1 Masters Programmes Dissertation Cover Sheet Submitted by: Date Sent: 06/03/2022 Module Code: IB9ZBN Date/Year of Module: Sept 2019 – March 2022 Submission Deadline: 07/03/2022 Word Count: 14997 Number of Pages: 62 Question: What are the key success factors for a growth strategy for Stable & Barn? “I declare that this work is entirely my own in accordance with the University’s Regulation 11 and the WBS guidelines on plagiarism and collusion. All external references and sources are clearly acknowledged and identified within the contents. No substantial part(s) of the work submitted here has also been submitted by me in other assessments for accredited courses of study, and I acknowledge that if this has been done it may result in me being reported for self-plagiarism and an appropriate reduction in marks may be made when marking this piece of work.” 2 Dedication For my hero, my dad, without whom I would not see the world with the endless possibilities it holds, and for your patience to discuss them all with me. For John, and his four-legged boys, thank you for your guiding hand, and relentless enthusiasm for the entrepreneur inside us. And, of course, Dot, who snores faithfully by my side through everything! 3 Executive Summary This dissertation focuses on small to medium sized enterprises (SME), because they are the steam-engine for employment and gross domestic product (GDP), provide extensive innovation and account for 99% of the businesses in the EU (EC, 2021, Dobbs & Hamilton, 2007). SMEs generate a total of 55% of innovation, and 95% of radical innovation (Robbins et al., 2000). However, SMEs are plagued by high failure rates and poor performance, which the literature is unable to explain (Jocumsen, 2004, Dobbs & Hamilton, 2007). Post-pandemic, many more SMEs have struggled and failed. Firms now enter a period with a new outlook on growth and values for SMEs, armed with the tools of digitalisation and entrepreneurship. This dissertation aims to explore, and make recommendations for key success factors (KSF) for growth in resource constrained SMEs with the influence of digitalisation utilising both strategic management and entrepreneurship literature. By conducting exploratory, inductive research based on an SME in the UK, Stable & Barn (S&B), this dissertation analyses data to make recommendations for growth in S&B, and to be a foundation for future research in SME venture growth. This dissertation’s contribution to practice is organised within 4 KSF, drawn from aggregate dimensions compiled from thematic analyses of semi-structured interview questions: 1. Know your customer. 2. Leverage the founder/founding story. 3. Have a simple and consistent brand identity. 4. Cultivate an entrepreneurial-mindset. Recommendations for S&B were: 1. Leverage the founder/founding story to cultivate a compelling narrative. 2. Explore market diversification through internationalisation via S&Bs replicable brand and processes. 3. Lead with customer intimacy and validated learning techniques to diversify the product range and recognise opportunities. As the “resource-practice gap” is widening this dissertation contributes to academia by providing data which explores the influence of digitalisation in SMEs in small marketplaces (Shepherd & Gruber, 2020). This dissertation concludes with a novel discovery of inter- personal dependence found within SMEs: 1. customer – founder, 2. founder – firm, 3. firm – customer. Future research can build upon new measurements of growth and integration of practitioners in this rapidly evolving business environment. 4 Table of contents 1.0 Introduction ....................................................................................................7 1.1 Research Background.............................................................................8 1.2 Research Question..................................................................................9 1.3 Research Aim.........................................................................................9 1.4 Key Literature Definitions........................................................................11 1.4.1 Growth.................................................................................11 1.4.2 SMEs...................................................................................11 1.4.3 Entrepreneurs.......................................................................12 1.4.4 Entrepreneurial Mindset...........................................................14 1.4.5 Effectuation...........................................................................14 1.4.6 Niche Markets .......................................................................15 1.4.7 Niche Players ...........................................................................16 1.4.8 Roadmap.............................................................................16 2.0 Literature Review... ........................................................................................17 2.1 Entrepreneurship “Opportunity Seeking” ...................................................19 2.1.1 Financial Capital....................................................................20 2.1.2 Social Capital (Founder Influence) .............................................20 2.1.3 Human Capital ......................................................................22 2.1.4 Conclusion...........................................................................22 2.2 Strategy “Advantage Seeking” ................................................................23 2.2.1 Organizational Culture.............................................................24 2.2.2 Strategy Formation.................................................................24 2.2.3 Conclusion......................,.....................................................26 2.3 Growth...............................................................................................26 2.3.1 Decision-Making....................................................................27 2.3.2 Business Models....................................................................28 2.3.3 Internationalisation.................................................................29 2.3.4 Marketing Strategy.................................................................30 2.3.5 Conclusion...........................................................................31 3.0 Methodology..................................................................................................32 3.1 Research Setting: The Equestrian Industry.................................................33 3.1.1 Research Setting: Entrepreneurship in Niche Markets.........................33 3.2 Research Context..................................................................................33 3.3 Method................................................................................................34 3.4 Data Sources .......................................................................................35 5 3.5 Data Collection .....................................................................................36 3.5.1 Semi Structured Interviews...........................................................36 3.5.2 Observations .............................................................................37 3.5.3 Documentation...........................................................................37 4.0 Results & Analysis..........................................................................................38 4.1 Industry Environment.............................................................................40 4.2 Market Positioning ...................................................................... .........41 4.3 Competition .........................................................................................42 4.4 Customer Insight...................................................................................43 4.5 Product Positioning...............................................................................44 4.6 Aggregate Theoretical Dimensions...........................................................45 4.7 Secondary Data ...................................................................................46 5.0 Discussion....................................................................................................47 6.0 Conclusion ...................................................................................................50 6.1 Relevance to Scholars............................................................................50 6.2 Relevance to Practitioners......................................................................50 6.3 Strengths and Weaknesses.....................................................................51 6.4 S&B Recommendations....................................................... .................52 6.5 Policy Implications ................................................................................53 6.6 Future Research...................................................................................53 6.7 Conclusion..........................................................................................54 6 Abbreviations BETA British Equestrian Trade Association BOD Board of Directors EC European Commission EU European Union GDP Gross Domestic Product KSF Key Success Factors OC Organizational culture OECD Organisation for Economic Co-operation and Development S&B Stable & Barn SME Small and Medium sized Enterprises SSI Semi-Structure Interviews TMT Top Management Team VC Venture Capital 7 1.0 Introduction 1.1 Research Background The conception of S&B was built - upon e ffectual design and logic , by b ringing together manufacturing contacts, specialist industry knowledge, and experience of marketing in the equestrian industry The S&B brand offer s novel, innovative equipment specifically designed to be functional for equestrians (Fig.1) S&B products are modul ar equipment for carrying and storing heavy equestrian accessories. In 2017 S&B was awarded the BETA Innovation award Fig.1 S&B Tradeshow S&B s vision supersedes that of its product range. S&B aims to make the lives of its customers easier by providing easy - to - use equipment to facilitate horse - owners S&B has a reputation for life - long quality. The S&B brand aims to be the ultimate in equestrian utility equipment , thus saving time on the laborious tasks involved in the pursuit of equestrianism, allowing the rider to focus on their passion t o horse - ride. The firm continues to grow year - on - year within the equestrian marketplace, and much like many small and medium sized enterprise s (SME) S&B asks the question – how could we grow faster than the industry average? What key success factors (KSF) do we need to capture market share and increase revenue? 8 The motivation for this dissertation is to establish a growth strategy for S&B as a young SME in the niche equestrian market. Research is carried out within entrepreneurship and strategy. This dissertation aims to explore the under-researched field of entrepreneurship in niche market SMEs. This curiosity is not focused on S&B alone. There is, of course, a drive to grow S&B, however SME growth is a fascination of the author. SME success stories have heterogenous growth paths, with no repeatable formula for growth (Barbero et al., 2011). Therefore, on a high-level the KSFs discovered throughout this dissertation could help illuminate the path for ambitious SMEs, like S&B. This dissertation aims to be a start-point for future research in the application of effectual thinking, and entrepreneurship with resource constraints. 1.2 Research Question: What are the KSFs for a growth strategy for Stable & Barn? The “research-practice gap” is growing (Shepherd & Gruber, 2020). There is a paucity of research in the application, and consequences of entrepreneurship and strategy in SME growth, with particular regard to the effects of resource-constraints and digitalisation. Due to this observation, the current dissertation is likely to be more relevant to practitioners, given that there is not a large body of literature that addresses the specific research questions. In the case of S&B, effectuation was crucial in the firm’s conception, and strategic entrepreneurship continues to drive S&Bs growth. Entrepreneurial growth is essential for S&B, given the external and internal influences S&B encounters: resource poverty, lack of human capital, and increasing influence of digitalisation. These constraints are commonplace for many SMEs today, and this dissertation aims to make recommendations for practitioners. 9 There are multiple theories, recommendations and models in the SME growth literature (Hamilton & Dobbs, 2007, Delmar & Wiklund, 2008). Therefore, the literature reviewed will extrapolate understandings on growth, strategy formation and entrepreneurship, in order to help explore the empirical themes from this dissertation’s qualitative data. This dissertation extrapolates from Porter’s (1985) five-forces framework to structure the exploration in to the forces at work on S&B. We use this structure to form the interview questions: 1. Environment : Within the bounds of a niche market, there is little chance of market expansion. Therefore, this dissertation explores the limitations, and influences of such an external environment to S&B. 2. Market Positioning : We gauge the perception of the S&B brand within the niche market. Identifying what partnerships/alliances customers would expect, and how these would align with their experience of the brand. Assisting in identifying product diversification and partnership avenues, depicted in the Ansoff matrix (Fig. 2). 3. Competition : We learn from customers perceptions how the competition has ensured, and maintained, thereby growing a successful business within the industry. 4. Customer Insight : What does the S&B customer value? We explore the values of the equestrian industry consumer and their willingness-to-pay. Critically, “know your customer” (Drucker, 1973). 5. Product Positioning : S&B products are analysed within the market-space. Defining the perceived brand and vision of S&B drives product development strategies from the Ansoff Matrix (Fig.2). Once the raw data has been analysed according to empirical themes, the aggregate theoretical dimensions will be related back to the literature, to build recommendations. 1.3 Research Aim This dissertation straddles the academic fields of both strategy and entrepreneurship in order to develop recommendations for growth for S&B. This dissertation conducts exploratory, inductive research in order to develop recommendations for venture growth. This dissertation will serve as a foundation for future research in SME growth with the influence of resource constraints and digitalisation. 10 Venture growth today has been explored through the lenses of both entrepreneurship and strategic management (Wiklund et al., 2009). Strategy and entrepreneurship are described as “mutually supportive, complementary fields”, “synergistic”, and “you cannot observe one field without simultaneously studying the other” (Ireland et al., 2003, p964, Ireland et al., 2001, p49). It is this effectual logic, combined with the increased digitalisation of the present-day which is the catalyst for huge numbers of start-ups across the globe, including S&B. As digital technology began to affect all areas of the business process, a firm’s competitive advantages became transient at best, and lost almost instantaneously (McGrath, 2007). Therefore, there is a huge reliance on a firm’s valuable capabilities and effective organizational frameworks for wealth creation, by exploiting internal sustainable competitive advantages, and skilfully seeking new competitive advantages when they are lost. These “sustainable competitive advantages is the holy grail of strategic-management”, whilst opportunities are discovered through entrepreneurship, there-by revealing how the influence of digitalisation further connects significant areas of strategy and entrepreneurship (Sarasvathy, 2000). Mintzberg’s (1994) emergent strategy concept echoes Sarasvathy’s (2008) theory of effectuation. Recognition and discovery of opportunities is entrepreneurial by its very nature, and emergent strategy literature is now being employed to exploit them. Thus, we will make strategic , growth suggestions for S&B through this entrepreneurial lens 1.4 Key Literature Definitions Before we explore the literature review it is prudent to define the boundaries of the research question. This dissertation aims to explore entrepreneurial growth, in SMEs which are operating in niche markets and each boundary of the research question is defined below. 1.4.1 Growth Growth has many definitions, using many different lenses. After careful review of the literature, two applicable definitions, for this dissertation, are: “Growth is the expansion of the firm’s resource base, and collateral change of its administrative structure” (Penrose, 1959 cited in Naldi & Davidsson, 2014, p689) 11 Applying the entrepreneurial lens, we expand: “Growth is the sequential process in which you combine exploitation of existing resources with the development of new resources” (Pettus, 2001) As mentioned, recent literature is enamoured with hyper-scaling. Therefore, is it prudent, from the outset, to make a clear distinction between growth and scaling: “ Scaling is adding revenue at a much greater rate than cost... Growth is adding revenue at the same pace you are adding resources” (Carucci, 2016) Presently, entrepreneurship literature is dominated by scaling, a term often used interchangeably with growth (Reuber et al., 2022). Scaling is defined as: a growth rate of over 20% over three-years, it is temporary, and unsustainable for a firm (Reuber et al., 2022). Most firms will scale once in their lifetime, if ever, and it can be at any stage of the firm-lifecycle (OECD, 2021). Growth, therefore, is more incremental and consistent, and, as such, venture scaling and growth literature have carved-out two separate terrains. Literature on firm growth has been “notably slow” to form, perhaps due to the vast discrepancy in measures of growth and context E.g., organic versus acquisition (Wiklund & McKelvie, 2010, p261, see section 6.6). We draw upon scaling literature, however focus this dissertations literature search on firm growth. 1.4.2 S mall or Medium - sized Enterprise (SME) “Evidence shows that most start-ups stay small, or exit the market in the first five-years” (Calvino, Criscuolo & Menan, 2018). There is no consensus for the definition of SMEs. After much consideration, we have decided to use the OECD definition (Table. 1). Much like the measurements of growth, the definition of SMEs is antiquated, and bounded by headcount, revenue, or assets. We suggest updates for these historical measures in the conclusion. 12 Definitions vary depending on the country, and its development. The EC define SMEs as the following: Table 1. European Commission definition of SMEs (EC, 2021) SMEs are “effective in identifying opportunities”, however struggle to “appropriate value from them” by establishing a sustainable competitive advantage (Ireland et al., 2003, p963). Economically, policymakers are acutely aware of their importance for GDP, yet struggle to ascertain how to support their growth. The growth of small firms has been analysed through multiple lenses over the last 50 years of literature, and none of which have ultimately identified a capability which repeatably contributes to growth (Hamilton & Dobbs, 2007). Leaving much literature to conclude by asking: “Is growth in SMEs ultimately idiosyncratic?” (Hamilton & Dobbs, 2007). Over the last six-years the literature focused on SMEs has increased, however this body of work is still unable to identify “repeatable models for performance achievement” (Kafetzopoulos, 2020, p305). SME growth is a complex, “fuzzy” task, with multiple interdependent motivations, and achieved in several different ways (Delmar & Wiklund, 2008, p439). As discussed earlier, resource management contributes to the majority of failures of SMEs (Simon & Hitt, 2003, Grichnik, 2014). Cash-flow problems are responsible for 82% of SME failures (Bonsu & Kuofie, 2019). Resource poverty drives much entrepreneurial behaviour highlighted by the “bird-in-hand principle” (Sarasvathy, 2008). This dissertation explores how SMEs are applying entrepreneurial principles, and what the KSFs are for growth. 1.4.3 Entrepreneurs An absolute definition of entrepreneurship is still debated, with no clear consensus about what qualities entrepreneurs possess, or the factors required for entrepreneurial success. 13 The OECD (2021, p165) defines entrepreneurship as: “A human action in pursuit of the generation of value by identifying and exploiting new products, processes or markets...The successful application of entrepreneurship comes from cumulative learning” Entrepreneurs/founders as individuals must motivate others to exploit the opportunities found in other markets, new innovations and changes in external forces (Green et al., 2007). Entrepreneurs “focus on what they can do” (Sarasvathy, 2008, p15). This motivation (culture) must permeate through both the firm, and their customers (Ford & Ungaro, 2020). Ultimately it is the founder/founders, whom are crucial in instilling the enduring culture of a firm, which will be discussed later (Schein, 1994, see section 2.2.1). There is not one, undisputed personality profile, or capability which defines a successful entrepreneur, however the “ process of new venture creation may be inseparable from their personality” (Sarasvathy, 2008, p6). Founders of fast-growing firms often had higher education, a compelling entrepreneurial story and prior industry experience (Barringer et al., 2005). It is accepted that entrepreneurs are unlikely to have specialist knowledge in multiple fields, such as in product innovation, process innovation, specialist research, therefore, firms must welcome external advice and services (OECD, 2010). This external knowledge can subsequently be integrated in to the firm via the recruitment process, education and the founder network (Kotter & Heskett, 1992). Liberman-Yaconi et al. (2010) suggest that building processes to augment internal knowledge capabilities ultimately is preferential to continually seeking external advice. The entrepreneur’s network, attracting new employees and instilling a growth culture are capabilities of the entrepreneurial-mindset. 14 1.4.4 Entrepreneurial Mindset An entrepreneur’s objective is growth, and wealth creation (Ireland et al., 2003). Multiple accounts in the literature define entrepreneurial activities as recognizing, seizing and creating opportunities (Ireland et al., 2003). Two entrepreneurship meta-analyses identified the founder’s drive for growth, and an entrepreneurial-mindset as crucial to firm growth (Hamilton & Dobbs, 2007, Delmar & Wiklund 2008). The “entrepreneurial-mindset” is composed of three elements (McGrath & Macmillan, 2000): 1. Action orientated work : to immediate effect 2. Simplicity : to avoid confusion and delay 3. Growth of capabilities over time These elements are reflected in this dissertation’s aggregate theoretical dimensions in the analysis (see section 5.0) and germinate actionable advice for practitioners. 1.4.5 Effectuation The theory of effectuation is the creation , rather than discovery, of these opportunities (Sarasvathy, 2008). Effectual logic builds upon entrepreneurship theory, and “rather than dealing with unpredictability via avoiding failure, they persistently pursue success” (Sarasvathy, 2008, p17). The marketplace where success is found may not exist yet, and the customer may not know they are your customers yet (“Blue-ocean strategy” Kim & Maugborgne, 2005). Effectuation in entrepreneurship is very applicable to the resource constrained firm such as S&B. Ultimately, sourcing new growth opportunities growth is the outcome of entrepreneurial efforts and the success is reflected in the effort (Delmar & Wiklund, 2008, p437). Many SMEs stay small, precisely because they wish to remain this way (Delmar et al., 2003). It is now widely acknowledged that it is the influence of the founder/top-management-team (TMT) that should be studied in future, not the individuals themselves (Shrader & Siegal, 2007). Therefore, the review of practice of entrepreneurship within the firm and the influence of the founder as an individual are separately explored the literature review. 15 1.4.6 Niche Markets With multiple, heterogenous, growth strategies identified in SMEs, Barbero et al. (2011) suggested that there is a need for an “industry perspective” which acknowledges that for success in different industries, different resources and capabilities are required. Porter (1985) states through his work on market positioning, “not all industries are created equal”. Therefore, we must identify the boundaries of S&B’s industry, in which this dissertation’s research question is founded, in order to decipher accurate recommendations. External factors which contribute to scaling and rapid growth are often synonymous with expanding marketplaces, or aggressive market penetration (Ansoff, 1965, See Fig. 2 depicted as X). Niche markets, are not clearly defined in the literature, however, consensus is attained that they are small market segments, with a unique customer base (Cambridge Dictionary, 2021). The size of a niche market is not clearly defined. For the purposes of this dissertation, we conclude that S&B’s niche market is small (<£2m). Growth in niche markets, is from internally derived drivers of “entrepreneurial growth” (2.3, Fig. 2 depicted as ü, Naldi & Davidsson 2014, p688). Fig. 2. Ansoff Matrix (Ansoff, 1965) X is unavailable due to small market size ü represent “entrepreneurial growth” strategies ? “moon-shot entrepreneurial growth” opportunities 16 1.4.7 Niche Players “Niche players” focus on a sub-segment of a marketplace. “Niche players” which operate on the outskirts of a business ecosystem alongside “keystone” players and “dominators” (Galateanu & Avasilcai, 2016, p344). These niche players can access information and be influenced by the keystone and dominant firms; however, it is their opportunity identification capability which is their key function (Inoue & Nagayama, 2011). Again, an internal capability, highlighting the importance of looking inwards for growth in niche market SMEs. 1.4.8 Roadmap The aim for this dissertation is to identify critical KSFs for growth in S&B, whilst simultaneously addressing the chasms in the literature surrounding KSF for successful SME growth, in the digital-age. This dissertation combines the literature from strategy and entrepreneurship throughout this dissertation’s exploratory, inductive research project. The findings have been analysed from both semi-structured-interviews (SSI) and secondary data, within a triangulated research design. Discussions will be mindful that any KSF for growth this dissertation uncovers could be applicable in practice to other SMEs, in similar niche markets. 17 2.0 Literature Review: Introduction Dobbs & Hamilton (2007, p316) describe the body of growth literature as “fragmented”, “lacking a unifying theory” and with a “wide-variety of measures”. In 2000, Venkataraman & Shane (2000) posited the then novel argument for entrepreneurship to be a d istinct field of research. Entrepreneurship literature is yet to be unified in the definition of entrepreneurship, on the qualifications of an effective entrepreneur/entrepreneurial venture, or the path to entrepreneurial success (see section 1.4.3). Gibrat’s (1931) “Law of Proportionate Effect” states that a firm’s future growth is independent of its size and structure at the time: “a firm’s past growth cannot determine its future” (Hamilton & Dobbs, 2007, p297). Gibrat’s Law acknowledges the fundamental influence of both internal and external factors within a firm’s lifetime, and the notion that “no one factor is a major influence over time” (Hamilton & Dobbs, 2007, p297). This heterogenicity is reflected in the subsequent literature review and we draw information that is relevant to the research question, spread throughout many disjointed academic fields (see Fig. 3). Research suggests that increasing size and age of firms are “negatively related to firm growth” (taking in to account survivor bias) (Becchetti & Trovato, 2002, p291). Which correlates with Christensen’s (2001) “disruptive innovations” upsetting the status-quo of mature markets. Most firms that scale are mature, contrary to the assumption that younger firms are more likely to experience high-growth rates (OECD, 2021, p19). Becchetti & Trovato (2002) state that small, surviving (mature) firms are more likely to experience high-growth rates. Therefore SMEs, like S&B, at any point in their life-cycle, are precisely where wealth creation is possible for both the firm and the economy. This dissertation focuses on how to instigate growth at any point in the firm life-cycle. Due to the lack of external funding options for SMEs in niche markets business models, narratives and profit margins have to be capable of wealth-creation from internal resources and capabilities (Magretta, 2002). Using Carlucci’s definition of growth (1.4.1), SMEs in small markets must develop an “engine of growth” which via successful wealth-creation, sustains their competitive advantage and market positioning, and so on (Monteiro, 2019, p102). 18 Introduction: Strategic Entrepreneurship This dissertation’s research aim sits within strategic entrepreneurship in SME growth, bringing together the “complementary” fields of strategy and entrepreneurship for wealth creation (Ireland et al., 2003). Both fields contribute to the research aim and are thus explored within this dissertation (Fig. 3). Fig. 3. Literature review Venn diagram Although the entrepreneur may seek opportunities, they may not be able to exploit them due to a lack of strategic knowledge, both capabilities are required for wealth creation (Ireland et al., 2003, p966). To explore strategic entrepreneurship in this dissertation we review the academic fields of entrepreneurship (opportunity-seeking), strategy (advantage-seeking) and growth (wealth-creation) in succession, following the below framework from Ireland et al. (2003, p967, Fig 4): Fig. 4. Adapted Strategic Entrepreneurship model (Ireland et al, 2003, p967) 19 2.1 Entrepreneurship “Opportunity-seeking behaviour” “Entrepreneurs are agents who seek to overcome the bounded capacities of their ventures and avoid resource dependencies” (Edelman and Yli-Renko, 2010 cited in Grichnik et al., 2014, p311). Initially in the literature the entrepreneur as an individual, and what they did, defined entrepreneurship (Venkataraman, 1997). One-hundred-years ago, Schumpter (1934) recognised that entrepreneurs value resources differently based on their “separate beliefs”, and “information asymmetries”. Therefore, the entrepreneur as an individual has a distinctive influence on the entrepreneurial activities of a firm and the culture of opportunity creation and recognition. All entrepreneurs are heterogenous in their “endowments”, which helps to explains the diversity of entrepreneurship literature (Grichnik et al., 2013). It is clear that the process by which opportunities are created (effectuation), explored, exploited and sustained by the firm are all components of entrepreneurship (Shane & Venkataraman, 2000). A distinction has also been made between entrepreneurial opportunity- recognition and creation, versus process optimization in firms (Shane & Venkataraman, 2000). “Entrepreneurial-alertness” and insights drives an individual, or firm, to search for opportunities within new markets, products or processes (Ireland et al., 2003, p968). The entrepreneurial-mindset exploits the uncertainty searching for opportunities (McGrath & Macmillan, 2000). However, a venture cannot rely on a single individual, therefore an entrepreneurial-mindset, must be instilled in to a firm and practiced by every agent. This dissertation explores the body of literature on entrepreneurship within three-categories: 2.1.1 Financial Capital 2.1.2 Social Capital (including Founder Influence) 2.1.3 Human Capital Firm capabilities are “higher-order” than the above categories depict, however, to cover them all individually would pass beyond the scope of this dissertation, so this dissertation draws on keystone papers within each theme which are relevant to our research question. 20 2.1.1 Financial Capital External investment in start-ups has become commonplace with the advent of crowd-funding and other platforms. However, just 0.31% of start-ups are funded by VCs, therefore most firms grow organically (OECD, 2021). External investors do not only bring capital, they are also a source of expertise, advice, and can tap in to extensive networks for firms. The availability of external funds, and their adjoining resources undoubtedly facilitates higher-growth, than in lower-leveraged firms (Becchetti & Trovato, 2002). Therefore, SMEs have to develop other growth mechanisms that do not rely on external investment. The bargaining power of a firm with reduced resources is limited, resulting in dependencies on external parties E.g., banks, angel-investors, networks etc (Grichnik et al., 2014, Ebben & Johnson, 2004). As SMEs lack potential for high return-on-investment, investors often require a firm’s assets as collateral, which may be limited (Almeida & Campello, 2007). Therefore, SMEs are more dependent on internal cash reserves (OECD, 2021). Bootstrapping activities are often employed in order to escape the trap of resource constraints (Grichnik et al., 2014). Digitalisation offers huge opportunities for SMEs, allowing a wide reach of the firm to customers, the ability to advertise, leverage networks and offer optimized customer service, without incurring huge costs (OECD, 2021). Bootstrapping decreases throughout a firm’s lifecycle and therefore, bootstrapping is assumed to be a necessity of environment and resources, rather than by entrepreneurial agency (Ebben & Johnson, 2006). Grichnik et al. (2014) found evidence to the contrary, observing bootstrapping techniques employed to varying degrees dependent on the individual entrepreneur, their education and social capital. Firms which do not raise external capital are often owned by an agent whom desires to sustain 100% control (Grichnik et al., 2014). The raising of capital often requires a degree of relinquished control from the founder/founders. It is unknown if SME decision-makers are ignorant of external funding options, or choose to be. This dissertation explores policy recommendations to enable SMEs later (see section 6.3). This dissertation explores the mechanisms for entrepreneurial growth with resource constraints. 2.1.2 Social Capital and Founder’s Influence It is widely accepted founder’s imprint upon their venture and contribute to the lasting legacy of the firm (Grilli et al., 2020, Snihur & Zott, 2021). This legacy, helps to instil the “values and assumptions”, and even generates “artefacts” for the organisational culture (Schein, 1990). The founder instils a business model at the conception of the firm and this decision-making