Phase 1 outcomes

4.3.1 The developed presentation of data

I begin the developed presentation of data by summarizing the empirical findings in relation to key resources and bootstrapping behaviors within each of the identified development milestones. In Figure 5, I present some raw data excerpts from interview quotes and observations notes to illustrate my conclusions on critical resource needs and behaviors to address such needs within each of the milestones. The role of Figure 5 is not only to illustrate the condensed data structure, but also to demonstrate the key resources and bootstrapping behaviors as they emerged and transformed over time as the critical development milestones were achieved. The top row in the figure, labeled #1 to #6, represents the six development milestones discussed previously in this chapter.

Figure 5 Phase 1 data structure

The typologies of resources by Lichtenstein and Brush (2001) and of bootstrapping behaviors by Winborg and Landström (2001) are popularly referred to, and they have already been mentioned as reference in my thesis a number of times. I choose these typologies to operationalize my empirical data on resources and bootstrapping behaviors. The work of Charmaz (2005; 2012) serves as inspiration here, as I develop the common themes uniting my raw data from the ground up, but I sample the data theoretically, considering the reasonable frame of reference and already achieved understanding of the study’s focus areas. Figure 5 should be read and understood as follows.

At the start of the journey, as the idea was born, progression towards milestone #1 was only possible given the availability of premises and materials at hand, and with some finances from the founder’s pocket and a grant. The earlier descriptive presentation of milestone #1 shows data on how the idea took shape with the help of these resources. The practical way of accessing and managing these resources was the availability of personal financing and the easily attainable small grant from a governmental support organization. When working towards milestone #2, entrepreneur leverages the supporting network built through contacts achieved through belonging to physical premises, and contacts in the supporting organization granting money at milestone #1. These respective network actors serve as the door openers for accessing the pool of resources within the wider industrial network. The resources required and accessed then are physical, human, social in the form of external expertise, and financial in the form of grants and subsidies. The network made it possible to access these resources for free or at a low cost, also during the work towards achieving milestone #3. The entrepreneur still relies on personal financial resources, but now becomes more aware of the utility the network may provide. Paying a membership fee to belong to an industry network association is considered a reasonable and necessary expense for attaining this utility. The personal financial investment is also the token of commitment, making it possible to demonstrate the seriousness of intentions to external stakeholders, and thereby gain power in negotiations for preferential prices and conditions. Upon market launch and growing sales commitments within the work towards achieving milestone #4, activities to manage customer accounts and supply chain actors require more human and legitimizing resources, and minimization of stock and accounts payable are now important ways to bootstrap. Accelerating sales and acquired equity capital in 2015 and 2017 also make it possible for the entrepreneur to acquire and manage resources in a non-bootstrapping manner, starting from the work towards achieving milestone #5. Relationship-oriented bootstrapping still remains instrumental. For example, the firm’s staff use their personal network (friends and family) to prepare marketing and branding materials, such as professional photoshoots, social media exposure, and so on. The growing legitimacy – the brand value and

achieved goodwill – are communicated to external stakeholders during the work towards achieving milestones #5 and #6. This allows the entrepreneur to rely on relationship-oriented bootstrapping, and use finances in the form of revenues for organic growth. The previously made agreements and strong legitimacy also allow the entrepreneur to use minimizing bootstrapping behaviors by means of negotiating the terms of contracts or quid-pro-quo arrangements.

The data structure presented in Figure 5 serves as a benchmark for evaluating how one milestone or another suits the interest of the study. The insights on criticality of relationships for possibilities to bootstrap for resources run as a common thread throughout the descriptive accounts for milestones presented earlier. Relationship-oriented bootstrapping is also the most representative in Figure 5. Additionally, I consider the study’s interest in learning the individual perspectives on bootstrapping exchanges from both parties – the entrepreneur and resource providers. This means that, when selecting study phase 2 cases, I will look for instances of entrepreneur-stakeholder relationship that could best satisfy my study’s interest. The detailed account of phase 2 case selection will be given in Chapter 6.

The first aim of study phase 1 – to develop the selection pool of potential phase 2 cases based on empirical data – is thus achieved. I move on to addressing the second purpose – the selection of the theoretical frame of reference.

4.3.2 Theoretical frame of reference considerations

I now consider the theories that could help me conceptualize my data. As per the above discussion, following Figure 5, the entrepreneur’s personal and professional relationships played the most significant role in the firm’s resource acquisition and management throughout the whole longitudinal development. Descriptive accounts of milestones demonstrate that, even when resources were acquired without critical external stakeholders involved, relationships were critical. For instance, the entrepreneur acknowledges that, in cases he had to rely on his own finances, he had to consider how it might affect his family members and negotiate for their support. I also conclude that, while the role of some other types of bootstrapping, like subsidy financing and private-owner financing, diminishes with time, and the role of some others, like minimizing stocks and accounts payable, becomes more critical, relationship-oriented bootstrapping remains important throughout the whole longitudinal development of the firm.

I first consider the real options framework, following McGrath (1999). Although Rita McGrath’s primary background is in strategic management research, her work inspired many entrepreneurship studies (e.g., Wiklund and Shepherd, 2005; Politis, 2005). From the beginning of my journey as a PhD student, I myself was greatly

inspired by McGrath’s research. However, the fit of real options framework for my study is a different question. The article by Adner and Levinthal (2005), published in the Academy of Management Review journal, was particularly helpful in evaluating the fit. Here, the authors argue that real options framework should be applied when the value of options is objective, readily observable, stable, and independent of the behavior of stakeholders. The greater the extent to which these conditions are violated, Adner and Levinthal suggest, the more problematic the application of real options framework.

Conceivably, if my study were to rely on real options theory, it would require a great violation of these properties, as I do not perceive the intrinsic or extrinsic characteristics of options as objective and stakeholder-independent. I therefore decide to dismiss real options as a suitable framework.

I further explore the role of relationships throughout bootstrapping exchanges over time. The non-trivial role of relationships in accessing and managing resources for new firms is extensively noted by bootstrapping researchers and entrepreneurship scholars alike, as discussed earlier in Chapters 1 and 2. Relationships, i.e., the criticality of human and social resources for enabling bootstrapping behaviors, also run as a common thread throughout my phase 1 empirical data, as demonstrated in descriptive accounts of milestones. In my early reading about entrepreneurial resource acquisition and management, an article by Starr and MacMillan (1990) was influential. There, the authors discuss the entrepreneurial social contracting for resources, relying on relational contracting theory by Ian Macneil (1978a). The principles of social contracting for attaining and managing a new firm’s resources that Starr and MacMillan (1990) spoke of hold exceptionally well for the findings of my study’s empirical phase 1. I begin studying Macneil’s original work closely, and soon establish that relational contracting is indeed a well-fitting theoretical framework for my study. I will explain my reasoning leading to such a conclusion in the upcoming Chapter 5.

I now achieved the aims of study phase 1 – to discover the selection pool of potential phase 2 cases, and to select the theoretical frame of reference for my study. The understanding of resource needs and behaviors to address these needs developed in this chapter, as well as implicit understanding of stakeholders’ roles – internal and external – will be critical for further case selection, while the theoretical frame of reference will be critically important for abductive analysis at phase 2. The findings of phase 1 are also instrumental for developing the conceptual framework and the study’s overarching empirical findings. I introduce and justify my theoretical framework next.