Do Disruptive Visions Pay Off? The Impact of Disruptive Entrepreneurial Visions on Venture Funding
Year: 2018
Type: article
Abstract: Entrepreneurs often articulate a vision for their venture that purports to fundamentally change, disturb, or re‐order the ways in which organizations, markets, and ecosystems operate. We call these visions disruptive visions . Neglected in both the disruption and the impression management literature, disruptive visions are widespread in business practice. We integrate real options and impression management theories to hypothesize that articulating a disruptive vision increases the likelihood of the venture receiving funding but reduces the amount of funding obtained. A novel dataset of Israeli start‐ups shows that a standard deviation increase in disruptive vision communication increases the odds of receiving a first round of funding by 22 per cent, but reduces amounts of funds received by 24 per cent. A randomized online experiment corroborates these findings and further demonstrates that the expectation of extraordinary returns is the key mechanism driving investors’ sensemaking.
Source: Journal of Management Studies
DOI: 10.1111/joms.12390
Authors: Timo van Balen, Murat Tarakci, Ashish Sood
Language: English
Subfield: Accounting
Domain: Social Sciences
Open Access status: hybrid
Estimated APC paid: $4,150
OpenAlex ID: W2898228767