Developing my own conceptual framework

al., 2006). Here, the norms of flexibility and contractual solidarity are the primary guarding norms.

I should note that my review conclusions at this stage are already sensitized by insights from my empirical phase 1. In other words, I identify the ongoing discussions that resonate with my data. Interestingly, all of the empirical studies similarly conclude that the formal contracts are not the driving force behind successful and sustainable stakeholder engagement in new firms. Although there usually are explicit agreements in place, the researchers conclude that explicit contracts are not as important for contractual exchanges in new firms as the relational (e.g., Larson, 1991). I now reflect on how the conclusions from the literature review might help to shape my study’s conceptual framework. In the upcoming section, I will also to present my argumentation as to why relational contracting is relevant for bootstrapping.

from the data by means of abductive inference, and thus devise my conceptual framework.

For the purpose of my study, I understand contractual norms as the means by which conditions for bootstrapping behaviors emerge, develop, and lead to outcomes. I cannot know in advance what kind of norms may act as conditions for bootstrapping behaviors in my study’s cases. Next, I propose the theoretically informed perspective on how the contractual norms may help us understand bootstrapping behaviors and, consequently, their possible nuanced outcomes.

5.5.1 Bootstrapping exchanges as relational contracts

In developing my study’s conceptual framework, I establish the key operationalization categories that would help me to select and interpret phase 2 cases – the contractual norms. I consider how the original theory distinguishes between such categories. While any contract is situationally and contextually bound, regardless of the quality of the relationship between the contractual parties, Macneil (1987) argues that all the exchanges, despite being simplistically delimited as either discrete or relational, can be best understood as relational contracts.

In bootstrapping exchanges, the relationships between the entrepreneur and resource-providing stakeholders are seldom legally regulated. Therefore, the guarding norms and conditions for building, sustaining, and terminating the contracts for bootstrapping exchange require more nuanced understanding. Research devises five guarding premises for relational exchanges (e.g., Cropanzano and Mitchell, 2005;

O'Boyle et al., 2012):

(1) the rewards and punishments invoked by the parties upon one another are subjectively perceived by the parties as valuable and acceptable;

(2) the costs and means of executing the relational exchange are subjectively perceived by the parties as appropriate and acceptable;

(3) the ongoing condition of trust in the exchange relationship is subjectively perceived by the parties;

(4) the parties subjectively perceive the relational exchange as fair and just, or such that adheres to norms of reciprocity, role integrity, and flexibility; and (5) the parties subjectively perceive that their relationship is committed, long-term

oriented, and based on mutual goodwill and trust.

Lounsbury and Glynn (2001) discuss these premises as the background notion of social (relational) exchange, whereby actions of one party create obligations for the other, who

then reciprocates. Bootstrapping research suggests that insofar as these principles are in place, resource exchange relationships between the parties can be successfully built and sustained over time (e.g., Jonsson and Lindbergh, 2013).

Just as any discrete types of contract relationships, bootstrapping contracts may also be guarded by explicit provisions of rewards and enactment of punishments, when necessary. As established earlier, it is the specific instance of exchange in its contextuality that indicates the nature of the exchange – whether more discrete or more relational. To bring some examples from my study’s data (see Chapter 4), when a manufacturer purchases material in smaller amounts, allowing for opportunity to adjust the purchase amount up or down depending on how much of the end product they can sell at any time of the contract’s duration, the contractual norms of flexibility and implementation of planning will manifest themselves in a more relational way; when the manufacturer has a reference frame in the form of the entrepreneur’s explicit commitment – for instance, “We buy from your factory X amount of ready products every 4 calendar months, with reservation for adjustment up or down based on current market expectations” – flexibility and implementation of planning are manifested in a more discrete fashion. Thus, one or the other contractual norm’s manifestation may depend on the firm’s development stage, the presence or absence of past experiences relevant to the specific instance of bootstrapping exchange, market expectations at any given point of time, and so on.

Relational contracting theory offers insights on dealing with conflicts arising from uncertainty that are relevant to my study. On the premise of relational contracting, contractual parties in bootstrapping exchanges individually evaluate the perceived costs and potential rewards of alternatives – to preserve the contractual relationship despite the conflict when the prospects of rewards outweigh the costs, or to terminate the contract if it has outlived its usefulness. Note that even though the above statement may read as presupposition of a conscious strategic choice of alternatives, when it comes to bootstrapping exchanges, the prospects of outcomes are so vague and the reliance on implicit personal commitments between the parties is so high that this

“choice” often happens in a non-perceived fashion – as the dynamic opportunities may serendipitously present themselves, windows of opportunity may open or close for either contractual party, or other conditions may play a role. One empirical example of such unconscious, non-perceived conflict management in bootstrapping exchange is the case when the entrepreneur finds him/herself in a long-term destructive relationship with a manufacturer because the risks and costs of other alternatives, or even the availability of such alternatives, cannot be estimated at all. I further link the premises of relational contracting to my study’s assumptions.

5.5.2 Linking relational contracting and my study’s assumptions

To relate my study’s assumptions to the above discussion, I first ask myself – is bootstrapping always relational? How about some instances of bootstrapping that do not explicitly involve other parties – can these be seen as relational contracts, too? Such is the case, for example, with owner-financed bootstrapping techniques – using personal credit cards for business purposes, working from home instead of renting office space, and so on. I have above given some other examples of resource acquisition and management that are “uninteresting” for my study. My thoughts here span in two directions.

Firstly, by analogy with Macneil’s argumentation that any exchange may best be treated as a relational contract (1987), I believe that even the bootstrapping instances that do not explicitly involve the resource-provider can only be understood and interpreted within their larger contexts. For instance, when the entrepreneur uses their personal credit card for business purposes, the financial institution providing the personal line of credit is indirectly a stakeholder in the transaction, and in the case when the entrepreneur is working from home, family members, roommates and neighbors can be seen as indirect stakeholders as well. Building on the core premises of relational contracting, I conclude that it is possible to view any bootstrapping instance as contextually and inter-relationally loaded, and therefore based on relational contract.

Secondly, my study is not primarily concerned with outlining the multiplicity of possible bootstrapping exchanges and their various types – the reliable topologies of bootstrapping behaviors already exist (Thorne, 1989; Winborg and Landström, 2001;

Malmström, 2014). Research also acknowledges that new and different types of bootstrapping behaviors may constantly develop, and that the established bootstrapping techniques may be used in various novel ways and combinations. This makes it virtually impossible for me to delimit with certainty what is the instance of bootstrapping exchange and what is not, and to what extent the specific bootstrapping exchange is discrete or relational. For the purpose of my study, I instead choose to focus on such instances of bootstrapping exchanges that can be reasonably viewed as relational at the time of my study, and within my specific case(s) and their contexts.

My study’s cases of interest are therefore such where bootstrapping exchanges based on relational contracts are best represented. This means that the involvement of internal and external resource-providing stakeholders that are approached by the entrepreneur in a bootstrapping manner is one of the critical criteria for selecting the phase 2 cases.

I now move on to presenting my understanding of how the study’s subsequent empirical process is linked to relational contracting framework.

5.5.3 Linking relational contracting and my empirical process

In my study’s empirical data at phase 1, I discover that interesting exchanges between the entrepreneur and resource provider(s) typically happen when the contracts are guided by implicit terms (e.g., the instance of experts’ involvement for free or at low cost, as described in Chapter 4), whereas the exchanges guided by explicit terms are typically uninteresting from the bootstrapping perspective (e.g., the instances of standardized manufacturing processes at a firm’s later development stages, as described in Chapter 4). Thus, my theoretically-developed understanding of bootstrapping exchanges will also inform my study’s execution at phase 2, alongside the phase 1 empirical findings.

There certainly exist different subjective perspectives on a firm’s emerging resource needs, on addressing of such resource needs through bootstrapping behaviors, and on the possible outcomes thereof. All of the perspectives are important to understand and account for. Despite the recognized importance of accounting for the subjectivity of the parties in bootstrapping exchanges (Bhide, 1992; Brush et al., 2006; Johnson and Lindbergh, 2013), theorizing efforts for understanding the bootstrapping exchanges are scarce. In relating bootstrapping to relational contracting theory, I aim to offer such theorizing. Before presenting phase 2 of my study in Chapter 6, I will summarize this chapter’s learnings.