Feeling Right: Regulatory Fit Theory and Early-Stage Entrepreneurial Investment Decisions

Jiang Shiyao, Li Guiquan (), Liu Haixin, Xiong Jie and Chakraborty Shubho
Additional contact information
Jiang Shiyao: School of Business Administration, Lanzhou University of Finance and Economics, Lanzhou, China
Li Guiquan: School of Psychological and Cognitive Sciences, Beijing Key Laboratory of Behavior and Mental Health, Peking University, Beijing, China
Liu Haixin: Department of Information Management, School of Economics and Management, Beijing Jiaotong University, Beijing, China
Xiong Jie: Department of Strategy, Entrepreneurship and International Business, ESSCA School of Management, Angers, France
Chakraborty Shubho: Department of Strategy and Innovation, Rennes School of Business, Rennes, France

Entrepreneurship Research Journal, 2024, vol. 14, issue 2, 735-758

Abstract: Recent advances in entrepreneurial investment decisions research implied that early-stage investment decisions, given their extreme uncertainty and unpredictability, were results of investors’ intuition processes. In other words, investors manage the high risks of early-stage investment decisions by finding justifications of future value against risk in the invested entrepreneurial projects. Although some studies have discussed the decision-making process of mid- and late-stage venture capital, there is still a lack of discussion on the early-stage investment decision-making mechanism. In this paper, we draw on regulatory fit theory to theorize how the fit of regulatory focus between investor and entrepreneur could lead to the investor’s early-stage investment decisions in terms of investment amount and speed. Across three experimental studies, we found empirical support for our proposed model. Specifically, investors who have similar regulatory focus with the entrepreneurs are more likely to invest a larger amount of funds at a faster speed. We further found that investor’s sense of rightness mediates the relationship between regulatory fit and investment decision, and investor’s previous investment experience plays a moderating role.

Keywords: regulatory focus theory; regulatory fit; investment decision; start-up business investment; sense of rightness; previous experience (search for similar items in EconPapers)
Date: 2024
References: Add references at CitEc
Citations:

Downloads: (external link)
https://doi.org/10.1515/erj-2020-0408 (text/html)
For access to full text, subscription to the journal or payment for the individual article is required.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bpj:erjour:v:14:y:2024:i:2:p:735-758:n:1

Ordering information: This journal article can be ordered from
https://www.degruyter.com/journal/key/erj/html

DOI: 10.1515/erj-2020-0408

Access Statistics for this article

Entrepreneurship Research Journal is currently edited by Chandra S. Mishra and Ramona K. Zachary

More articles in Entrepreneurship Research Journal from De Gruyter
Bibliographic data for series maintained by Peter Golla ().