Social trust and angel investors' decisions: A multilevel analysis across nations

Zhujun Ding, Kevin Au and Flora Chiang

Journal of Business Venturing, 2015, vol. 30, issue 2, 307-321

Abstract: The decisions made by angel investors are embedded in and influenced by their institutional settings. This paper advances a multilevel model of the direct and indirect effects of social trust on individuals' angel-investment decisions. It is postulated that two dimensions of social trust, namely the level and radius, can enhance information transmission, collaboration, and sanctioning mechanisms within a society. Consequently, they facilitate angel investment and moderate the relationship between it and individual factors. A multilevel model of data from 191,907 individuals across 25 countries shows that individuals in countries with a high level of trust are more likely to make angel investments. Whereas both the level of trust and the radius of trust are found to heighten the positive relationship between an individual's perceived entrepreneurial skills and angel investment, it is interesting to note that these factors weaken the relationship between the perception of new business opportunities and angel investment. These direct and moderating effects are robust after controlling for wealth, cultural values, and other factors. This study contributes to the crossover between research on entrepreneurship and social-trust research.

Keywords: Comparative entrepreneurship; Angel investment; Social trust; Institutional perspective (search for similar items in EconPapers)
JEL-codes: L26 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (31)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jbvent:v:30:y:2015:i:2:p:307-321

DOI: 10.1016/j.jbusvent.2014.08.003

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