The contingent value of venture capitalist reputation

Lee, Peggy M.; Pollock, Timothy G.; Jin, Kyuho

doi:10.1177/1476127011400505

Cited by 161 publications

(163 citation statements)

References 110 publications

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“…Examples of prominent VDOs include Techstars in Colorado, JumpStart in Ohio, and Y-Combinator in California. In the context of early-stage financing, third party affiliations signal investors in two ways, by (1) endorsing the quality of the startup and founding team, and (2) communicating to investors that the third party will provide key substantive benefits to the startup (Lee et al, 2011). For example, the Techstars VDO provides client firms access to a small pool of capital, and access to a network of investors from which additional funds can be raised.…”

Section: Vdo Affiliationmentioning

confidence: 99%

“…Others have investigated the contingent nature of new venture signaling, finding, for example, that prestigious ties are more valuable in certain markets and when made early in a firm's lifecycle (Gulati & Higgins, 2003;Lee, Pollock, & Jin, 2011). To secure investment, entrepreneurs can signal about their venture's latent potential by aligning themselves with reliable third parties.…”

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confidence: 99%

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Better Together? Signaling Interactions in New Venture Pursuit of Initial External Capital

Plummer

Allison

Connelly

2016

AMJ

270

224

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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.

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Section: Vdo Affiliationmentioning

confidence: 99%

mentioning

confidence: 99%

Better Together? Signaling Interactions in New Venture Pursuit of Initial External Capital

Plummer

Allison

Connelly

2016

AMJ

270

224

View full text Add to dashboard Cite

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“…While status is shaped by social construction, reputation is grounded in a firm's past actions and behaviors (Agarwal, Ganco, & Ziedonis, 2009;Fombrun & Shanley, 1990). Drivers of a VC's reputation include the firm's recent investments, the success of those investments, and the firm's track record of attracting investment funds from institutional investors (Lee, Pollock, and Jin, 2011 Drivers of a VC's reputation include the firm's recent investments, the success of those investments, and the firm's track record of attracting investment funds from institutional investors (Lee, Pollock, and Jin, 2011 …”

Section: Hypothesis 5: the Negative Effect Of Indirect Competitor Tiementioning

confidence: 99%

Exposed: Venture Capital, Competitor Ties, and Entrepreneurial Innovation

Pahnke

McDonald

Wang

et al. 2015

AMJ

155

112

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This paper investigates the impact of early relationships on innovation at entrepreneurial firms. Prior research has largely focused on the benefits of network ties, documenting the many advantages that accrue to firms embedded in a rich network of inter-organizational relationships. In contrast, we build on research emphasizing potential drawbacks to examine how competitive exposure, enabled by powerful intermediaries, can inhibit innovation. We develop the concept of competitive information leakage, which occurs when firms are indirectly tied to their competitors via shared intermediary organizations. To test our theory, we examine every relationship between entrepreneurial firms and their venture capital investors in the minimally-invasive surgical segment of the medical device industry over a 22-year period. We find that indirect ties to competitors impede innovation, and that this effect is moderated by several factors related to the intermediary's opportunities and motivation to leak important information. ABSTRACTThis study investigates the impact of early relationships on innovation at entrepreneurial firms. Prior research has largely focused on the benefits of network ties, documenting the many advantages that accrue to firms embedded in a rich network of inter-organizational relationships. In contrast, we build on research emphasizing potential drawbacks to examine how competitive exposure, enabled by powerful intermediaries, can inhibit innovation. We develop the concept of competitive information leakage, which occurs when firms are indirectly tied to their competitors via shared intermediary organizations. To test our theory, we examine every relationship between entrepreneurial firms and their venture capital investors in the minimally-invasive surgical segment of the medical device industry over a 22-year period. We find that indirect ties to competitors impede innovation, and that this effect is moderated by several factors related to the intermediary's opportunities and motivation to leak important information.

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“…A variety of studies in management (e.g., Kilduff & Krackhardt, 1994;Lee, Pollock, & Jin, 2011;Rao, 1994;Roberts & Dowling, 2002), economics (e.g., Banerjee & Duflo, 2000;Shapiro, 1983), and sociology (e.g., Raub & Weesie, 1990) have provided empirical evidence that good reputations are valuable to actors, whether these actors are individuals or organizations (for an overview see Rindova & Martins, 2012). Scholars in management have defined reputation in a number of ways (Fombrun, 2012;Rindova & Martins, 2012) that are associated with different approaches to measuring reputation (Dowling & Gardberg, 2012;Lange, Lee, & Dai, 2011).…”

Section: Audience-specific Reputationsmentioning

confidence: 99%

The Art of Representation: How Audience-specific Reputations Affect Success in the Contemporary Art Field

Ertug

Yogev

Lee

et al. 2016

AMJ

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AcknowledgmentWe would like to thank Tim Pollock and the three anonymous reviewers for their excellent suggestions and guidance. We would also like to thank Martin Gargiulo, Matteo Prato, Heeyon Kim, Abhijith G. Acharya, Fabrizio Castellucci, Yi Tang, and Francois Collet for their valuable feedback, as well as participants at presentations at the Oxford University Centre for Corporate Reputation and at Singapore Management University. We would also like to express our gratitude for the financial support we have received from the Oxford University Centre for Corporate Reputation. The research leading to these results has received funding from the European Research 2 THE ART OF REPRESENTATION: HOW AUDIENCE-SPECIFIC REPUTATIONS AFFECT SUCCESS IN THE CONTEMPORARY ART FIELD ABSTRACTWe study the effects of actors' audience-specific reputations on their levels of success with different audiences in the same field. Extending recent work that has emphasized the presence of multiple audiences with different concerns, we demonstrate that considering audience specificity leads to an improved understanding of reputation effects. Using data on emerging artists in the field of contemporary art from 2001 to 2010, we investigate the manner in which artists' audience-specific reputations affect their subsequent success with two distinct audiences: museums and galleries. Our findings suggest that audience-specific reputations have systematically different effects with respect to success with museums and galleries. Our findings also illuminate the extent to which audience-specific reputations are relevant for emerging research on the contingent effects of reputation. In particular, our findings support our predictions that audiences differ from one another in terms of the extent to which other signals (specifically, status and interaction with other audiences) enhance or reduce the value of audience-specific reputations. Our study thus advances theory by providing empirical evidence for the value of incorporating audience-specific reputations into the general study of reputation.3

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The contingent value of venture capitalist reputation

Cited by 161 publications

References 110 publications

Better Together? Signaling Interactions in New Venture Pursuit of Initial External Capital

Better Together? Signaling Interactions in New Venture Pursuit of Initial External Capital

Exposed: Venture Capital, Competitor Ties, and Entrepreneurial Innovation

The Art of Representation: How Audience-specific Reputations Affect Success in the Contemporary Art Field

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