While earlier studies focused on the general effects of corporate or individual reputations on attracting investment capital, a major contribution of this study is to distinguish between different types of reputations and different types of investors, and then analyze how particular types of reputations have an effect on particular types of investors. We do this by applying selection system theory, which is an approach to understanding competitive processes by focusing on the identity of the decision makers whose evaluations determine the outcome of these competitive processes. The three basic types of selectors are: market selectors, peer selectors and expert selectors.This tripartite classification allows us to categorize types of reputations on the basis of their sources. First, if a reputation is based on success in consumer markets, for example (end-) consumers' quality perceptions of a specific brand of shampoo, it can be linked to market selection. Second, a reputation type can be linked to expert selection if it originates from expert judgments. An example is a credit rating agency 4 such as Moody's. Third, if the reputation is based upon success among peers, for example winning an award at the 'Oscars' where the jury largely consists of other filmmakers, it can be linked to peer selection.At the same time types of investors can be categorized by considering both the characteristics and the goals of the investors making the investment decisions. First, if investors back a venture because they primarily hope that many consumers will like and buy the product they can be identified as market selectors. Second, if investors are (industry) peers of the founding members of the new venture they can be identified as peer selectors. Third, if they are neither market nor peer selectors they can be categorized as expert selectors. This tripartite categorization opens the way to the main argument of this paper: nascent organizations will be more successful in attracting investment capital from an investor if their founding members have performance-based reputations of a type that matches the type of the investor.In the empirical section of this paper we test this argument by studying the impact of the reputations of producers and directors on the investment decisions of the three main investors in the Dutch film industry: distributors, television broadcasters and the Film Fund. We find support for our main theoretical argument,
IntroductionAn adequate resource base (Brush, Greene, Hart and Haller, 1993;Davidson and Honig, 2003;Parker and van Praag, 2006), and especially adequate financing Earlier studies applied selection system theory to study competition in product markets. For example, how winning or being nominated for an award impacts box office revenues of mainstream or art-house films (Gemser et al., 2008). Employing selection system theory to better understand the financing stage further tests the usefulness of this framework and also extends the theory itself.Our empirical setting is the Dutch film industr...