From signalling to endorsement: The valorisation of fledgling digital ventures

Vom Signalisieren zur Unterstützung: Die Aufwertung junger digitaler Unternehmen

Milan Frederik Klus

No 3/2020, Discussion Papers of the Institute for Organisational Economics from University of Münster, Institute for Organisational Economics

Abstract: Despite extensive research on the liability of newness of young firms and what they can do to reduce information asymmetries, relatively little is known about how young digital ventures' growth and scaling is affected by different forms of endorsement. With a focus on third-party endorsements from industry analysts, I approach this question using a two-stage research design. First, I empirically examine the connection between awards given by industry analysts and the funding of digital ventures. I use the example of the Cool Vendor award given by the analyst firm Gartner and focus on the fintech domain. Using semi-structured interviews, I then identify and explain different forms of endorsement from a digital venture perspective, thereby differentiating between pure market signals and more sophisticated mechanisms. This differentiation is presented in a conceptual framework, which I propose as a supplement to the signalling literature. This paper promotes a better understanding of what helps fledgling digital firms to develop and prosper.

JEL-codes: D83 G24 M13 O33 (search for similar items in EconPapers)
Date: 2020
New Economics Papers: this item is included in nep-ore and nep-pay
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