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Cited by 64Entrepreneurship Studies and InfluencesPrivate Equity and Venture CapitalMigration, Ethnicity, and Economy

When capital does not matter: How entrepreneurship training buffers the negative effect of capital constraints on business creation

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Bischoff, Kim Marie, Gielnik, Michael M., Frese, Michael·2020·Strategic Entrepreneurship Journal
DOI 10.1002/sej.1364
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Abstract

Research summary: Entrepreneurship training is an effective means to promote business creation. We examine the effect of entrepreneurship training in conjunction with capital constraints, which entrepreneurs frequently experience in the context of developing countries and emerging economies. We develop a theoretical model that explains how entrepreneurship training attenuates the negative effect of capital constraints on business creation by developing financial mental models. To test our model, we conducted two longitudinal, randomized field experiments in developing countries. Our studies show a moderation effect of entrepreneurship training on the relationship between capital constraints and business creation. Results reveal that financial mental models mediated this moderation. The study demonstrates the role that entrepreneurship training plays in dealing with capital constraints in entrepreneurship in developing countries and emerging economies. Managerial summary: A major barrier for entrepreneurship is capital constraints. In the context of developing countries and emerging economies, where people experience severe capital constraints, the common thinking suggests improving access to capital as the major solution for overcoming capital constraints in business creation. Our study provides empirical evidence for a different point of view: It emphasizes the importance of entrepreneurship training as an effective means to cope with capital constraints when starting businesses. Our findings show that entrepreneurship training reduces the negative effect of capital constraints on business creation through financial mental models. This implies that entrepreneurship training improves participants' financial mental models and hence supports them in starting businesses despite capital constraints. Consequently, we recommend promoting entrepreneurship training to overcome capital constraints in business creation.

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  • Action regulation theory suggests that performing real actions during a training and receiving feedback allows necessity entrepreneurs to be more efficient in applying what they have learned in the training.

    “Actionregulation theory suggests that performing real actions during a training and receiving feedback allows necessity entrepreneurs to be more efficient in applying what they have learned in the training (Bischoff et al., 2020;Frese, 2009;Zacher & Frese, 2018).”

    From The impact of growth mindset training on entrepreneurial action among necessity entrepreneurs: Evidence from a randomized control trial (2023) · cites this paper as Bischoff et al., 2020

    Section 2.1 says that performing real-life actions and receiving feedback helps entrepreneurs interpret information and take efficient action, and describes both as parts of action-oriented training. The paper applies this account to entrepreneurs facing capital constraints, but the cited passages do not establish it specifically for necessity entrepreneurs. (LLM, conf=0.85)

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  • Training individuals about financial mental models helped overcome the capital constraints faced by entrepreneurs in Uganda.

    “For example, Bischoff et al. (2020) found that training individuals about financial mental models helped overcome the capital constraints faced by entrepreneurs in Uganda.”

    From The impact of growth mindset training on entrepreneurial action among necessity entrepreneurs: Evidence from a randomized control trial (2023) · cites this paper as Bischoff et al., 2020

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Research works printed but not linked: 4

  1. Cook, T. D., Campbell, D. T., & Peracchio, L. (1990). Quasi experimentation. In M. D. Dunnette & L. M. Hough (Eds.), Handbook of industrial and organizational psychology (Vol. 1, 2nd ed., pp. 491-576). Palo Alto, CA: Consulting Psy- chologists Press.
  2. Gielnik, M. M., & Frese, M. (2013). Entrepreneurship and poverty reduction: Applying I-O psychology to microbusiness and entrepreneurship in developing countries. In J. B. Olson-Buchanan, L. L. Koppes Bryan, & L. Foster Thompson (Eds.), Using industrial-organizational psychology for the greater good: Helping those who help others (pp. 394-438). New York, NY: Routledge. https://doi.org/10.4324/9780203069264 · DOI
  3. Glass, H. L., & Holyoak, K. J. (1986). Cognition. New York, NY: Random House. https://doi.org/10.2307/1422126 · DOI
  4. van Auken, H. E. (1999). Obstacles to business launch. Journal of Development Entrepreneurship, 4, 175-187.

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Authors
Bischoff, K. M., Gielnik, M. M., & Frese, M.
Affiliations
  • Hochschule Fresenius (DE)
  • Leuphana University of Lüneburg (DE)
  • Institute of Management and Organization Leuphana University of Lüneburg Lüneburg Germany
Corresponding author
Bischoff, Kim Marie
ORCID
Venue
Strategic Entrepreneurship Journal
Publisher
Wiley
Published
2020-09
Volume
14
Issue
3
Pages
369-395
ISSN
  • 1932-4391 (ISSN-L)
  • 1932-443X
DOI
10.1002/sej.1364
OpenAlex
W3048157930
Cited by
64
References
108
Citations by year
2026: 9 · 2025: 8 · 2024: 11 · 2023: 11 · 2022: 16 · 2021: 9
FWCI
8.23
Type
journal article
Language
en
Open access
Licence
Locations
  • Strategic Entrepreneurship Journal (publishedVersion, cc-by)
  • Multilingual Matters (Channel View Publications) (publishedVersion, cc-by)
Funders
  • National University of Singapore (R‐317‐000‐084‐133, R‐317‐000‐095‐112)
  • Deutscher Akademischer Austauschdienst (ID 50020279, ID 54391079)
Topics
  • Social Sciences › Business, Management and Accounting › Management of Technology and Innovation › Entrepreneurship Studies and Influences
  • Social Sciences › Business, Management and Accounting › Accounting › Private Equity and Venture Capital
  • Social Sciences › Sociology and Political Science › Migration, Ethnicity, and Economy
Keywords
entrepreneurship education, capital constraints, startups, access to capital, developing countries, emerging markets, moderating effect

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