Not All Entrepreneurs are Viewed Equally: A Social Dominance Theory Perspective on Access to Capital

Abstract

Abstract Drawing on social dominance theory, the present research examines how the characteristics of a potential investor – namely, social dominance orientation (SDO) (i.e. the degree to which individuals seek to maintain inequality between groups) interacts with the characteristics of the entrepreneur (i.e. race) to influence capital decision-making. Study 1 found that as a function of individuals’ SDO, individuals supported a policy that would increase funding access to White but not minority entrepreneurs. Study 2 found that as a function of SDO, individuals were willing to invest in White but not minority-owned firms. The perceived threat of the entrepreneur’s success to the extant racial hierarchy explained differences in investment decisions. The present research in the field of entrepreneurship is the first to apply Social Dominance Theory and Social Dominance Orientation (Sidanius, J., and F. Pratto. 1999. Social Dominance: An Intergroup Theory of Social Hierarchy and Oppression. New York: Cambridge University Press.), which have received much attention in social psychology and organizational behavior, to funding access and investment decisions. In doing so, these studies answer the call by (Klotz, A. C., and D. O. Neubaum. 2016. “Research on the Dark Side of Personality Traits in Entrepreneurship: Observations from an Organizational Behavior Perspective.” Entrepreneurship Theory and Practice 40 (1): 7–17.) to examine the relationship between “darker” personality traits, such as SDO, and entrepreneurial outcomes.