The Paradox of Investment Timing in Small Business: Why Do Firms Invest When It Is Too Late?

Bach Nguyen, Chau Le*, Vinh Vo

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

Abstract

This article aims to tell the “gamble of resurrection” story for small owner-managed firms. Analyzing a set of private firms in Vietnam, we find that for firms that are less financially constrained, an increase in the degree of financing constraints leads to a decrease in the use of entrepreneurs’ personal capital. However, once critical value of constraints is reached, this relationship reverses. Specifically, deferring investments that would otherwise be in time may result in firms’ experiencing such serious financial distress that the entrepreneurs will invest their personal capital to try and maintain their firms’ survival even though it may be too late.
Original languageEnglish
JournalJournal of Small Business Management
Early online date14 Oct 2020
DOIs
Publication statusE-pub ahead of print - 14 Oct 2020

Bibliographical note

This is an Accepted Manuscript of an article published by Taylor & Francis Group in Journal of Small Business Management on 14 Oct 2020, available online at: http://www.tandfonline.com/10.1080/00472778.2020.1816436

Keywords

  • Cash flow
  • financial constraints
  • investment behavior
  • personal capital
  • small business

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