Posted: September 13th, 2017

“Entrepreneurial teams – Access to funding”

“Entrepreneurial teams – Access to funding”

Background and research question:
Possible determinants of an individual’s choice to start a business have been thoroughly researched in the academic literature of entrepreneurship (Parker, 2009). An entrepreneur that has made the choice to start a company must thereafter decide if s/he wants to pursue this in a partnership1 or as a lone wolf. Having partners may entail advantages such as increased access to personal assets for start-up capital and a complementary skillset, but it may come at the expense of a loss of decision rights and the need to share residual claims (Åstebro & Bernhardt, 2003). The costs of having a partner seem in general to be outweighed by the benefits since entrepreneurial teams show a higher degree of firm survival (Cooper & Saral, 2013).
One important aspect for entrepreneurs concerns the access to capital, a critical determinant of venture success and future expansion (Åstebro & Bernhardt, 2003). Having a partner increases the potential network for finding investors among friends and relatives. Generally a partner also increases the possible size of firm collateral, hence possibly extending the access to bank loans and risk capital.
Research Question:
Do partnerships have a larger start-up capital and/or expansion capital compared to lone business owners?

Data:
The US Census Bureau conducts a cross-sectional survey called the Survey of Business Owners (SBO), for a full introduction see: http://www.census.gov/econ/sbo/. The survey is conducted in five-year intervals and in 2007 it covered approximately 2.3 million businesses in the US. The above mentioned research questions are suitable to investigate in the Public Use Microdata Sample (PUMS) created from the SBO conducted in 2007. The dataset is available here: https://www.census.gov/econ/sbo/pums.html. I recommend you to read the Data Users Guide supplied at the PUMS site to get a feeling for how to approach the above mentioned research questions in this data material and to be able to plan a suitable econometric approach. The Data Users Guide include a list of variables and summary statistics.
IMPORTANT
What needs to be done in this paper:
Outlining and testing different factors affecting the initial capital investment using the Ordinary Least Square regression (OLS) in relation to partnerships and lone business owners using SPSS (

Literature review:
Your literature review should be brief and focused. Think of it as a funnel where you start broad and let the literature review narrow down to specifics applicable to your research question. Ideally it should include:
•    The theoretical foundations of partnership firms.
•    The current state of knowledge on the effects of partnerships in the academic literature, expressed in a concise manner.
•    On the basis of this review the reader should be able see why it is interesting to carry ?out your particular research question. E.g. is there a gap in the academic literature? Has the question been investigated with this data material before? Is there a new method you could employ? Do contradictory findings proliferate side-by-side in the literature and your findings could aid in settling the score? ?

Empirical analysis: ?
The empirical analysis will be the most important part of your paper. Before you start analyzing, think carefully about how to construct a measure for your research question from the available data. Also think carefully about which control variables you need to include. Are there any other potentially omitted variables which you cannot control for? Think of a study design that allows you to identify the effects of interest. Finally, think carefully about if and how the available data may allow you to say something about causal effects and unobserved heterogeneity. ?
The SBO survey is a cross-section which does not permit you to analyze dynamics, i.e. the study of change. Think carefully about the advantages and limitations of performing this kind of study. ?

Notes and tips:
If you want to write an excellent paper, you should be aware of the existing research and you should carefully explain how your own research results extend our current knowledge. Furthermore, the essence of a good scientific paper is that it reports findings that are actually true, i.e. conclusions are backed up by evidence, the evidence is flawless and indisputable, and methods and data that were used are clearly explained, enabling the reader to understand immediately and completely what was done and why. Hence, an excellent paper discusses the internal and external validity, reliability and replicability of its methods and findings.

Writing instructions: keep the following in mind when writing the final report:
Paper format: ?
Rigorous/accurate set-up, including
i.    one-page summary ?
ii.    table of contents ?
iii.    introduction (including problem statement, research questions, motivation – both ?scientific and societal – and set-up paper) ?
iv.    definitions, concepts, theory (and hypotheses, if applicable) ?
v.            data (describe the data source you are using in detail, providing descriptive statistics) ?
vi.    method (describe the statistical method you are using and explain why this method is appropriate – explicitly state assumptions you need to make which may be critical for the interpretation of your results) ?
vii.    results (Provide tables and figures that clearly show the results of your analysis. Adequately discuss your results and link them back to your research question, theory, and hypotheses as far as possible. Discuss possible limitations of your method / data / results here.) ?
viii.    conclusion (summarize your answers to the research question(s), discuss how your work contributes to the existing literature, what have we learned from your work, discuss possible implications of your findings for practice or policy – but be careful not to overstate your results)?
ix.        reference list (in alphabetical order, see example below)
x.         appendices

Note that this is a usual and suggested set-up for your study. Naturally, there is room for your own insight and structure.
o    10,000 – 15,000 words in total (including main text, excluding reference list and appendices) ?
o    Tables and figures that are necessary to understanding your main analyses and results should be included in the main body of the text (not more than 10 display items in total). Additional tables and figures may be placed in the appendix. ?
o    Flawless English: check for misspellings and grammar mistakes! ?
o    Letter type Times New Roman, 12-point, 1.5 line spacing, 2 cm margins (left and right) ?
o    Chapters, paragraphs and pages are numbered ?
o    Tables and figures are numbered, there is a reference to tables/figures in the text, they ?have a title (they are independently readable from the text) and a literature reference if ?necessary ?
o    Include a title page with the title of the paper, name of the supervisor, date of completion, ?your name, student number, and the name of your Master’s program ?
o    The reference list should be accurate and complete. Missing references will be taken into ?account when grading the paper. References should be in alphabetical order and written down following the style guide of the Journal of Economic Psychology (http://www.elsevier.com/wps/find/journaldescription.cws_home/505589/authorinstructio ns#68000). You can use a reference manager such as Mendeley. ?
o    Tables and figures must be self-explanatory (i.e. the reader can grasp the message of the presented evidence without having to read the article) and easy to understand. Make use of notes, explanations and clear heading to achieve this. Also follow closely the guidelines of Ehrenberg (1977) (http://www.jstor.org/stable/10.2307/2344922). ?

! It is important that you follow these instructions closely; we will take this into account when grading the paper. ?
References
?Cooper, D. J., & Saral, K. J. (2013). Entrepreneurship and team participation: An experimental study. European Economic Review, Vol. 59 (No. 3), p. 126-140.
Parker, S.C. (2009). The Economics of Entrepreneurship. Cambridge: Cambridge University Press. ?
Partnership. (2015). Oxford Dictionary Online. Retrieved 2015-02-26 from: http://www.oxforddictionaries.com/definition/english/partnership
Ruef, M., Aldrich, H. E., & Carter, N. M. (2003). The Structure of Founding Teams: Homophily, Strong Ties, and Isolation among U.S. Entrepreneurs. American Sociological Review, Vol. 68 (No. 2), p. 195-222. ?
Åstebro, T., & Bernhardt, I. (2003). Start-up financing, owner characteristics, and survival. Journal of Economics and Business, Vol. 55 (No. 2), p. 303-319. ?