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

  • 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
How to Cite
FIORE, Robert A.; LUSSIER, Robert N.. Measuring Wealth Generation in Early-Stage Entrepreneurial Organizations: An Alternative to the Capital Asset Pricing Model. Journal of Small Business Strategy, [S.l.], v. 19, n. 2, p. 69-88, may 2008. ISSN 2380-1751. Available at: <https://libjournals.mtsu.edu/index.php/jsbs/article/view/111>. Date accessed: 22 apr. 2019.
Section
Articles

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