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Badge of honor or tolerable reality? How previous firm failure and experience influences investor perceptions

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Abstract
Entrepreneurs face considerable obstacles in accruing funding and other resources when starting a new venture; problems that are likely compounded when starting a new venture after experiencing failure. In particular, it is unclear how early-stage investors react to entrepreneurs with prior failure experiences in terms of how they perceive the entrepreneur's capabilities and how they evaluate the new venture. Leveraging expectancy violation theory, we theorize that prior failure will lead to more negative outcomes than prior success, but more positive outcomes than those with no prior entrepreneurial experience, and that this effect will be further attenuated by whether the entrepreneur learned or not from their prior experience. We test our model using a scenario-based experiment of 828 decisions made by 69 early-stage investors. We contribute to the literature on early stage investor decision making, entrepreneurial failure and learning, and discuss implications and future research directions given our findings.
Keywords
Firm failure, Learning, Investor decision making, Expectancy violation theory

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MLA
Roccapriore, Ashley Y., et al. “Badge of Honor or Tolerable Reality? How Previous Firm Failure and Experience Influences Investor Perceptions.” JOURNAL OF BUSINESS VENTURING INSIGHTS, vol. 16, 2021, doi:10.1016/j.jbvi.2021.e00252.
APA
Roccapriore, A. Y., Imhof, Z., & Cardon, M. S. (2021). Badge of honor or tolerable reality? How previous firm failure and experience influences investor perceptions. JOURNAL OF BUSINESS VENTURING INSIGHTS, 16. https://doi.org/10.1016/j.jbvi.2021.e00252
Chicago author-date
Roccapriore, Ashley Y., Zoë Imhof, and Melissa S. Cardon. 2021. “Badge of Honor or Tolerable Reality? How Previous Firm Failure and Experience Influences Investor Perceptions.” JOURNAL OF BUSINESS VENTURING INSIGHTS 16. https://doi.org/10.1016/j.jbvi.2021.e00252.
Chicago author-date (all authors)
Roccapriore, Ashley Y., Zoë Imhof, and Melissa S. Cardon. 2021. “Badge of Honor or Tolerable Reality? How Previous Firm Failure and Experience Influences Investor Perceptions.” JOURNAL OF BUSINESS VENTURING INSIGHTS 16. doi:10.1016/j.jbvi.2021.e00252.
Vancouver
1.
Roccapriore AY, Imhof Z, Cardon MS. Badge of honor or tolerable reality? How previous firm failure and experience influences investor perceptions. JOURNAL OF BUSINESS VENTURING INSIGHTS. 2021;16.
IEEE
[1]
A. Y. Roccapriore, Z. Imhof, and M. S. Cardon, “Badge of honor or tolerable reality? How previous firm failure and experience influences investor perceptions,” JOURNAL OF BUSINESS VENTURING INSIGHTS, vol. 16, 2021.
@article{8742117,
  abstract     = {{Entrepreneurs face considerable obstacles in accruing funding and other resources when starting a new venture; problems that are likely compounded when starting a new venture after experiencing failure. In particular, it is unclear how early-stage investors react to entrepreneurs with prior failure experiences in terms of how they perceive the entrepreneur's capabilities and how they evaluate the new venture. Leveraging expectancy violation theory, we theorize that prior failure will lead to more negative outcomes than prior success, but more positive outcomes than those with no prior entrepreneurial experience, and that this effect will be further attenuated by whether the entrepreneur learned or not from their prior experience. We test our model using a scenario-based experiment of 828 decisions made by 69 early-stage investors. We contribute to the literature on early stage investor decision making, entrepreneurial failure and learning, and discuss implications and future research directions given our findings.}},
  articleno    = {{e00252}},
  author       = {{Roccapriore, Ashley Y. and Imhof, Zoë and Cardon, Melissa S.}},
  issn         = {{2352-6734}},
  journal      = {{JOURNAL OF BUSINESS VENTURING INSIGHTS}},
  keywords     = {{Firm failure,Learning,Investor decision making,Expectancy violation theory}},
  language     = {{eng}},
  pages        = {{14}},
  title        = {{Badge of honor or tolerable reality? How previous firm failure and experience influences investor perceptions}},
  url          = {{http://doi.org/10.1016/j.jbvi.2021.e00252}},
  volume       = {{16}},
  year         = {{2021}},
}

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