Decision-making style in entrepreneurial finance and growth

Laurence Cohen and Peter Wirtz
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Laurence Cohen: MAGELLAN - Laboratoire de Recherche Magellan - UJML - Université Jean Moulin - Lyon 3 - Université de Lyon - Institut d'Administration des Entreprises (IAE) - Lyon

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Abstract: Comparing one hyper-growth venture with one moderate growth venture, we show that growth paths critically depend on the founders' capability to leverage BAs' and VCs' financial and cognitive resources in an ongoing process of interaction. Dynamically matching specific entrepreneurs' and investors' decision-making styles is critical for shaping heterogeneous growth paths, as investors and entrepreneurs interact. Specifically, sharing a predictive decision-making style among VCs, BAs and entrepreneurs facilitate mutual communication and shared understanding in the joint pursuit of ambitious growth targets. To the contrary, matching non-predictive and purely control-oriented entrepreneurs with BAs featuring an identical decision-making style locks the venture into a moderate growth trajectory. This has practical implications for entrepreneurs searching for the adequate funding strategy, and for equity investors in their assessment of entrepreneurs' cognitive profiles.

Keywords: entrepreneurial; finance (search for similar items in EconPapers)
Date: 2022-06
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Citations: View citations in EconPapers (2)

Published in Small Business Economics, 2022, 59 (1), pp.183-210. ⟨10.1007/s11187-021-00528-y⟩

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Journal Article: Decision-making style in entrepreneurial finance and growth (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-03289758

DOI: 10.1007/s11187-021-00528-y

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