Measuring Wealth Generation in Early-Stage Entrepreneurial Organizations: An Alternative to the Capital Asset Pricing Model

Authors

  • Robert A. Fiore Springfield College
  • Robert N. Lussier Springfield College

Abstract

There is no generally accepted measure of wealth created by new ventures, as most early-stage firms do not have positive cash flows, and early-stage discount rates cannot be estimated with sufficient accuracy as required by the Capital Asset Pricing Model (CAPM). Through regression analysis of organizational economic value, as assessed by a sample of 145 CPAs, this research supports using a new economic evaluation methodology involving the use of early-stage organizational structure itself as a construct and predictor of economic value. The current research employs a Validated Nascent Organizational Structure Sequence (VNOSS) model as an alternative to CAP-M in establishing the perceived economic value of early-stage entrepreneurial firms. The small business owner that utilizes the strategy of taking the firm through the VNOSS stages will create greater economic wealth. There is a substantial discussion of the implications of the applied research results.

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Published

2008-05-21

Issue

Vol. 19 No. 2 (2008)

Section

Articles

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How to Cite

Measuring Wealth Generation in Early-Stage Entrepreneurial Organizations: An Alternative to the Capital Asset Pricing Model. (2008). Journal of Small Business Strategy (archive Only), 19(2), 69-88. https://libjournals.mtsu.edu/index.php/jsbs/article/view/111

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