Alleviating concerns of misappropriation in corporate venture capital: Creating credible commitments and calculative trust

Sears, Joshua B.; McLeod, Michael S.; Evert, Robert E.; Payne, G. Tyge

doi:10.1177/1476127020926174

Cited by 12 publications

(10 citation statements)

References 63 publications

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“…Integrating other variables while investigating rhetoric usage in industries could also be interesting. For example, past research has found that corporate venture capitalists (CVCs) can build trust with new ventures by establishing credible commitments, even when their industries overlap (Sears et al, 2020). It would be interesting to investigate if or how CVCs use language to build trust with new ventures in overlapping industries.…”

Section: Discussionmentioning

confidence: 99%

Rhetoric, Risk, and Investment: Letting the Numbers Speak for Themselves

McLeod

Sears

Chandler

et al. 2022

J Management Studies

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It is well established that words matter. Yet, there remains much that we do not understand about when and how words are best utilized in various business contexts. This study uses a mediation model to examine how investment risk influences the choice of different rhetorical frames – logos (logic), pathos (emotion), and ethos (character) – in the initial public offering (IPO) prospectus, and subsequently how rhetoric influences investment performance. We apply rhetorical theory to describe how authors use different amalgamations of words to frame messages to persuade audiences to engage in specific actions. Two key mechanisms of rhetorical theory that we investigate and build upon in this study are: 1) rhetoric reflects an author’s perspective of a context (i.e., perspective of the investment risk) and 2) the process through which cognitive resource limitations of authors and audiences influence outcomes. Specifically, we question whether these two mechanisms create a paradoxical situation where rhetoric that reflects the author’s perspective is not always the most effective approach given cognitive resource limitations. Based on a sample of 644 IPO firms, we find that using words that reflect the author’s perspective is not always the most persuasive. We posit that this is because investment authors fail to account for other communicative symbols (such as data and financial information) that can fulfill the role of more logic‐based rhetorical frames, thereby creating cognitive resource slack.

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Section: Discussionmentioning

confidence: 99%

Rhetoric, Risk, and Investment: Letting the Numbers Speak for Themselves

McLeod

Sears

Chandler

et al. 2022

J Management Studies

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show abstract

“…Several arguments support this perspective. First, large shareholders tend to be more risk averse, which may discourage larger and more costly investments—especially in early startup stages—that benefit the long-term performance of the firm (Sears, McLeod, Evert, & Payne, 2020). Likewise, higher ownership concentration is associated with increased monitoring activities that slow down decision-making processes.…”

Section: Theory and Hypotheses Developmentmentioning

confidence: 99%

Ambiguous Signals and Information Asymmetry in the Initial Public Offering Process: Examining Ownership Concentration, Process Time, and Underpricing

Payne

Trudell

Moore

et al. 2022

Group & Organization Management

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Initial public offerings (IPOs) represent an important stage of development for many firms as they try to gain access to the resources needed for growth and development. Due to the information asymmetry that accompanies the process, there is extensive research examining what factors might signal quality to potential investors such that the IPO might be more optimally valuated and priced. Herein, we hypothesize and empirically explore how a mixed or ambiguous signal about a firm—the signal of ownership concentration in this case—might be overcome with more opportunities for information disclosure and, thus, lessen underpricing; IPO stocks tend to be underpriced (i.e., the offer price of a stock is lower than the inherent market value), which means that owner’s “leave money on the table.” Using a generalized structural equation model of data on 601 U.S. IPO firms, we find support for our model by demonstrating that longer IPO process times (i.e., days from the IPO firm’s filing date to the actual issue date)—representing opportunities to disclose and disseminate information—act as a mediator between ownership concentration and underpricing. Further, we show that the age of the firm also influences this process model arguing that more historical data and other information is more readily available to the potential investor with increased firm age. Overall, our study contributes to the literature by demonstrating how more disclosure and dissemination of relevant information might reduce asymmetries associated with more ambiguous or difficult-to-interpret signals and improve outcomes.

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“…This calculative, riskbased theory of trust implies that trust is warranted when the trustor assesses the expected gain of placing oneself at risk to be greater than the expected gain of not placing oneself at risk (Wang et al, 2020;Fawcett et al, 2017;Suh and Kwon, 2006). Stated differently, placing trust in another implies that the probability that one's counterparty will act in a way that is beneficial is high enough to justify engaging in cooperation (Sears et al, 2020). Williamson (1993) defined four theoretical assumptions about the calculative theory of trust.…”

Section: Quantificationmentioning

confidence: 99%

Decision model with quantification of buyer-supplier trust in advanced technology enterprises

Collier

Guin

Sarkis

et al. 2021

BIJ

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PurposeIn the buyer-supplier relationship of a high-technology enterprise, the concepts of trust and risk are closely intertwined. Entering into a buyer-supplier relationship inherently involves a degree of risk, since there is always an opportunity for one of the parties to act opportunistically. Purchasing and supply managers play an important role in reducing the firm's risk profile, and must make decisions about whether or not to enter into, or remain in, a relationship with a supplier based on a subjective assessment of trust and risk.Design/methodology/approachIn this paper, the authors seek to explore how trust in the buyer-supplier relationship can be quantitatively modeled in the presence of risk. The authors develop a model of trust between a buyer and supplier as a risk-based decision, in which a buyer decides to place trust in a supplier, who may either act cooperatively or opportunistically. The authors use a case study of intellectual property (IP) piracy in the electronics industry to illustrate the conceptual discussion and model development.FindingsThe authors produce a generalizable model that can be used to aid in decision-making and risk analysis for potential supply-chain partnerships, and is both a theoretical and practical innovation. However, the model can benefit a variety of high-technology enterprises.Originality/valueWhile the topic of trust is widely discussed, few studies have attempted to derive a quantitative model to support trust-based decision making. This paper advanced the field of supply chain management by developing a model which relates risk and trust in the buyer-supplier relationship.

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Alleviating concerns of misappropriation in corporate venture capital: Creating credible commitments and calculative trust

Cited by 12 publications

References 63 publications

Rhetoric, Risk, and Investment: Letting the Numbers Speak for Themselves

Rhetoric, Risk, and Investment: Letting the Numbers Speak for Themselves

Ambiguous Signals and Information Asymmetry in the Initial Public Offering Process: Examining Ownership Concentration, Process Time, and Underpricing

Decision model with quantification of buyer-supplier trust in advanced technology enterprises

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