Pub Date : 2024-08-29DOI: 10.1177/10422587241270571
Bin Hao, Yanan Feng, Hongbin Tan, Mingzhu Ye
This study investigates how venture capitalists (VCs) balance upside potential and downside risk across investment stages. Drawing on the attention-based view, we propose a situated attention mechanism—that is, the investment stage represents a situational consideration affecting VC’s attention allocation to different risk dimensions. We argue that varying staging situations drive VCs to prioritize upside potential in the initial stage yet downside risk in the subsequent stage. As such, VCs may initially favor a risky project, but subsequently devalue it. We further propose that these effects are contingent on number of VCs on market, start-up maturity, and VC attention constraints. Our empirical results support our predictions.
{"title":"Taking a Second Look at the Bait: Attention to Upside Potential Versus Downside Risk in Venture Capitalists’ Staged Investment","authors":"Bin Hao, Yanan Feng, Hongbin Tan, Mingzhu Ye","doi":"10.1177/10422587241270571","DOIUrl":"https://doi.org/10.1177/10422587241270571","url":null,"abstract":"This study investigates how venture capitalists (VCs) balance upside potential and downside risk across investment stages. Drawing on the attention-based view, we propose a situated attention mechanism—that is, the investment stage represents a situational consideration affecting VC’s attention allocation to different risk dimensions. We argue that varying staging situations drive VCs to prioritize upside potential in the initial stage yet downside risk in the subsequent stage. As such, VCs may initially favor a risky project, but subsequently devalue it. We further propose that these effects are contingent on number of VCs on market, start-up maturity, and VC attention constraints. Our empirical results support our predictions.","PeriodicalId":48443,"journal":{"name":"Entrepreneurship Theory and Practice","volume":"30 1","pages":""},"PeriodicalIF":10.5,"publicationDate":"2024-08-29","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142100873","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2024-08-29DOI: 10.1177/10422587241268311
Simon Kleinert, Marie Hildebrand
This study examines the influence of market conditions—hot versus cold—on the decision-making processes of venture capitalists (VCs). Prior research suggests that VCs prefer costly signals over cheap talk when assessing new ventures under static conditions. However, based on a cognitive perspective, we argue that the dynamic nature of market conditions alters VCs’ information processing. In cold markets, VCs prioritize signals, whereas, in hot markets, they emphasize less costly cues that resonate with prevailing optimism, often at the expense of signals. Supported by a conjoint experiment with 76 VCs, our results clarify the pivotal role of market conditions on the effectiveness of entrepreneurs’ signaling strategies.
{"title":"Venture Capitalists’ Decision-Making in Hot and Cold Markets: The Effect of Signals and Cheap Talk","authors":"Simon Kleinert, Marie Hildebrand","doi":"10.1177/10422587241268311","DOIUrl":"https://doi.org/10.1177/10422587241268311","url":null,"abstract":"This study examines the influence of market conditions—hot versus cold—on the decision-making processes of venture capitalists (VCs). Prior research suggests that VCs prefer costly signals over cheap talk when assessing new ventures under static conditions. However, based on a cognitive perspective, we argue that the dynamic nature of market conditions alters VCs’ information processing. In cold markets, VCs prioritize signals, whereas, in hot markets, they emphasize less costly cues that resonate with prevailing optimism, often at the expense of signals. Supported by a conjoint experiment with 76 VCs, our results clarify the pivotal role of market conditions on the effectiveness of entrepreneurs’ signaling strategies.","PeriodicalId":48443,"journal":{"name":"Entrepreneurship Theory and Practice","volume":"12 1","pages":""},"PeriodicalIF":10.5,"publicationDate":"2024-08-29","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142100874","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2024-08-28DOI: 10.1177/10422587241268029
Paolo Capolupo, Lorenzo Ardito, Antonio Messeni Petruzzelli, Nadine Kammerlander, Alfredo De Massis
Digital product innovation (DPI) is critical for the survival of firms, especially those operating in traditional industrial-age industries. While research has started to investigate digital innovation in family firms (FFs) considering them as a monolithic group, we still lack a more nuanced perspective that considers heterogeneity among FFs with respect to DPI and what drives such variance. Drawing on construal level theory to explain the risk behavior and goal time horizon of FF owner-managers, we propose and find that the presence of later family generations in control positively influences DPI in FFs, while the presence of a family CEO is detrimental to DPI. Furthermore, we propose that these relationships are moderated by the size of the top management team (TMT), finding that a larger TMT weakens the positive relationship between later generations in control and DPI. We base our analysis on a longitudinal sample of 103 FFs in the automotive, industrial engineering, and pharmaceutical sectors observed from 2013 to 2020. This first empirical study applying construal level theory to the family business literature has important implications for the FF digital innovation literature and for FF owner-managers interested in achieving DPI.
{"title":"Digital Product Innovation Within Family Firms: A Construal Level Perspective","authors":"Paolo Capolupo, Lorenzo Ardito, Antonio Messeni Petruzzelli, Nadine Kammerlander, Alfredo De Massis","doi":"10.1177/10422587241268029","DOIUrl":"https://doi.org/10.1177/10422587241268029","url":null,"abstract":"Digital product innovation (DPI) is critical for the survival of firms, especially those operating in traditional industrial-age industries. While research has started to investigate digital innovation in family firms (FFs) considering them as a monolithic group, we still lack a more nuanced perspective that considers heterogeneity among FFs with respect to DPI and what drives such variance. Drawing on construal level theory to explain the risk behavior and goal time horizon of FF owner-managers, we propose and find that the presence of later family generations in control positively influences DPI in FFs, while the presence of a family CEO is detrimental to DPI. Furthermore, we propose that these relationships are moderated by the size of the top management team (TMT), finding that a larger TMT weakens the positive relationship between later generations in control and DPI. We base our analysis on a longitudinal sample of 103 FFs in the automotive, industrial engineering, and pharmaceutical sectors observed from 2013 to 2020. This first empirical study applying construal level theory to the family business literature has important implications for the FF digital innovation literature and for FF owner-managers interested in achieving DPI.","PeriodicalId":48443,"journal":{"name":"Entrepreneurship Theory and Practice","volume":"58 1","pages":""},"PeriodicalIF":10.5,"publicationDate":"2024-08-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142090041","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2024-08-17DOI: 10.1177/10422587241261625
Wolfgang Drobetz, Lars Hornuf, Paul P. Momtaz, Niclas Schermann
This article examines the operating and financial performance of venture firms conducting initial coin offerings (ICOs) with different types of investors and at different points along a venture’s life-cycle. Relative to purely crowdfunded ICO ventures, institutional investor-backed ICO ventures exhibit weaker operating performance and fail earlier. However, conditional on survival, these ventures financially outperform their peers that do not receive institutional investor support. The diverging effects of investor backing on financial and operating performance are consistent with our theory of “certification exploitation” through a new form of a pump-and-dump scheme. Institutional investors exploit their reputation to drive up ICO valuations and quickly exit the venture post-ICO, with the difference in pre- versus post-certification token prices being their exploitation profit in liquid markets for startups. Our findings further indicate that there is an inverted U-shaped relationship between the financial success of an ICO and the timing along a venture’s life-cycle, with the product piloting phase representing the pivotal point.JEL Codes: G24, G32, K22, L26
{"title":"Token-Based Crowdfunding: Investor Choice and the Optimal Timing of Initial Coin Offerings","authors":"Wolfgang Drobetz, Lars Hornuf, Paul P. Momtaz, Niclas Schermann","doi":"10.1177/10422587241261625","DOIUrl":"https://doi.org/10.1177/10422587241261625","url":null,"abstract":"This article examines the operating and financial performance of venture firms conducting initial coin offerings (ICOs) with different types of investors and at different points along a venture’s life-cycle. Relative to purely crowdfunded ICO ventures, institutional investor-backed ICO ventures exhibit weaker operating performance and fail earlier. However, conditional on survival, these ventures financially outperform their peers that do not receive institutional investor support. The diverging effects of investor backing on financial and operating performance are consistent with our theory of “certification exploitation” through a new form of a pump-and-dump scheme. Institutional investors exploit their reputation to drive up ICO valuations and quickly exit the venture post-ICO, with the difference in pre- versus post-certification token prices being their exploitation profit in liquid markets for startups. Our findings further indicate that there is an inverted U-shaped relationship between the financial success of an ICO and the timing along a venture’s life-cycle, with the product piloting phase representing the pivotal point.JEL Codes: G24, G32, K22, L26","PeriodicalId":48443,"journal":{"name":"Entrepreneurship Theory and Practice","volume":"7 1","pages":""},"PeriodicalIF":10.5,"publicationDate":"2024-08-17","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"141998730","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Product development in innovation-driven industries often fails. Although such failures cause new ventures to struggle to raise follow-on investments, some overcome this challenge. Why? Synthesizing insights from the research on signaling and social evaluation theory, we identify how certain resources can mitigate the risk of funding termination for new ventures despite product development failure. Through a longitudinal study of 254 venture capital-funded biotechnology ventures, we show that internal quality signals decrease in their effectiveness while industry endorsement signals increase in their effectiveness as quality signals over time. Our findings contribute to the literatures on entrepreneurial failure, entrepreneurial resource acquisition and signaling.
{"title":"When Failure Is Not Fatal: Examining Venture Resource Acquisition Following Product Development Failure","authors":"Amrita Lahiri, Chandresh Baid, Arvin Sahaym, Greg Fisher","doi":"10.1177/10422587241261618","DOIUrl":"https://doi.org/10.1177/10422587241261618","url":null,"abstract":"Product development in innovation-driven industries often fails. Although such failures cause new ventures to struggle to raise follow-on investments, some overcome this challenge. Why? Synthesizing insights from the research on signaling and social evaluation theory, we identify how certain resources can mitigate the risk of funding termination for new ventures despite product development failure. Through a longitudinal study of 254 venture capital-funded biotechnology ventures, we show that internal quality signals decrease in their effectiveness while industry endorsement signals increase in their effectiveness as quality signals over time. Our findings contribute to the literatures on entrepreneurial failure, entrepreneurial resource acquisition and signaling.","PeriodicalId":48443,"journal":{"name":"Entrepreneurship Theory and Practice","volume":"81 1","pages":""},"PeriodicalIF":10.5,"publicationDate":"2024-08-07","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"141904263","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2024-08-07DOI: 10.1177/10422587241259393
Hans Rawhouser, Chris Sutter, Natalie Holzaepfel, Michael Conger, Scott L. Newbert
Entrepreneurs need to access knowledge to grow, but weak entrepreneurial ecosystems tend to lack the types of knowledge that foster venture growth. To explore how entrepreneurs can act resourcefully as they overcome local ecosystem deficiencies in efforts to grow, we conducted 78 interviews with growth-oriented entrepreneurs in Central America. These entrepreneurs, perceiving that their ecosystem was subordinate to stronger ecosystems, challenged local knowledge, prompting them to engage in knowledge-related resourcefulness, which involves reorienting network targets (resourceful cognition) and assembling network tie proxies (resourceful behavior), to leverage benefits from both local and distant entrepreneurial ecosystems in pursuit of steady organic growth.
{"title":"Knowledge-Related Resourcefulness for Growth in Weak Entrepreneurial Ecosystems","authors":"Hans Rawhouser, Chris Sutter, Natalie Holzaepfel, Michael Conger, Scott L. Newbert","doi":"10.1177/10422587241259393","DOIUrl":"https://doi.org/10.1177/10422587241259393","url":null,"abstract":"Entrepreneurs need to access knowledge to grow, but weak entrepreneurial ecosystems tend to lack the types of knowledge that foster venture growth. To explore how entrepreneurs can act resourcefully as they overcome local ecosystem deficiencies in efforts to grow, we conducted 78 interviews with growth-oriented entrepreneurs in Central America. These entrepreneurs, perceiving that their ecosystem was subordinate to stronger ecosystems, challenged local knowledge, prompting them to engage in knowledge-related resourcefulness, which involves reorienting network targets (resourceful cognition) and assembling network tie proxies (resourceful behavior), to leverage benefits from both local and distant entrepreneurial ecosystems in pursuit of steady organic growth.","PeriodicalId":48443,"journal":{"name":"Entrepreneurship Theory and Practice","volume":"37 1","pages":""},"PeriodicalIF":10.5,"publicationDate":"2024-08-07","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"141904264","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2024-05-31DOI: 10.1177/10422587241254064
Dean A. Shepherd, Holger Patzelt
Although we know a great deal about creating ventures that can generate financial wealth for entrepreneurs, we have largely excluded, ignored, or “danced around” the creation of nonprofit ventures (with some important exceptions). We propose research to explore how initiating, engaging, and performing nonprofit venturing may differ from for-profit venturing and how some nonprofit entrepreneurs and their ventures differ from other nonprofit entrepreneurs and their ventures. We hope this essay convinces some entrepreneurship scholars that investigating the creation of nonprofit ventures is valuable and can add richness and vibrancy to the entrepreneurship field.
{"title":"What About Me? An Essay on Creating Nonprofit Ventures","authors":"Dean A. Shepherd, Holger Patzelt","doi":"10.1177/10422587241254064","DOIUrl":"https://doi.org/10.1177/10422587241254064","url":null,"abstract":"Although we know a great deal about creating ventures that can generate financial wealth for entrepreneurs, we have largely excluded, ignored, or “danced around” the creation of nonprofit ventures (with some important exceptions). We propose research to explore how initiating, engaging, and performing nonprofit venturing may differ from for-profit venturing and how some nonprofit entrepreneurs and their ventures differ from other nonprofit entrepreneurs and their ventures. We hope this essay convinces some entrepreneurship scholars that investigating the creation of nonprofit ventures is valuable and can add richness and vibrancy to the entrepreneurship field.","PeriodicalId":48443,"journal":{"name":"Entrepreneurship Theory and Practice","volume":"41 1","pages":""},"PeriodicalIF":10.5,"publicationDate":"2024-05-31","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"141185138","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2024-05-31DOI: 10.1177/10422587241254069
Pyayt P. Oo, Arvin Sahaym, Keith M. Hmieleski, Richard Chan, Annaleena Parhankangas
Serendipity has played a significant role in the history of invention. Yet, little is known about whether serendipitous inventions are perceived as more or less innovative and thus achieve greater success in seeking funding than those resulting from deliberate processes. The current study explores this issue using a matched-pair sample of 168 serendipitous and non-serendipitous inventions used by entrepreneurs to raise capital through crowdfunding. The results demonstrate that serendipitous inventions are more positively related to crowdfunding success than non-serendipitous ones via perceptions of product innovativeness. Thus, serendipitous inventions appear to be socially rewarded rather than penalized in the context of crowdfunding.
{"title":"The Aha Moment! The Effects of Serendipity and Innovation on Crowdfunding Performance","authors":"Pyayt P. Oo, Arvin Sahaym, Keith M. Hmieleski, Richard Chan, Annaleena Parhankangas","doi":"10.1177/10422587241254069","DOIUrl":"https://doi.org/10.1177/10422587241254069","url":null,"abstract":"Serendipity has played a significant role in the history of invention. Yet, little is known about whether serendipitous inventions are perceived as more or less innovative and thus achieve greater success in seeking funding than those resulting from deliberate processes. The current study explores this issue using a matched-pair sample of 168 serendipitous and non-serendipitous inventions used by entrepreneurs to raise capital through crowdfunding. The results demonstrate that serendipitous inventions are more positively related to crowdfunding success than non-serendipitous ones via perceptions of product innovativeness. Thus, serendipitous inventions appear to be socially rewarded rather than penalized in the context of crowdfunding.","PeriodicalId":48443,"journal":{"name":"Entrepreneurship Theory and Practice","volume":"75 1","pages":""},"PeriodicalIF":10.5,"publicationDate":"2024-05-31","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"141185224","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2024-05-25DOI: 10.1177/10422587241254062
Ugochukwu Chinonso Okolie
This study explores how students from low-income families with no prior entrepreneurial experience engage in conditional student entrepreneurship (CSE). Longitudinal data from 30 undergraduates across two Nigerian public universities revealed that resource constraints and significant loss events threaten students’ educational pursuits. However, rather than dropping out to pursue unskilled jobs, the students opt for CSE to generate income and persist in their education. Through the findings, a model of CSE for financial stability was developed to shed light on an overlooked phenomenon in emerging economies. The findings contribute to academic, policy, and practical implications.
{"title":"A Longitudinal Study of Conditional Student Entrepreneurship in an Emerging Economy","authors":"Ugochukwu Chinonso Okolie","doi":"10.1177/10422587241254062","DOIUrl":"https://doi.org/10.1177/10422587241254062","url":null,"abstract":"This study explores how students from low-income families with no prior entrepreneurial experience engage in conditional student entrepreneurship (CSE). Longitudinal data from 30 undergraduates across two Nigerian public universities revealed that resource constraints and significant loss events threaten students’ educational pursuits. However, rather than dropping out to pursue unskilled jobs, the students opt for CSE to generate income and persist in their education. Through the findings, a model of CSE for financial stability was developed to shed light on an overlooked phenomenon in emerging economies. The findings contribute to academic, policy, and practical implications.","PeriodicalId":48443,"journal":{"name":"Entrepreneurship Theory and Practice","volume":"44 1","pages":""},"PeriodicalIF":10.5,"publicationDate":"2024-05-25","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"141098007","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2024-05-25DOI: 10.1177/10422587241249330
Yunzhou Du, Qiuchen Liu, Phillip H. Kim, Jiaxin Li
Studying temporal change using Qualitative Comparative Analysis (QCA) allows researchers to examine complex and dynamic causal pathways between configurations of time-based conditions and a desired outcome. No comprehensive QCA technique currently addresses complex temporal changes in a unified manner. To remedy these shortcomings, we introduce Growth Pattern QCA—a mixed-method technique for studying complex growth dynamics. We integrate a quantitative computational toolkit for calculating growth slopes with QCA and demonstrate it using an illustrative multiyear panel. We offer practical guidance for researchers to apply these mixed methods for analyzing and forecasting complex growth patterns in various entrepreneurship research settings. We also review existing techniques and provide a decision roadmap of time-related QCA methods for researchers to use the best option for their research objectives.
{"title":"Riding the Waves of Change: Using Qualitative Comparative Analysis to Analyze Complex Growth Patterns in Entrepreneurship","authors":"Yunzhou Du, Qiuchen Liu, Phillip H. Kim, Jiaxin Li","doi":"10.1177/10422587241249330","DOIUrl":"https://doi.org/10.1177/10422587241249330","url":null,"abstract":"Studying temporal change using Qualitative Comparative Analysis (QCA) allows researchers to examine complex and dynamic causal pathways between configurations of time-based conditions and a desired outcome. No comprehensive QCA technique currently addresses complex temporal changes in a unified manner. To remedy these shortcomings, we introduce Growth Pattern QCA—a mixed-method technique for studying complex growth dynamics. We integrate a quantitative computational toolkit for calculating growth slopes with QCA and demonstrate it using an illustrative multiyear panel. We offer practical guidance for researchers to apply these mixed methods for analyzing and forecasting complex growth patterns in various entrepreneurship research settings. We also review existing techniques and provide a decision roadmap of time-related QCA methods for researchers to use the best option for their research objectives.","PeriodicalId":48443,"journal":{"name":"Entrepreneurship Theory and Practice","volume":"5 1","pages":""},"PeriodicalIF":10.5,"publicationDate":"2024-05-25","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"141097991","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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