A Signaling Theory Perspective on Social Impact Accelerators' Selection Decisions.

Abstract

Understanding entrepreneurial actions that addresses pressing social and environmental challenges has become an emergent and important area of research interests. Blending of market-based logics and social welfare logics has created new opportunity spaces for prosocial ventures, albeit it comes with acute challenges of resource acquisition. This gap can be filled by social impact accelerators (SIA)s short-term, limited duration, cohort-based educational programs for nascent prosocial ventures, that apart from providing seed funding often utilize extensive consultation with mentors, program directors, customers, guest speakers, alumni, and peers, help solidify their value proposition. Hence it is crucial for prosocial ventures to get selected into the accelerator programs as that could later translate into venture success. Despite the recent proliferation of accelerator research, research on Social impact accelerators (SIA)s has been limited. SIA is a new form of accelerator that selects prosocial ventures, those ventures that display potential to generate financial returns along with social impact into their cohort-based programs. Specifically, how SIAs process external information to make cohort admission decisions. This study uses signaling theory layered with pecking order and static trade-off theory to conceptually analyze how entrepreneurial behaviors about capital structure decisions impact selection decisions into SIA.