Séminaire FRGSalle du conseil ; Faculté de DEG ; 14h00

Le 24 mai 2019

Chercheur invité : Peter G. Klein, Department of Entrepreneurship and Corporte Innovation, Baylor University, USA

Titre : Entrepreneurial Finance under Knightian Uncertainty

Résumé : Under Knightian uncertainty entrepreneurs cannot fully articulate and communicate their beliefs about the future. And yet, many entrepreneurial ventures are externally funded. We develop a framework linking characteristics of entrepreneurial projects such as novelty, complexity, specificity, and tacitness to financing arrangements. Thus, there is more to financing entrepreneurial projects that the moral hazard problems emphasized by the financial contracting literature. We argue that projects with high potential for value creation are particularly difficult to fund externally because of frictions caused by novelty and ambiguity aversion, tacit knowledge, and moral hazard. However, entrepreneurs and financiers can adopt signaling and contracting strategies to overcome such challenges. For example, entrepreneurs may choose a less specialized resource structure, misrepresent their value to the project, offer ownership and control rights to financiers, or pursue other strategies to convince financiers to invest. We describe these strategies and explain the circumstances under which each strategy is likely to be chosen. In sum, uncertainty does not cause markets for financing entrepreneurial projects to fail, but does call for behaviors on the part of entrepreneurs and financiers that go beyond those dealt with in the entrepreneurial finance literature.

Discutant: Catherine Deffains-Crapsky