Importance of social networking in the process of bootstrapping

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Empirical findings

The aim of the master thesis is to offer a clear understanding on the bootstrapping meth-ods that are used in a specific sector, more specifically in the tourism sector, and to clarify the motives that lay behind the bootstrapping choices made by entrepreneurs from a cross-national point of view. In order to achieve this goal a study was conducted among travel agencies and tour operators from Sweden, Latvia and Romania. As it was already described in the chapter of method there have been 11 interviews conducted – 3 in Sweden, 3 in Lat-via and 5 in Romania, as well as a questionnaire was completed by 50 travel agencies/tour operators – 9 from Sweden, 23 from Latvia and 18 from Romania. The descriptive infor-mation of these travel agencies and tour operators can be seen in Appendixes 4, 5 and 6. However, more detailed information of the case companies is provided in Charts 4-1, 4-2, 4-3 which will follow below. For the sake of respecting the confidentiality agreement signed with all the entrepreneurs interviewed, code names are given to each of the companies represented by the interview-ees. Every code name is made by using the following formula: country code (SWE, LV, RO) + assigning letter (A-E) + principal activity of the company (agency or operator). The empirical findings related to the usage of bootstrapping methods and the motives that lay behind the choice of bootstrapping comprise two parts. The first one represents the pure results of the research based on the 4-category Model presented in the sub-chapter 2.6. The second one is based on the analysis and interpretation (chapter 5) of the conduct-ed interviews by describing the 4-category Model implemented in the tourism sector.

General trend and patterns in the usage of bootstrapping methods

The results obtained from the interviews and questionnaires revealed that all the entrepre-neurs from the tourism sector who were involved in the research have used various boot-strapping methods; there was no company that has not recognized using at some extent at least 3 bootstrapping methods (lowest number of methods, used by a company in Sweden). The results agree with the findings of Harrison et al. (2004) which showed that all but 5% of the companies on which they based their research on, all from the software sector, have used “at least some bootstrapping methods” (Harrison et al., 2004, p. 318). Winborg (2009), who conducted a research on new businesses established in business incubators, has found that 88% of the businesses have used bootstrapping methods at some extent. The general trend in the usage of bootstrapping methods among the travel agencies and tour operators can be seen in Appendix 7 that shows the results derived from the multiple-case study, and in Appendix 8 the results from the survey are shown. When discussing about the general trend, it is interesting to look at the most and the least used bootstrapping methods among travel agencies and tour operators. The following two charts show the 5 most used bootstrapping techniques, Chart 4-4 reflecting the results from the multiple-case study and Chart 4-5 mirroring the results of the survey. As it is obvious from the two tables shown previously, the most important methods for the travel agencies and tour operators within the tourism sector were found to be seeking out best conditions possible with supplier/s and obtaining payment in advance from customers. These patterns were revealed by the multiple-case study and supported also by the survey conducted in the three countries. This shows that entrepreneurs from various countries that run their travel agencies/tour operators in the tourism sector choose to use the two particular methods and find them the most important for their businesses. In comparison to the findings of Winborg and Landström (2001) which showed the two main bootstrapping methods as being: the first one buy used equipment instead of new and on the second place seek out the best conditions possible with suppliers, the research con-ducted for this master thesis revealed that the travel agencies and tour operators within the tourism sector present some similarities with the SMEs in Sweden as it seems that seeking out the best conditions possible with suppliers is one of the most commonly used boot-strapping methods, for the tourism sector being seen as the most important one. What dif-ferentiates the tourism sector from other SMEs is the fact that the entrepreneurs seek to obtain payment in advance from customers, this being the way they work. When it comes to the least used bootstrapping methods, the multiple-case study and the survey showed at some extent different results (see Chart 4-6 and 4-7). Although the results derived from the semi-structured interviews and the internet-mediated questionnaires differ, it is obvious that the travel agencies and tour operators do not raise capital from factoring companies. By executing a comparison with the least commonly used bootstrapping methods under-lined by Winborg and Landström (2001), who found as least used methods obtaining vari-ous subsidies and raising capital from a factoring company and also share employees or equipment with other businesses, the conclusion is that there is no obvious difference from this perspective that might distinguish the SMEs in the tourism sector by other SMEs. To sum up, previously mentioned results showed only the general trend and patterns in the usage of bootstrapping methods among the travel agencies and tour operators from the tourism sector without considering the four categories of bootstrapping methods defined in the 4-category Model.

Implementation of the 4-category Model

Taking into account that the results of the survey have supported and shown the same re-sults in the use of bootstrapping as the results of the interviews did, in this sub-chapter on-ly the results obtained from the semi-structured interviews are described. In order to get a more comprehensive insight into the usage of bootstrapping methods used by the travel agencies and tour operators, the 4-category Model was adapted to the empirical findings obtained from the semi-structured interviews and a new version was generated, which will be called Implementation of the 4-category Model in the tourism sec-tor (see Figure 4-1) showing the specificity of the tourism sector (travel agencies and tour-operators). The categories separation shows clearly which of the bootstrapping methods from each of them are mostly used by the interviewed entrepreneurs, the methods used by more than 50% of the interviewees being bolded in the following figure. The methods are listed based on their usage as found from the interviews, expressed in percentages. It can be seen in Implementation of 4-category Model that all four categories of bootstrapping methods pre-sent the great interest of the travel agencies and tour operators.

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Usage of each category from a cross-national perspective

Interesting facts reveal when taking a look at the usage of the four categories of bootstrap-ping methods from a cross-national point of view (see Figure 4-2). Firstly, the results show that each category of bootstrapping methods is almost equally used among the travel agencies and tour operators from Sweden, Latvia and Romania, only small variations can be observed. It means that the trend in the use of bootstrapping meth-ods is not affected by the country in which the enterprise is located. Secondly, Figure 4-2 shows the proportion of used categories of bootstrapping methods and it reveals that the categories of external cash-increasing, internal cost-decreasing and external cost-decreasing bootstrapping methods (each presenting approximately one third of total usage of the categories) are used with very small variations among the travel agen-cies and tour operators. Thereby it is not possible to say that one of these three categories presents a greater interest for the travel agencies and tour operators; they are all important for these companies. Nevertheless, it can be seen that the internal cash-increasing methods are not used among the case companies so frequently.

Usage of each category in the interviewed companies

In order to get more detailed results of the usage of the categories identified in the 4-category Model among the travel agencies and tour operators within the tourism sector, it is necessary to look at each case company individually (see Figure 4-3). In average every case company has used 11-12 bootstrapping methods and this trend can be seen also in the Figure 4-3. Interestingly, in each country there has been one company that has used remarkably more bootstrapping methods (SWE-C-agency – 18 techniques, LV-B-operator – 17 techniques and RO -D-agency – 14 techniques), but there were no sim-ilarities found among these companies that could lead them to use more bootstrapping methods than in average. Figure 4-3 also shows that all four categories of the bootstrapping methods are used among the most travel agencies and tour operators; there were only three companies (SWE-A-operator, SWE-B-operator and RO-B-operator) that had not used all categories of the bootstrapping techniques.

The motivation for bootstrapping

The research related to motives that lay behind the choice of bootstrapping is based on the list of motives defined by Winborg (2009). An important thing that needs to be mentioned here is that the list of motives was not shown to the interviewees. The entrepreneurs were questioned about each bootstrapping method individually along with being asked to reflect on the motives for choosing to use that method and define them. For reasons of accurate-ness of the explanations and for offering a better and clearer understanding to the reader the decision of analyzing the information in this manner was taken. The supportive survey conducted had also a question related to the motives for choosing to use bootstrapping methods and were given the list defined by Winborg (2009) as options for motivation as it was the most complete list of motivations for bootstrapping defined in the literature.

The main motives identified by following the list of Winborg (2009)

By following the list of motives defined by Winborg (2009), the empirical findings showed that the most common motive identified by entrepreneurs in both multiple-case study and survey is cost reduction as it is shown in the Figure 4-4 (also see Appendix 9) and Figure 4-5 (see also Appendix 10). The multiple-case study (Figure 4-4 and Appendix 9) supports the findings of Winborg (2005) as stated by Winborg (2009) which show that the 3 most frequently mentioned mo-tives by entrepreneurs are cost-reduction (as many as 91% of entrepreneurs recognizing it as a motive for bootstrapping), lack of capital (45%) and risk-reduction (45%). The study also supports partially the subsequent findings of Winborg (2009) which showed that the most important three motives are lower costs, lack of capital and fun helping and getting help from others. As it can be observed from the Figure 4-4, saving time and enjoyment of helping others and getting help from others are only seen as motives by entrepreneurs from Sweden. Managing without long-term external finance and risk reduction are not consid-ered motives for bootstrapping according to the 3 Swedish interviewees. Moreover, Latvian entrepreneurs were the only ones who found managing without long-term external finance as a motive for bootstrapping, but they do not recognize the lack of capital and gaining freedom of action as motives for bootstrapping. In Romania, the motives for bootstrap-ping were found to be cost-reduction, lack of capital, risk reduction and gaining freedom of action.

1 Introduction
1.1 Problem
1.2 Purpose
1.3 Research questions
2 Frame of reference
2.1 Defining “bootstrapping”
2.2 Bootstrapping methods
2.3 Usage of bootstrapping methods
2.4 Importance of social networking in the process of bootstrapping
2.5 Motives for bootstrapping
2.6 Defining the model for the research
3 Method
3.1 Research strategy
3.2 Selecting samples
3.3 Data collection
3.4 Data analysis
3.5 Nature of research
3.6 Credibility of research
4 Empirical findings
4.1 General trend and patterns in the usage of bootstrapping methods
4.2 Implementation of the 4-category Mode
4.3 The motivation for bootstrapping
5 Analysis and interpretation
5.1 The context in which each category is used
5.2 Other stakeholders’ influence on bootstrapping
5.3 Entrepreneurs’ direct influence on bootstrapping
5.4 Motives resulted after the analysis and interpretation of the empirical findings
5.5 Cross-national differences that influence the tourism sector
6 Conclusions
7 Discussion and implications