%0 Journal Article %1 Gorman2005/11 %A Gorman, Gary G. %A Rosa, Peter J. %A Faseruk, Alex %D 2005/11 %J Journal of Business Venturing %K Bank Consensus Government Knowledge-based Risk analysis assessment; businesses; funding; lending; %N 6 %P 793-819 %T Institutional lending to knowledge-based businesses %V 20 %X Knowledge-based businesses (KBBs) are vital to economic development and revitalization in many regions, especially in areas that have experienced a decline in traditional industries. While much attention has been devoted to various aspects of traditional small firm financing, there is a paucity of empirical research to explain how new knowledge-based firms are externally financed. The current study researches institutional strategies, structures and risk assessment practices of chartered banks and government agencies in a peripheral region of Canada. It examines the extent to which these institutions have modified traditional lending approaches and practices to meet the needs of knowledge-based firms. The study explores the existence of institutional lending cultures through an empirical investigation of risk assessment practices employed by account managers. Two business proposals, one for a knowledge-based firm and one for a more traditional firm, were presented to account managers in chartered banks and government agencies for initial review and subsequent due diligence and risk assessment. Verbal protocols and interview data obtained at three stages of the due diligence process were analyzed using standard multivariate techniques and consensus analysis (CA). CA, a tool developed to measure cultural agreement in cognitive anthropology, was employed to assess the level of agreement among lenders with respect to risk assessment. Overall, the study findings confirm that specialized strategies, structures and processes for lending to KBBs are only partially developed, are still evolving and are considerably diverse in both the banking and government sectors. Furthermore, the level of agreement among lenders develops during the course of the due diligence process. Results confirm consensus and the existence of a lending culture sensitive to the needs of KBBs among a select but important subgroup, knowledge-based lending specialists. The paper discusses the implications of these findings for researchers, entrepreneurs in search of capital and policy makers seeking to develop new business opportunities for regional economic development.

@article{Gorman2005/11, abstract = {Knowledge-based businesses (KBBs) are vital to economic development and revitalization in many regions, especially in areas that have experienced a decline in traditional industries. While much attention has been devoted to various aspects of traditional small firm financing, there is a paucity of empirical research to explain how new knowledge-based firms are externally financed. The current study researches institutional strategies, structures and risk assessment practices of chartered banks and government agencies in a peripheral region of Canada. It examines the extent to which these institutions have modified traditional lending approaches and practices to meet the needs of knowledge-based firms. The study explores the existence of institutional lending cultures through an empirical investigation of risk assessment practices employed by account managers. Two business proposals, one for a knowledge-based firm and one for a more traditional firm, were presented to account managers in chartered banks and government agencies for initial review and subsequent due diligence and risk assessment. Verbal protocols and interview data obtained at three stages of the due diligence process were analyzed using standard multivariate techniques and consensus analysis (CA). CA, a tool developed to measure cultural agreement in cognitive anthropology, was employed to assess the level of agreement among lenders with respect to risk assessment. Overall, the study findings confirm that specialized strategies, structures and processes for lending to KBBs are only partially developed, are still evolving and are considerably diverse in both the banking and government sectors. Furthermore, the level of agreement among lenders develops during the course of the due diligence process. Results confirm consensus and the existence of a lending culture sensitive to the needs of KBBs among a select but important subgroup, knowledge-based lending specialists. The paper discusses the implications of these findings for researchers, entrepreneurs in search of capital and policy makers seeking to develop new business opportunities for regional economic development.}, added-at = {2008-08-31T18:03:07.000+0200}, author = {Gorman, Gary G. and Rosa, Peter J. and Faseruk, Alex}, biburl = {https://www.bibsonomy.org/bibtex/28caece0ac6ba38adf80c6c97e3bd5501/jomiralb}, description = {Old biblio}, interhash = {1e2108b7bfe637d730ec83537c463869}, intrahash = {8caece0ac6ba38adf80c6c97e3bd5501}, journal = {Journal of Business Venturing}, keywords = {Bank Consensus Government Knowledge-based Risk analysis assessment; businesses; funding; lending;}, number = 6, owner = {oriol}, pages = {793-819}, timestamp = {2008-08-31T18:03:13.000+0200}, title = {Institutional lending to knowledge-based businesses}, volume = 20, year = {2005/11} }