Abstract
The effectiveness of trust has been extensively investigated in entrepreneurship studies. However, compared to the outcomes of trust, we still lack knowledge about the mechanisms underlying venture capitalists' initial trust in entrepreneurs. Drawing from signal theory and impression management theory, this study explores an impression management motivational explanation for the influencing factors of venture capitalists' initial trust. An empirical test is based on 202 valid questionnaires from venture capitalists, and the results indicate that the signal of five dimensions of entrepreneurial orientation has a significant impact on the initial trust of venture capitalists and that a signal of entrepreneurial orientation of perseverance or passion positively influences venture capitalists' initial trust through acquired impression management strategies, while a signal of entrepreneurial orientation of risk-taking, innovation, or proactivity positively affects the initial trust of venture capitalists through defensive impression management strategies. The perceptions of entrepreneurs' hypocrisy by venture capitalists negatively moderate the relationship between acquired impression management strategies and the initial trust of venture capitalists and negatively moderate the relationship between defensive impression management strategies and the initial trust of venture capitalists.
Highlights
During the economic transition period, the business environment is changing rapidly
The sample data were collected by questionnaire in our study, and the measurement items were answered by the venture capitalists themselves, which may incur the problem of common method bias
To ensure the reliability of the research results, we used SPSS 21.0 for Harman’s single-factor test and carried out principal component analysis (PCA) on all measurement items of the core variables involved in the research
Summary
During the economic transition period, the business environment is changing rapidly. How to obtain external resources to promote corporate growth for “new and weak” start-ups has gradually become an urgent problem to be solved in academic and practical circles. The trust of venture capitalists in entrepreneurs, as one of the important ways for start-ups to obtain external “soft” resources, affects the success or failure of start-ups to a large extent. Studies have confirmed that the trust of venture capitalists in entrepreneurs helps entrepreneurs to obtain financial capital and strategic advice for new ventures, thereby enhancing the level of innovation (Maula et al, 2013) and improving financial performance (Park and Steensma, 2012). Existing studies have paid more attention to the trust of venture capitalists in entrepreneurs after investment, and research on initial trust before investment is rare. The development of trust occurs in stages (Schoorman et al, 2007), so the investigation of trust in entrepreneurs by venture capitalists should be dynamic (Yang and Li, 2018)
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