The Relationship Between Owner Characteristics and Use of Bootstrap Financing Methods

Abstract

Bootstrap finance methods are important to small firms because these techniques provide access to capital, appeal to funding preferences, are widely-used, and are often cost-effective. Despite the wide use of bootstrap financing methods among small firms, little is known about the relationship between owner traits and bootstrap financing. This study used a sample of 247 small firms to examine the relationship between education, age and gender relative to six groups of bootstrap financing methods identified through factor analysis as internally-, socially-, or subsidy-oriented. The analysis identified significant differences between owners grouped by their personal characteristics and the bootstrap approaches they chose. The results may be used by small firm owners, educators, and advisors to find better mixes of financial resources.