Developing High-Tech Ventures: Entrepreneurs, Advisors, and the Use of Non-Disclosure Agreements (NDAs)

Abstract

Understanding how entrepreneurs secure venture-related knowledge during the preoperational stage is a rarely studied aspect of entrepreneurship research. Our premise is that entrepreneurs will rely on discretion and use secrecy with advisors who are close friends and family. They will trust these advisors not to disclose shared knowledge with others. We also propose that they will use non-disclosure agreements(NDAs) with those they are not so familiar with, such as business associates and professional consultants. Drawing on the social capital perspective, we use interviews with 52 high-tech entrepreneurs to examine their use of NDAs with their advisors. Our results show that entrepreneurs’ trust in advisors significantly impact the choice of knowledge security mechanisms during the preoperational stage.