Uncovering Bias in Entrepreneurship: Testing Gender Stereotype Content in Investment Decisions

Abstract

Recent research demonstrates that when firms headed by female CEOs seek to launch new firms, or prepare their firms to go public, they face a significant disadvantage in their ability to successfully acquire growth capital. While this research does demonstrate the existence of an empirically significant gender- based capital gap, there has been little investigation of the underlying psychological processes at play in the minds of investors. We draw on the stereotype content model (Fisk et al., 2002) to suggest that an investor's psychological willingness to invest in an entrepreneur is contingent upon the entrepreneur's perceived trustworthiness and competence. Moreover, we investigate how perceptions of the entrepreneur's trustworthiness or competence can be influenced by the investor's own biases (i.e., the strength of the investor's own gender stereotypes). We develop a multiple-mediation model and test our hypotheses using both archival and experimental crowdfunding samples. Our results support previo...