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Funding decisions and entrepreneurial team diversity: A field study - Zurich Open Repository and Archive


Puhan, Tatjana-Xenia; Vogel, Rick; Shehu, Edlira; Klinger, Doron; Beese, Henning (2014). Funding decisions and entrepreneurial team diversity: A field study. Journal of Economic Behavior & Organization, 107:595-613.

Abstract

This study provides experimental evidence, using a large sample of 2894 individuals recruited via business media websites, about the impact of demographic attributes within entrepreneurial teams on funding decisions by external capital providers. In previous work the role of diversity with regard to personal characteristics within entrepreneurial teams, such as education, gender and nationality was not clear. Specifically, we focus on task-oriented (e.g., education, experience) and relations-oriented (e.g., age, nationality) dimensions of diversity. The participants of our experiment had to decide on providing early-stage funding to a team of start-up managers whereas the diversity of these teams varied across treatment groups. We find that task-oriented diversity is positively and significantly related to the willingness of respondents to provide capital. Interestingly, the same applies for relations-oriented diversity. This suggests social capital of an entrepreneurial team matters to a greater extent to funding decisions of external investors than the behavioral integration of the team's human capital. Entrepreneurial teams must therefore carefully balance the social costs of non-task-related diversity and the access to financial resources.

Abstract

This study provides experimental evidence, using a large sample of 2894 individuals recruited via business media websites, about the impact of demographic attributes within entrepreneurial teams on funding decisions by external capital providers. In previous work the role of diversity with regard to personal characteristics within entrepreneurial teams, such as education, gender and nationality was not clear. Specifically, we focus on task-oriented (e.g., education, experience) and relations-oriented (e.g., age, nationality) dimensions of diversity. The participants of our experiment had to decide on providing early-stage funding to a team of start-up managers whereas the diversity of these teams varied across treatment groups. We find that task-oriented diversity is positively and significantly related to the willingness of respondents to provide capital. Interestingly, the same applies for relations-oriented diversity. This suggests social capital of an entrepreneurial team matters to a greater extent to funding decisions of external investors than the behavioral integration of the team's human capital. Entrepreneurial teams must therefore carefully balance the social costs of non-task-related diversity and the access to financial resources.

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3 citations in Web of Science®
2 citations in Scopus®
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Additional indexing

Item Type:Journal Article, refereed, original work
Communities & Collections:03 Faculty of Economics > Department of Banking and Finance
Dewey Decimal Classification:330 Economics
Language:English
Date:November 2014
Deposited On:20 Feb 2015 09:25
Last Modified:05 Apr 2016 18:58
Publisher:Elsevier
ISSN:0167-2681
Publisher DOI:https://doi.org/10.1016/j.jebo.2014.02.021
Official URL:http://www.sciencedirect.com/science/article/pii/S0167268114000602
Other Identification Number:merlin-id:9536

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