Homophily and peer influence in early-stage new venture informal investment

Fei Qin, Tomasz Mickiewicz and Saul Estrin

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: Conceptualising early-stage new venture informal investors as co-entrepreneurs whose actions are socially embedded, we examine the role of social influence and how it interplays with entrepreneurial experience at the individual level leading to informal investment. We extend theories of social homophily and social influence to argue that informal investment decisions are influenced by shared experience and entrepreneurism in peer groups. We test our hypotheses with a multi-level model using first a large cross-country dataset and next in depth within a country. Our analysis reveals that both individual entrepreneurship experience and peer group-embedded experience significantly influence the likelihood that an individual becomes an early-stage investor. Furthermore, these social effects substitute for the lack of individual entrepreneurial experience.

Keywords: informal investors; entrepreneurial experience; social homophily; peer influence; entrepreneurship capital; global entrepreneurship monitor (GEM); angel investors; Peer influence (search for similar items in EconPapers)
JEL-codes: G32 M13 (search for similar items in EconPapers)
Pages: 24 pages
Date: 2022-06-01
New Economics Papers: this item is included in nep-cfn, nep-isf, nep-iue, nep-net, nep-sbm and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Published in Small Business Economics, 1, June, 2022, 59(1), pp. 93 - 116. ISSN: 0921-898X

Downloads: (external link)
http://eprints.lse.ac.uk/110890/ Open access version. (application/pdf)

Related works:
Journal Article: Homophily and peer influence in early-stage new venture informal investment (2022)
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:ehl:lserod:110890

Access Statistics for this paper

More papers in LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library LSE Library Portugal Street London, WC2A 2HD, U.K.. Contact information at EDIRC.
Bibliographic data for series maintained by LSERO Manager ().