Bootstrapping motives in nonfinancially constrained firms: A case study

The purpose of this paper is to examine the reasons or motives for firms with enough capital investment, thus not financially incapacitated, but still utilizing some form of financial bootstrapping in their daily operations. This paper uses the empirical findings on techniques and motives for bootstrapping according to Winborg and Landström (2001) and Winborg (2009) as a basis for analysis to evaluate the various bootstrapping methods and motives. Two case studies in southern Sweden were carefully selected, a manufacturing company in operation for four years and an IT company with three years in operation. Each company has adequate financial support internally and externally, but still bootstrapping in various ways. The results indicate that bootstrapping in not a form of cheap finance for firms lacking financial capital since even financially fit companies bootstrap to lower their day to day operating costs. Results also show that companies will not use customer-oriented bootstrapping techniques for fear of being too strict to make customers pay on time while risking losing them to their competitors. Joint utilization bootstrapping techniques are widely used and save a lot of time and money in the long run. The findings do not support the use of customer-oriented bootstrapping techniques as observed in previous research as the customer is the means for the firm’s survival, if threatened can move to obtain an alternative product or service from competitors. As far as bootstrapping is said to save money, this study’s findings show that it wastes time in return especially in projects that are short-lived or need to be launched within a limited period. Meaning that bootstrapping will take a lot of time to develop a product or service although may lower the overall cost. Practical implications for this study could assist business owners to understand why they bootstrap, and to carefully evaluate a project before bootstrapping since it is important to decide whether it is worth it to save time or save money. This study is among the few studies which have gone further to explore the empirical findings of bootstrapping in a case study approach, hence obtaining in-depth information of bootstrapping in specific companies operating in capital-intensive industries