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Affiliation rhetoric and digital orientation in crowdfunding appeals
... These factors are: digital technology scope, digital capabilities, digital ecosystem coordination, and digital architecture configuration. Despite a growing number of studies exploring the nomological net surrounding DO (Bendig et al., 2023;Liu et al., 2023;Maurer et al., 2023), empirical research on this concept remains constrained. ...
... Table 1 illustrates constraints prevalent in previous research. First, current measurement approaches largely preclude examining the DO of firms not subject to comprehensive reporting requirements, such as private or very young firms (with the exception of Maurer et al., 2023). For instance, in the context of new ventures, often established as digital-first firms, the lack of suitable measurement tools makes it difficult to assess the significance of DO in their development. ...
... Several studies have recently explored how adopting a DO affects firm performance; they suggest that DO has a positive impact on firm performance (Kindermann et al., 2021), environmental performance (Bendig et al., 2023), and organizational resilience (Liu et al., 2023). Maurer et al. (2023) show that DO is an essential assisting factor in crowdsourcing success. To explain the performance-enhancing effect of DO theoretically, these works mainly draw on the RBV (Barney, 1991) or versions thereof (e.g., natural RBV; Hart, 1995). ...
... In prior studies on crowdfunding, researchers have examined the influence of the founder (Sundermeier & Kummer, 2022), project (Chen, 2023), and category-level characteristics on funders' evaluations of new venture legitimacy. Empirical studies have demonstrated that to gain cognitive, normative, and other forms of legitimacy (Chen, 2023), ventures need to communicate the high quality of their offering through the use of videos, images, and text on their campaign page (Huang et al., 2022), their novelty , and affiliation with or endorsement by prestigious organizations (Calic & Mosakowski, 2016;Maurer et al., 2023). The industry or type of campaign also matters since the success of prior campaigns in the category creates a legitimacy spillover (Kostova & Zaheer, 1999) to subsequent campaigns (Soublière & Gehman, 2020). ...
... Thus, laying a foundation for a firm's DO requires not only a change in strategy, processes, resources, and technological prerequisites but also in specific individual CEO characteristics (Hanelt, 2020;Vial, 2019). So far, research has established that DO affects firm performance (Kindermann et al., 2020), environmental performance (Bendig et al., 2023), or crowdfunding (Maurer et al., 2023). However, we have limited knowledge about the potential antecedents of DO and, specifically, the influence of individual CEO characteristics on their firms' DO (Garcia de Lomana et al., 2019). ...
Purpose
Continuous development of digital technology makes it necessary for digital entrepreneurs to pivot to cope with the environmental changes. However, limited research has focused on the important strategic orientation of digital new ventures in digital contexts, digital orientation, which depicts the tendency of new ventures to utilize digital technologies to create value. This research aims to explore the relationship between digital orientation and pivoting, along with the mediating role of dynamic capabilities as essential organizational competencies. Additionally, the study investigates the influence of boundary conditions related to the environmental dynamism and the prior experience of entrepreneurs.
Design/methodology/approach
The data of this study were gathered by a two-phase survey of 328 Chinese digital new ventures in China with the assistance of entrepreneurial service organizations, entrepreneurship parks and entrepreneurial training institutions. The current study used regression analysis to verify the hypotheses and factor analysis to evaluate the validity and reliability of the measurement by using MPLUS, SPSS and PROCESS macro.
Findings
The findings of this research indicate that digital orientation enhances pivoting of digital new ventures, with dynamic capabilities acting as a crucial mediator in this process. Additionally, the dynamic environment and prior entrepreneurial experience influence both the relationship between digital orientation and dynamic capabilities, as well as the mediating effect of dynamic capabilities.
Research limitations/implications
This study significantly contributes to the existing literature by exploring the relationship between digital orientation and pivoting in digital new ventures. This broadens the scope of research on pivoting and enriches the literature on digital orientation in the digital context. By emphasizing how these factors shape pivoting, our research provides valuable guidance for entrepreneurs responding to the dynamic environment and technological advances.
Originality/value
This research illuminates the relationship between digital orientation and pivoting based on the resource-based view (RBV) and dynamic capabilities theory (DCT). It explores the antecedent of digital orientation on digital new ventures’ pivoting activities, reveals the internal mechanisms and boundary conditions and enriches the literature related to RBV and DCT in the digital entrepreneurship context.
استهدفت الدراسة الحالية تطوير إطاراً مفاهيمياً يتعلق بتعيين المستويات المختلفة لممارسة إدارة الموارد البشرية الخضراء (كمتغير تابع) كدالة في التفاعل بين متغيري التوجه الرقمي للمنظمات، وضغوط البيئة الخارجية (كمتغيرات مستقلة) بالشركات المصرية العاملة بقطاع الدواء البشري المصري. وفي هذا السياق، فقد تم تطوير فرضين رئيسيين للتعرف علي آلية عمل هذا الاطار. وباستخدام قائمة استقصاء تم تجميع البيانات الأولية المتعلقة بمتغيرات الدراسة من خلال عينة طبقية عشوائية قوامها ٢٩٥ مفردة من العاملين في ١٣ شركة من الشركات المصرية العاملة في قطاع الدواء البشري؛ واعتمدت الدراسة على حزمة من أساليب التحليل الإحصائي لاختبار فروض الدراسة؛ أبرزها أسلوب تحليل التباين المتعدد MANOVA وأسلوب تحليل التمايز المتعدد MDA.
وكشفت النتائج عن نجاح الإطار المقترح في التمييز بين أربعة خلايا (مستويات) مختلفة لممارسة إدارة الموارد البشرية الخضراء في مجتمع الدراسة. كما تبين وجود تفاوت في مستويات إدراك التوجه الرقمي للمنظمات، وكذلك مستويات ضغوط البيئة الخارجية داخل كل خلية. كما كشفت النتائج عن أن متغير ضغوط البيئة الخارجية كان الأكثر قدرة ودلالة على التمييز بين المستويات المختلفة لممارسة إدارة الموارد البشرية الخضراء مقارنةً بالتوجه الرقمي للمنظمة. واختُتمت الدراسة بمناقشة النتائج ودلالاتها، وكذلك التطبيقات الإدارية لنتائج الدراسة، وأخيراً حدودها والدراسات المستقبلية المقترحة.
Purpose
This study aims to investigate three relevant antecedents of digital transformation (digital orientation, digital intensity and digital maturity) and their influences on the financial success of companies.
Design/methodology/approach
Building on the strategic management and digital transformation literature, five hypotheses are developed to find the relationships between these antecedents and financial success.
Findings
Digital orientation and digital intensity alone do not contribute to the financial success of companies. Specifically, digital intensity serves as a negative moderator between digital orientation and financial success, meaning that it reduces the performance effects of digital orientation. Digital maturity acts as a mediator between digital orientation and the financial success of companies and between digital intensity and the financial success of companies.
Originality/value
This research contributes to the literature on strategic management and digital transformation by providing a further understanding of three relevant antecedents of digital transformation (digital orientation, digital intensity and digital maturity) and how they should be positioned alongside digital transformation settings to achieve financial success.
This study employs Knowledge-based view (KBV) and Transaction Cost Theory (TCT) to analyze the moderating effect of the Not-Invented-Here Syndrome (NIHS) on the relationship between digital orientation and digital innovation performance when employee's artificial intelligence awareness (EAIA) changes. EAIA alludes to employee's concern about being replaced by artificial intelligence at work. Structural equations were used to test the research model. The key findings reveal that when EAIA is high, the negative impact of the NIHS is stronger. The finding is significant because it confirms that the NIHS, which is associated with organizational rejection of external technologies, is not a phenomenon exclusive to the pre-digital era, but its negative consequences such as biases in the digital technology assessment and neglect or suboptimal, persist in the digital era. Nevertheless, the major contribution demonstrates that the NIHS is not an isolated fact or a product of individuals’ whims or irrationality; in the digital era, the NIHS is above all rational and opportunistic attitude rooted in EAIA. Furthermore, the NIHS becomes a planned response by employees aiming to minimize the risk of losing their jobs due to the impending replacement of digital technologies, particularly those related to automation processes.
In recent years, entrepreneurs have increasingly turned to crowdfunding, a new form of entrepreneurial finance, to fund projects. Whilst research has shown that signals originating from the entrepreneur and project can affect the outcome of crowdfunding, how different signals work together under different signalling environments remains underexplored. Drawing on signalling theory, we examine how signals of entrepreneurs’ credibility (success, failure, backer and industry experience) and project quality (preparedness and third-party endorsements) produce crowdfunding success in different signalling environments. We collected a unique dataset with matched projects listed on both Kickstarter and Indiegogo, but with different funding models, to represent two distinct signalling environments. Results based on qualitative comparative analysis (QCA) identify two distinct signalling patterns that show entrepreneur’s credibility and project quality signals can complement each other to produce crowdfunding success. In an environment with less uncertainty, entrepreneur’s credibility in terms of crowdfunding experience can also compensate absent project quality to produce crowdfunding success. In an environment with higher uncertainty, entrepreneur’s credibility and project quality need to be both present to establish the necessary legitimacy for crowdfunding to be successful. Furthermore, by integrating positive (i.e. success) and negative (i.e. failure) signals, we demonstrate how signal incongruence can enhance crowdfunding success.
Plain English Summary Failure experience is an important signal in achieving crowdfunding success, but its effectiveness depends on other signals as well as the signalling environment. Our study shows how crowdfunding success can be achieved in multiple ways and that the path to success depends on the funding model of the platform used. For entrepreneurs to demonstrate credibility, backer experience and project preparedness are important. Both are under the control of the entrepreneur and well worth considering investing effort into. Importantly, the study also shows that demonstrating failure experience is important in achieving crowdfunding success. Failure experience can either replace the lack of prior success experience by demonstrating a track record of learning or it can enhance prior success experience by producing a more realistic picture of the entrepreneurs. Thus, the study offers practical implications for entrepreneurs on how to use different signals to increase the likelihood of success in reward-based crowdfunding.
Purpose
This study aims to analyze the mediating effect of the open innovation processes of knowledge acquisition and exploitation as external embeddedness strategy on the relationships between strategic orientation toward digitalization and the three dimensions of the innovation capability: client, marketing and technology.
Design/methodology/approach
The research model was tested using a structural equation modeling design based on survey data from a financial and insurance sector multinational enterprise with direct operations in seven emerging countries. This sector is classified as being highly digitalized.
Findings
The results show that strategic orientation toward digitalization has an effect on innovation capability, with a greater impact on the client and technology dimensions than on the marketing dimension. However, the relationships with clients and technology are partially mediated by acquisition, while the one with marketing is mediated by exploitation.
Originality/value
This finding widens the current purpose and theoretical sense of external embeddedness as a type of inter-organizational arrangement key for digitalization in the literature, which is focused on the adaptation of digital technology of the head office to the needs of the subsidiaries and the systems of their local allies. By contrast, the study results show that external embeddedness is key for the multinational to be able, from its global way of creating value through digital technologies, not only to improve operating efficiency, but also to meet costumer experience expectations in each host country and innovate in local commercialization strategies, on account of the knowledge transfer between the multinational and the local players on customer preferences and technology uses in local markets.
Although there is ample evidence that digital technologies are strategically important for value creation, extant literature lacks holistic concepts that capture an organization's strategic orientation concerning digital innovation and transformation initiatives. This study integrates recent digitalization themes with IT business alignment research to conceptualize a new strategic orientation construct: digital orientation. The construct is manifested in four dimensions which we operationalize for computer-aided text analysis. We validate the construct based on 6498 shareholder letters from large US firms over 16 years. Building upon the resource-based view, we validate the digital orientation construct by linking it to firm performance. Our findings advance the literature on strategic orientations and bring the domains of strategy and information systems closer together. The novel digital orientation construct and the validated measurement instrument lead to many new research opportunities.
This study examines how the success of reward-based crowdfunding (RBCF) is affected by two narrative styles—namely “results in progress” (RIP) and “ongoing journey” (OJ)—and by the entrepreneur’s RBCF experience. Our findings reveal that greater success in collecting funds is achieved by RBCF campaigns that are communicated through RIP narrative styles rather than OJ styles. Moreover, we have underscored the positive effect brought about by an entrepreneur’s RBCF experience. In addition, we highlight how these two factors interact with each other in their overall effect on successful fundraising through RBFC, showing that entrepreneurs with extensive experience in RBCF attract more pledges by adopting OJ narratives rather than RIP narratives. The outcomes of this study advance the theoretical understanding of success factors in RBCF and provide RBCF entrepreneurs with suggestions regarding the most appropriate narrative style to adopt, depending on their level of experience.
Purpose
Despite the growing importance of digital innovation conceptualized as innovative digital solutions that enable digital transformation of businesses across industries, empirical study of factors related to digital innovation is still scant, creating a knowledge gap. To fill this gap, this paper aims to examine the effect of digital orientation and digital capability on digital innovation, and also the mediating effect of digital innovation on the link between organizational performance and digital orientation as well as digital capability.
Design/methodology/approach
This study tests a new conceptual framework using a survey data of 105 small to medium-sized IT firms in Malaysia and employing structural equation model (SEM) analysis from partial least square (PLS) approach.
Findings
The results show that digital orientation and digital capability have positive effect on digital innovation and also that digital innovation mediates the effect of technology orientation and digital capability on financial and non-financial performance.
Practical implications
The findings encourage the firms to take the opportunity of emerging digital technologies and digitalization trend in industries by being committed toward embracing new digital technologies and upgrading their digital capabilities to become innovation leaders and also to boost firms’ performance.
Originality/value
This study is one of the first studies that explain how emerging digital technologies can be leveraged to create innovative digital products and services and subsequently boost their business performance. It also fills the literature gaps related to driving factors of digital innovation and mediating role of digital innovation on the link between its driving factors and performance.
In the last few years leading-edge research from information systems, strategic
management, and economics have separately informed our understanding of platforms
and infrastructures in the digital age. Our motivation for undertaking this special
issue rests in the conviction that it is significant to discuss platforms and infrastructures
concomitantly, while enabling knowledge from diverse disciplines to cross-pollinate to
address critical, pressing policy challenges and informstrategic thinking across both social
and business spheres. In this editorial,we reviewkey insights from the literature on digital
infrastructures and platforms, present emerging research themes, highlight the contributions
developed from each of the six articles in this special issue, and conclude with
suggestions for further research.
We extend the entrepreneurship literature to include positive psychological capital-an individual or organization's level of psychological resources consisting of hope, optimism, resilience , and confidence-as a salient signal in crowdfunding. We draw from the costless signaling literature to argue that positive psychological capital language usage enhances crowdfunding performance. We examine 1726 crowdfunding campaigns from Kickstarter, finding that entrepreneurs conveying positive psychological capital experience superior fundraising performance. Human capital moderates this relationship while social capital does not, suggesting that costly signals may, at times, enhance the influence of costless signals. Post hoc analyses suggest findings generalize across crowdfunding types, but not to IPOs.
Research Summary
The recent surge of interest in “ecosystems” in strategy research and practice has mainly focused on what ecosystems are and how they operate. We complement this literature by considering when and why ecosystems emerge, and what makes them distinct from other governance forms. We argue that modularity enables ecosystem emergence, as it allows a set of distinct yet interdependent organizations to coordinate without full hierarchical fiat. We show how ecosystems address multilateral dependences based on various types of complementarities ‐ supermodular or unique, unidirectional or bidirectional, which determine the ecosystem's value‐add. We argue that at the core of ecosystems lie non‐generic complementarities, and the creation of sets of roles that face similar rules. We conclude with implications for mainstream strategy and suggestions for future research.
Managerial summary
We consider what makes ecosystems different from other business constellations, including markets, alliances or hierarchically managed supply chains. Ecosystems, we posit, are interacting organizations, enabled by modularity, not hierarchically managed, bound together by the non‐redeployability of their collective investment elsewhere. Ecosystems add value as they allow managers to coordinate their multilateral dependence through sets of roles that face similar rules, thus obviating the need to enter into customized contractual agreements with each partner. We explain how different types of complementarities (unique or supermodular, generic or specific, uni‐ or bi‐directional) shape ecosystems, and offer a “theory of ecosystems” that can explain what they are, when they emerge and why alignment occurs. Finally, we outline the critical factors affecting ecosystem emergence, evolution, and success ‐‐ or failure.
This paper presents a first-ever empirical examination of the effectiveness of signals that entrepreneurs use to induce (small) investors to commit financial resources in an equity crowdfunding context. We examine the impact of venture quality (human capital, social (alliance) capital, and intellectual capital) and uncertainty on fundraising success. Our data highlight that retaining equity and providing more detailed information about risks can be interpreted as effective signals and can therefore strongly impact the probability of funding success. Social capital and intellectual capital, by contrast, have little or no impact on funding success. We discuss the implications of our results for theory, future research and practice.
This study draws upon the elaboration likelihood model of persuasion (ELM) to develop and test a model of persuasive influence in crowdfunding. To test our hypothesized relationships, we drew upon a sample of 383 ventures taken directly from Kickstarter, coupled with a decision experiment conducted in a simulated crowdfunding context. Results suggest that issue-relevant information, such as entrepreneurs' education, matters most when funders possess greater ability and motivation to make careful evaluations. In contrast, cues, such as adopting a group identity, have their strongest influence among inexperienced, first-time funders, and when requested funding amounts are smaller.
Crowdfunding is an emerging phenomenon that enables entrepreneurs to solicit financial contributions for new projects from mass audiences. Drawing on the elaboration likelihood model of persuasion and emotional contagion theory, the authors examined the importance of displayed entrepreneurial passion when seeking resources in a crowdfunding context. They proposed that entrepreneurs’ displayed passion in the introductory video for a crowdfunding project increases viewers’ experienced enthusiasm about the project (i.e., passion contagion), which then prompts them to contribute financially and to share campaign information via social-media channels. Such sharing further facilitates campaign success. In addition, the authors proposed that perceived project innovativeness strengthens the positive effect of displayed passion on social-media exposure and the funding amount a project garners. They first tested their hypotheses in 2 studies using a combination of survey and archival data from the world’s 2 most popular crowdfunding platforms: Indiegogo (Study 1) and Kickstarter (Study 2). They then conducted an experiment (Study 3) to validate the proposed passion contagion process, and the effect of displayed entrepreneurial passion at the individual level. Findings from these 3 studies significantly supported their hypotheses. The authors discuss the theoretical and practical implications of their findings.
Digital technologies have dramatically changed the organisation and marketing environments. Whether this presents an opportunity or a challenge for small and medium organisations depends on how these organisations approach it, strategically. Specifically, organisations that are guided by a combination of market, learning and entrepreneurial orientations are well-positioned to take advantage of the opportunities presented by digital technologies because they adopt attitudes and behaviours that support the generation and use of market insight, proactive innovation and openness to new ideas. We call this combination the digital orientation (DO), and present a set of propositions that facilitate its development. This paper creates value both through the conceptualisation of the DO and the outlining of the implications for strategic marketing management of understanding the strategic factors supporting or hindering the performance of small and medium enterprises in the digital economy.
Free access to the article through the following link: https://www.tandfonline.com/eprint/bWHXYvmBqf6e2AxRDXJm/full
Start-ups often face the challenge of a shortage of capital, the so-called funding gap, which can be overcome by raising small amounts of money from a large number of individuals. As crowdfunding suffers from a continuous rise in failure rates, the aim of this article is to contribute to the research concerning success factors in reward-based crowdfunding campaigns by focusing on signaling theory. Based on data retrieved from the crowdfunding platform Kickstarter, our results indicate that social ties, investment preparation and presentation, the supply of multiple rewards as well as endeavors to communicate and interact with the crowd positively influence the probability of success of a reward-based crowdfunding campaign. In contrast, the funding goal, a campaign’s runtime and the estimated time of delivery for the rewards have a negative impact on the successful completion of a campaign.
Despite increased interest in examining the factors that influence crowdfunding success, the effects of community context have been relatively unexamined. We address this void by examining the role of cultural context in crowdfunding success. Our unique data set of crowdfunding projects to “save the local theater” are homogenous in their goal, allowing us to test whether crowdfunding campaigns in certain communities lead to better funding outcomes than others. Theoretically, our results suggest the need for further integration of community and cultural constructs into models of venture funding, as such variables may have more relevance than previously believed.
One of the enduring insights about early-stage creative efforts is that their prospects for success depend on their ability to overcome a variety of liabilities of newness. In our study, we address one aspect of such liabilities: the ability to communicate credible claims about the merits of an idea when raising the funds required for execution. The narratives employed during fundraising are both a vehicle for assembling details about nascent ideas and a structure for communicating them to a wider audience. With this communication, entrepreneurs signal information that potential backers use to evaluate the claims. We argue that using language to differentiate new creative projects from the status quo is beneficial because of signal clarity, but employing a language of accountability that discloses too much information (TMI) may actually backfire when raising funds in open settings. We test this argument by analyzing a sample of crowdfunding campaign texts and find evidence supportive of our predictions. These results advance the literature on entrepreneurial narratives and signaling, establish some baseline characteristics of donation- and reward-based crowdfunding sites, and reinvigorate the application of Stinchcombe’s arguments about the liabilities of newness within a contemporary context.
The formation of new businesses can be conceptualized as a function of opportunity structures and motivated entrepreneurs with access to resources. On the demand side, opportunity structures contain the environmental resources that can be exploited by new businesses as they seek to carve out niches for themselves. On the supply side, motivated entrepreneurs need access to capital and other resources so that they can take advantage of perceived opportunities. A cursory examination of this formulation reveals two essential issues that research on entrepreneurship must address: (1) Entrepreneurship is a process and must be viewed in dynamic terms rather than in cross-sectional snapshots; and (2) entrepreneurship requires linkages or relations between key components of the process.
To acquire resources, new ventures need to be perceived as legitimate. For this to occur, a venture must meet the expectations of various audienceswith differing norms, standards, and values as the venture evolves and grows. We investigate how the organizational identity of a technology venture must adapt to meet the expectations of critical resource providers at each stage of its organizational life cycle. In so doing, we provide a temporal perspective on the interactions among identity, organizational legitimacy, institutional environments, and entrepreneurial resource acquisition for technology ventures. The core assertion from this conceptual analysis is that entrepreneurial ventures confront multiple legitimacy thresholds as they evolve and grow.We identify and discuss three key insights related to entrepreneurs' efforts to cross those thresholds at different organizational life cycle stages: institutional pluralism, venture-identity embeddedness, and legitimacy buffering.
The distinction of macro- and microfoundations of institutions implies a multilevel conceptualization of institutional processes. We adopt the evaluators' perspective on legitimacy to develop a multilevel theory of the legitimacy process under ideal-type conditions of institutional stability and institutional change, and we explore the dynamics of institutional change - from destabilization of the institutional order to return to stability in legitimacy judgments expressed by evaluators. We argue that through the process of institutionalization, legitimacy judgments of evaluators are subjected to social control and describe an institutional stability loop - a cross-level positive-feedback process that ensures persistence of legitimacy judgments and stability of the institutional order. Viewing institutional stability as a state of suppressed microlevel diversity, we draw researchers' attention to "silenced" legitimacy judgments and to judgment suppressor factors that induce evaluators to abstain from making their deviant judgments public. The removal of such factors leads to the (re)emergence of competing judgments in public communications and creates an opportunity for institutional change. We explore competitive strategies that address propriety or validity components of legitimacy and describe the process through which organizational fields return to a state of institutional stability.
After new ventures have exhausted the limited financial resources of founders, family, and friends, they often pursue initial external capital. To secure investment, entrepreneurs can signal about their venture's latent potential by aligning themselves with reliable third parties. Such affiliations affirm the new venture's legitimacy and provide substantive benefits in the form of mentoring, access to resources, and ongoing monitoring. However, early stage financing is an especially "noisy" signaling environment owing to the large number of startups seeking funding, many of which will not survive. The real value of third-party affiliations in this context resides in their ability to unlock the potential of other more pedestrian signals, such as the entrepreneur's characteristics and actions that might otherwise go unnoticed. We borrow from the sensemaking literature to explain how third-party affiliation signals disambiguate signals with multiple possible interpretations so that potential investors interpret them positively. Findings support our theory that a startup's characteristics and actions are signals that remain relatively unnoticed unless a startup combines them with a third-party affiliation that enhances the signal's value, thus increasing the likelihood of receiving external capital.
PurposeSocial entrepreneurs often make public appeals for funding to investors who are motivated by nonfinancial considerations. This emerging research context is an opportunity for researchers to expand the bounds of entrepreneurship theory. To do so, we require appropriate research tools. In this chapter, we show how computer-aided text analysis (CATA) can be applied to advance social entrepreneurship research. We demonstrate how CATA is well suited to analyze the public appeals for resources made by entrepreneurs, provide insight into the rationale of social lenders, and overcome challenges associated with traditional survey methods.
Method
We illustrate the advantages of CATA by examining how charismatic language in 13,000 entrepreneurial narratives provided by entrepreneurs in developing countries influences funding speed from social lenders. CATA is used to assess the eight dimensions of charismatic rhetoric.
FindingsWe find that four of the dimensions of charismatic rhetoric examined were important in predicting funding outcomes for entrepreneurs.
ImplicationsData collection and sample size are important challenges facing social entrepreneurship research. This chapter demonstrates how CATA techniques can be used to collect valuable data and increase sample size. This chapter also examines how the rhetoric used by entrepreneurs impacts their fundraising efforts.
Prior research highlights storytelling as a means for entrepreneurs to establish venture legitimacy and gain stakeholder support. We extend this line of research by examining the role that projective stories play in setting expectations and the dynamics that ensue. Such attention highlights a paradox-the very expectations that are set through projective stories to gain venture legitimacy can also serve as the source of future disappointments. Because of inherent uncertainties that projective stories mask, ventures will likely deviate from their early projections, thereby disappointing stakeholders. This, in turn, can result in a loss of legitimacy. Recognizing that entrepreneurship is an ongoing process, we examine the constraints and possibilities of maintaining or regaining legitimacy through revised storytelling. We conclude the paper with implications for research on entrepreneurial storytelling as an ongoing process.
I describe how board structures influence the decision-making processes that investors use when purchasing shares of firms undertaking initial public offerings (IPOs). IPO firms are relatively unknown to investors and suffer from a liability of market newness. I rely on signaling theory, institutional theory, and sociological research on prestige to suggest that investor perceptions of board prestige signal organizational legitimacy, thereby reducing the liability of market newness and improving IPO firm stock performance. I also propose that the characteristics of investors, namely prestige, influence their perceptions of board prestige.
Observable resources, particularly patents, alliances, and team experience, are known to affect a start-up's ability to attract venture capital financing. In this context they potentially fulfill a twofold function: as productive assets and, likely, as signals of characteristics of a venture that are not observable at the time of assessment. In particular, patents, alliances, and team experience may serve as signals of the unobservable quality of a venture's technology. Most existing studies based on firm-level transaction data cannot disentangle signaling from productive effects. Using a conjoint-based survey among 187 European and U.S. venture capitalists, we find they rely on research alliances and, partly, on team experience as signals of technological quality. While patents affect the venture capitalists’ decision making in their property rights function, we find no indication that they serve as technology quality signals.
We examined how social capital and the power of venture capitalists and founder-CEOs affect IPO firm survival. Using data from 218 U.S. initial public offerings conducted in 1992, we found that average management team tenure and an IPO deal's network embeddedness decreased the likelihood of failure during a firm's first five years as a public entity. Founder-CEO presence at the time of an IPO interacted with CEO ownership to decrease the likelihood of failure, and CEO ownership and venture capitalist ownership concentration also decreased that likelihood.
The use of crowdfunding as a funding method has increased considerably over the last decade. However, competition for crowdfunding money is tough, and goal setting is critical for fund seekers. We investigate the impact of initially set stretch goals and the project creators' communication openness on project funding performance. Empirical results based on a large dataset from Kickstarter show that the stretch goals and higher levels of communication openness increase the likelihood of project funding success. Furthermore, communication openness positively moderates the relation between stretch goals and funding success. Moreover, projects with aggressive stretch goals are more likely to succeed if the goals are communicated well. The results provide practical implications for project creators to increase funding performance by communicating openly with the crowd.
Research on financial resource acquisition has indicated negative consequences for entrepreneurs that act feminine when trying to attract investors. Yet, does this remain true in crowdfunding, where there is a more diverse population of backers? To explore this, we take a gender role congruity perspective to see if gender roles align with crowdfunding success. More specifically, 2,071 entrepreneurs from Kickstarter were rated based on feminine (agreeableness and humility) and masculine (assertiveness and emotional stability) characteristics, and these characteristics were compared to whether or not the entrepreneur met the campaign goal. The results suggest that gender role congruity is a factor for successful crowdfunding, in that, for the most part, female entrepreneurs are rewarded for being more feminine and male entrepreneurs are rewarded for being more masculine. Only assertiveness was expected for both male and female entrepreneurs. Theoretical and practical implications are discussed from these findings.
Venture capitalists (VCs) make only a small number of investments and are more likely to invest in ventures where other VCs have invested previously. As such, valuable opportunities may be forgone if they are not funded by VCs in the first place. We demonstrate how crowdfunding (CF) can remedy this concern. Using a sample of new technology-based ventures, we reveal that ventures initially funded through reward-based CF can be even more likely than those initially backed by VCs in attracting follow-up funds from VCs. This happens when ventures originally funded via reward-based CF complement the certification they derive from CF with patents and a founding team with a track record of success. In those cases, VCs rely on the crowd more than their peers. Overall, the results suggest that signal complementarity can at least equalize the effectiveness of an a priori inferior and an a priori superior signal.
Research summary
A firm's strategic orientation has long been of interest in management and strategy research. In particular, entrepreneurial, market, and learning orientations have received thorough theoretical and empirical research attention. In this meta‐analysis, we compare the direct and combined performance effects of these orientations, explore their interrelatedness, and provide a theoretical foundation for complementarity between the three. Building on prior empirical findings from 210 samples and using structural equation modeling and seemingly unrelated regression techniques, we extend the knowledge base on strategic orientations. Our results provide evidence for interrelatedness and complementarity among strategic orientations, indicating that superior firm performance emerges from its capability to align entrepreneurial, market, and learning orientations.
Managerial summary
Managers might be tempted to divide rather than combine their attention on various aspects of strategy, such as entrepreneurial, market, and learning orientations. Similarly, organizational culture might inhibit or promote collaboration between distinct organizational functions. We synthesize a vast body of research on firm‐level strategy making and reveal that while each strategic orientation is beneficial on its own, together, the three strategic orientations create synergies that surpass the effects of individual strategic orientations. Therefore, to achieve superior performance, firms need to align their strategy making efforts to (a) monitoring changes in customer needs and competitor moves, (b) engaging in creative processes, and (c) assimilating the extensive knowledge gained from these activities.
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The emergence of novel and powerful digital technologies, digital platforms and digital infrastructures has transformed innovation and entrepreneurship in significant ways. Beyond simply opening new opportunities for innovators and entrepreneurs, digital technologies have broader implications for value creation and value capture. Research aimed at understanding the digital transformation of the economy needs to incorporate multiple and cross-levels of analysis, embrace ideas and concepts from multiple fields/disciplines, and explicitly acknowledge the role of digital technologies in transforming organizations and social relationships. To help realize this research agenda, we identify three key themes related to digitization—openness, affordances, and generativity—and, outline broad research issues relating to each. We suggest that such themes that are innate to digital technologies could serve as a common conceptual platform that allows for connections between issues at different levels as well as the integration of ideas from different disciplines/areas. We then summarize the contributions of the 11 papers presented in this Special Issue relating them to one or more of these themes and outlining their implications for future research.
Firms often need to acquire external financial resources to maintain and develop their business. To attract these resources, firms employ various substantive and rhetorical signals, such as publishing press releases, showcasing prototypes of new products, and hiring renowned managers. However, despite the relevance of signals, we still know little about how they interact—whether they strengthen, weaken, or neutralize one another—in attracting resources. Traditional signaling theory downplays the importance of rhetoric while management research acknowledges its relevance, creating a disconnect between these two camps and a shortcoming that deserves further investigation. To address this shortcoming, we advance the concept of signal portfolios. Signal portfolios may combine rhetorical signals with substantive signals. We employ this concept to explain how the interaction of the two affects financial resource acquisition in high-noise environments—settings where firms send multiple signals simultaneously. Based on longitudinal data on crowdfunding, an exemplary high-noise environment, we find that rhetorical signals complement substantive signals in certain situations and, thus, strengthen their impact on a firm’s financial resource acquisition. Contrary to our expectations, however, we find that under specific conditions, rhetorical signals may also weaken the impact of substantive signals. Our research has implications for signaling theory, crowdfunding research, and management practice.
The online appendix is available at https://doi.org/10.1287/orsc.2017.1195 .
In her 1959 seminal work on firm growth, Edith Penrose states that entrepreneurs and managers complement each other. Entrepreneurs innovate and create new markets, usually by starting their own firm, while managers amplify entrepreneurial projects through control and routinization. This image of entrepreneurship and management taking on different roles seems to be very harmonic; the question is whether that harmony remains in times calling for more fluent, network-like structures. Penrose in the foreword to her third edition states: "The business network is very different from a cartel of independent firms in its structure, organization, and purpose. ... This may call for a new 'theory of the firm.'" Obviously, there will also be a need for a new image of firm growth and, we argue, a new understanding of the linkages between entrepreneurship and management.
Prosocial crowdfunding platforms are venues for individual lenders to allocate resources to ventures that specifically pursue economic and social value. In a setting where hybridity is expected, do crowdfunders respond positively to category-spanning ventures, or do they prefer to fund ventures that are more clearly situated within a single category? Drawing on theory rooted in category membership and spanning, our hypotheses test whether prosocial crowdfunding lenders will more quickly allocate resources to hybrid microenterprises that communicate their hybridity, or to those that communicate a single one of their dual aims. Our study demonstrates that even in such a setting, crowdfunders lend more quickly to microenterprises that position themselves within a single linguistic category in which the social is emphasized over the economic. This suggests that how hybrid organizations position themselves in their linguistic narratives has a significant impact on resource allocation by external prosocial audiences.
Research on organizational signalling tends to focus on the effects of isolated or congruent signals, assuming highly rational responses to those signals. In this study, we theorize about the cognitive processes associated with the attention paid to and interpretation of multiple, often incongruent signals that organizations send to consumers, financiers, and other stakeholders who make organizational assessments. Contributing a cognitive perspective of signal attention and interpretation, alongside the introduction of signal sets, we provide a more complete picture of how organizational signalling unfolds in the field. Our research opens new frontiers for future inquiry into the cognitive foundations of signal attention, multi-signal interpretation, and incongruent signals.
We define digital leadership as doing the right things for the strategic success of digitalization for the enterprise and its business ecosystem. Digital leadership means thinking differently about business strategy, business models, the IT function, enterprise platforms, mindsets and skill sets, and the workplace. Based on the decade-long digitalization journey and experiences of the LEGO Group, this article provides insights on building the foundations for enhancing enterprise capabilities for digital leadership. Leveraging digitalization is one of the LEGO Group's four strategic priorities and is fundamental to it being a world leader in its industry.
The resource-based view proposes that reputation is a resource leading to competitive advantage. Past research tested this by using Fortune ratings to measure reputation, but these ratings are theoretically weak. This paper integrates mass communication theory into past research to develop a concept called media reputation, defined as the overall evaluation of a firm presented in the media. Theoretical and empirical analyses indicate that media reputation is a resource that increases the performance of commercial banks.
We theorize about how the entrepreneurial identity, which we define as the constellation of claims around the founder, new venture, and market opportunity as to "who we are" and "what we do," serves as a touchstone for investor judgments about new venture plausibility. We propose that entrepreneurial identities are judged favorably when they are legitimately distinctive, and that such judgments are influenced by market context and are mediated by identity narratives that provide institutional primes and equivocal cues in investor sensemaking.
While many sociologists have noted that organizational legitimacy is important for organizational survival, legitimacy has been infrequently empirically examined. This paper presents a conceptual framework in which organizational legitimacy is defined as the congruence between the values associated with the organization and the values of its environment. Challenges to organizational legitimacy and responses to these challenges are illustrated in a discussion of the American Institute for Foreign Study. Corporate philanthropic contributions, the composition and size of boards of directors, and the content of annual reports and other organizational communications are presented as efforts on the part of organizations to achieve legitimacy. The focus on processes of organizational legitimation can be used in analyzing a variety of organizational behaviors that are components of organization-environment interaction.
In this article we argue that (1) legitimacy is an important resource for gaining other resources, (2) such resources are crucial for new venture growth, and (3) legitimacy can be enhanced by the strategic actions of new ventures. We review the impact of legitimacy on new ventures as well as sources of legitimacy for new ventures, present strategies for new ventures to acquire legitimacy, explore the process of building legitimacy in the new venture, and examine the concept of the legitimacy threshold.
This study examines whether the value a venture derives from an affiliation depends on its relative standing in the portfolio of all affiliations held by its partner. Relative standing refers to how the venture ranks among other ventures in the partner's portfolio with respect to expected returns. The relative standing of a venture in its partner's portfolio influences the venture's access to the partner's resources and the venture's performance. We also argue that a venture's relative standing becomes more important to performance when the partner has a larger portfolio or higher status. In addition to a field study, we test the effect of a venture's relative standing in a venture capital portfolio on its exit likelihood, controlling for endogeneity. We find support for our hypotheses.
The nascent crowdfunding literature has highlighted the existence of a self-reinforcing pattern whereby contributions received in the early days of a campaign accelerate its success. After discussing what sustains this pattern, we maintain that the internal social capital that proponents may develop inside the crowdfunding community provides crucial assistance in igniting a self-reinforcing mechanism. Results of an econometric analysis of a sample of 669 Kickstarter projects are consistent with this view. Moreover, the effect of internal social capital on the success of a campaign is fully mediated by the capital and backers collected in the campaign's early days.
Research on how new ventures (NV) achieve legitimacy is fragmented and rests on taken-for-granted assumptions that require problematisation. Following a systematic literature review, I identify five distinct perspectives on NV legitimation: an institutional perspective, a cultural entrepreneurship perspective, an ecological perspective, an impression management perspective, and a social movement perspective. After comparing and contrasting these perspectives, I synthesise them into a generative and integrative typology. Based on this typology, I develop a new research programme. The programme widens the extant scholarship agenda by challenging its shared assumptions and contributes to further integration of the literature by building bridges between perspectives.