In this study, we examine whether female entrepreneurs are held to a different standard than male entrepreneurs in obtaining financing from banks. To test this idea, we draw from the literature on ...signaling theory to propose that characteristics specific to the firm and the entrepreneur act as a means to communicate (i.e., signal) the inherent quality of the venture and thus impact the amount of capital the entrepreneur is able to obtain. We then explore the moderating role of gender based on gender role congruity theory to argue that capital providers reward the business characteristics of male and female entrepreneurs differently to the disadvantage of women.
Although similarity attraction theory is often utilized to explain why people form relationships with similar others, we utilize diversity research to look beyond surface–level demographic ...characteristics similarity to explain situations when angels form interpersonal relations with angels with dissimilar deep–level personal characteristics due to a strong desire to receive information and cognitive benefits. We use data collected from a chapter of one of the largest angel organizations in the United States. Our results show that although individuals often form relations with similar others, conditions exist when angels exert the extra effort required to form relations with dissimilar others.
Crowdfunding has gained substantial interest in the U.S., allowing entrepreneurs to raise startup capital in exchange for equity in their ventures. This approach to equity capital can open up new ...sources of venture finance to legitimate entrepreneurs, but little attention has been given to how it offers new opportunities for illegal entrepreneurs to defraud investors. We adopt a forensic approach to examine entrepreneurs who launch Ponzi ventures—businesses that continually bring in new investors in order to use their money to pay returns to earlier investors—to demonstrate the ease, creativity, and audacity with which these illegal entrepreneurs operate. The provided examples of Ponzi entrepreneurs show how easily they can circumvent the safeguards purported to protect investors: screening by ‘the crowd,’ transparency and documentation requirements, independent audit reports, and withholding of funds until the venture's financial goal has been met. In this article, we offer possible solutions to help protect investors, legitimate entrepreneurs, and business in general from the damage created by illegal entrepreneurs.
Despite interest in understanding the role passion plays in investor decision making, little is known about the conditions under which perceived passion is likely to play a significant role in the ...funding decision process. We first establish a relationship between perceived passion and evaluations of funding potential, then use affective reactivity as a theoretical framework to explore how several individual characteristics of angel investors impact the relationship between perceived passion and evaluations of funding potential. The results indicate that the relationship is stronger for angel investors who are older, more intuitive, have a high openness personality, or those who are motivated to mentor. Surprisingly, the relationship weakens for angels who are extraverted and those who have a promotion-dominated regulatory focus.
► We examine what factors impact whether passion leads to higher evaluations of funding potential. ► We establish a relationship between perceived passion and evaluations of funding potential. ► Age, cognitive style, openness personality, and motivation to mentor act as positive moderators. ► Extraverted and promotion dominated regulatory focus angels are less influenced by passion.
Angel investors often make investment decisions based on motivational cues communicated during pitches—including enthusiasm, preparedness, and commitment—to evaluate potentially important qualities ...of entrepreneurs. We tested the independent and interaction effects of these cues by having 72 angels complete 1,995 evaluations of 133 live pitches. We found a positive effect of preparedness on angel evaluations, an effect enhanced by one form of commitment. The relationship between enthusiasm and evaluations of funding potential varies depending on the type of commitment considered. Our findings suggest that enthusiasm, preparedness, and commitment should be treated as conceptually and empirically distinct.
Entrepreneurs with venture ideas must establish cognitive legitimacy so they can acquire essential resources needed for survival. We extend the concept of cognitive legitimacy by developing a model ...through which entrepreneurs in emerging high growth organizations attempt to establish and build cognitive legitimacy. This is based on the composition of their new venture team and advisory board. Novice entrepreneurs can draw on the prestige of their new venture team and advisory board to enhance perceptions of their emerging organization's cognitive legitimacy. Novelty of the venture idea moderates relationships between both new venture team prestige and advisory board prestige and cognitive legitimacy; thus entrepreneurs whose emerging organizations rely on highly novel products or services will likely need to establish higher levels of prestige to create cognitive legitimacy. PUBLICATION ABSTRACT
Social influence describes processes by which individuals modify their behavior, attitudes or perceptions to that of others in their social environment. Rather than asking which interaction ...structures (i.e. ways individuals may be related to one another in their social network) predict social influence, I shift the focus on the circumstances surrounding when each interaction structure predicts social influence. In addition to the type of interaction structure, four factors appear to impact the social influence process. I integrate the literature regarding interpersonal relations, issue-related communication, type of social influence, and issue-related expertise into Friedkin's (1993) model of interpersonal influence. The extended model was tested in the angel investing context. Dyadic data collected from a chapter of one of the largest angel organizations in the United States over two points in time was analyzed using social network research. The findings provide support for the assertion that social influence is contingent on factors not specified in existing social influence models. The results reveal that advice direct contact appears to dominate the other social influence mechanisms when predicting both investment-specific communication and felt influence. However, there are circumstances when other social influence mechanisms increase in strength to provide new insight into the social influence process. Findings also indicate circumstances exist when issue-related communication mediates the relationships in the social influence process and relative issue-related expertise moderates relationships in the social influence process. This dissertation offers several new insights into the social influence process and underscores the importance of considering the social forces that surround individuals when they are making decisions. Results from my dissertation likely have practical implications for entrepreneurs, angels, and venture capitalists. Entrepreneurs face high rejection rates when seeking funding, making it critical to better understand the angel funding decision process. Understanding how and why individuals exert social influence that impacts their funding decisions may allow angels to identify and fund ventures deserving funding and avoid ventures that should not receive funding. Better investing decisions by angels allows entrepreneurs, angels, and venture capitalists to reap the rewards of new ventures' success.
