Bootstrapping as a Resource Dependence Management Strategy and its Association with Startup Growth

This paper studies the association between bootstrapping and startup growth. Bootstrapping reduces a startup’s dependence on financial investors, but may create new dependencies. Drawing upon resource dependence theory, we hypothesize that when bootstrapping does not create new strong dependencies it will benefit startup growth, especially when dependence from financial investors is high. However, when bootstrapping creates new strong dependencies it will constrain growth, especially when dependence from financial investors is low. We use a longitudinal database of 205 Belgian startups comprising data from both questionnaires and yearly financial accounts. Findings broadly confirm our hypotheses. Theoretical and managerial implications are discussed.