping strategies on business performance

Abstract

PurposeThis paper aims to examine the effect of financial bootstrapping strategies (FBS) and strategic improvisation (SI) on business performance (BP). The study enriches our understanding of the contributions of bootstrapping and improvisation strategies toward resource-constrained small businesses during real economic downturns and crises. The potential moderating effect of SI on the relationship between FBS and its dimensions and performance were also examined.Design/methodology/approachUsing the convenience snowball sampling technique, data were collected from entrepreneurs in Tripoli, Libya. Structural equation modeling by means of partial least square bootstrapping resampling was used for the hypotheses testing of the 147 useable responses.FindingsStatistically significant positive relationships were found in the direct relationships between bootstrapping and improvisation with performance. However, there was no significant association found between the delaying payment related bootstrapping and the owner-related bootstrapping with performance. The moderating effect of improvisation had a significant relationship between bootstrapping as an aggregate construct and its dimensions and performance.Research limitations/implicationsDue to the cross-sectional nature of this study which used a small sample that was randomly selected, generalization to the entire population of business ventures should be made with caution.Practical implicationsThe negative moderation effect of improvisation on FBS-BP association suggests that entrepreneurs need to be careful in balancing the two strategies so that efforts are no wasted.Originality/valueWhile business performance has been studied in various organizations, its examination with financial bootstrapping strategies as a predictor and strategic improvisation as a moderator contribute nascent theoretical insights.