Signaling Theory Perspective Research Articles

Crowdfunding Success Effects on Financing Outcomes for Startups: A Signaling Theory Perspective

This study adopts a signaling theory perspective to examine whether and how crowdfunding (relative to angel financing) influences subsequent venture capital (VC) investments in startups. We used a bivariate probit model with propensity score matching to address the potential endogeneity of the initial funding choice. Subsequently, we found that crowdfunded startups have a lower chance of receiving VC funding than angel-financed startups and that the effect is more negative for startups located outside of startup cluster cities. We show that corporate VCs, unlike independent VCs comprising the majority of VCs, favor crowdfunded startups. Our study contributes to the literature on crowdfunding, startup finance, and the transformative effects of IT-enabled platforms. This study further discusses the practical implications of crowdfunding in startup finance ecosystems.

Investigating the determinants of medical crowdfunding performance: a signaling theory perspective

PurposeThis study examines the determinants of medical crowdfunding performance. Drawing on signaling theory, the authors investigate how funding-related signals (funding goal and duration), story-related signals (text length, text sentiment, and use of first-person pronouns), and donor-related signals (donor identity disclosure) affect medical crowdfunding performance.Design/methodology/approachThis study analyzed the data of 754 medical crowdfunding projects collected from the Qingsongchou platform in China to test the proposed model.FindingsThe empirical findings reveal that both funding goal and funding duration exhibit a U-shaped relationship with crowdfunding performance. Additionally, the authors find evidence that story text length and donor identity disclosure are positively related to crowdfunding performance, whereas the use of first-person pronouns is negatively related to crowdfunding performance.Originality/valueThis study extends the understanding of the determinants of medical crowdfunding performance through the signaling theory. Specifically, this study provides new insights into the roles of funding goal and funding duration in predicting medical crowdfunding performance and identifies several new predictors of crowdfunding performance, including the use of first-person pronouns in project story text and donor identity disclosure.

Contrariwise obesity through organic food consumption in Malaysia: a signaling theory perspective

Background: the context and purpose of the studyUnhealthy food consumption has raised an alarming situation of obesity among Asian nations and posing serious threats to human health. Recent studies have acknowledged that organic food consumption has been contrariwise associated with obesity. The consumption of healthy food has received research attention in social marketing and several antecedents and consequences have been identified. However, to date, there is a void in literature that how social, individual, and marketing elements together tradeoff in predicting a healthy lifestyle. Thus, the current investigation unfolds the antecedents of healthy foods’ adoption in Asia by integrating the brand signaling and theory of planned behavior.MethodsThe data of 241 respondents were collected from selected social media Facebook communities through a survey using assessed 42 questions. For this purpose, participants’ Facebook accounts were selected from the online healthy communities such as ‘Diet Suku Suku Separuh’ (469,000 followers), ‘Hiking, and Camping around Malaysia’ (351,200 followers), and ‘Healthy Malaysia’ (332 followers). The enumerator also engaged with the online community by liking posts and following health accounts.ResultsThe data was analyzed using PLS (SEM) approach, the outcomes of hypotheses revealed interesting information that health consciousness not significantly predicts the purchase intention of healthy food. All antecedents were significant contributors to the prediction of foods’ purchase intentions in this study. However, the findings indicated that no positive relationship exists between brand image identifications and brand credibility identifications, and healthy foods’ purchase intentions identifications. The findings also indicated that no positive relationship exists between health consciousness identifications and healthy foods’ purchase intentions identifications.Conclusions: (summary and potential implications)Owing to the perilous increase in obesity among the general public in Asia. This study reinforced the factor that can help in the adoption of a healthy lifestyle. The study validated that a healthy lifestyle is reliant on the consumers’ health consciousness, environmental concern, and innovativeness through motivating the consumers’ healthy foods’ purchase intentions. Surprisingly, the results highlighted that respondents have not identified brand image and credibility as an antecedent of purchase intention. Given that organic food brands are somewhat new in Asian markets and therefore, brands must endure crisis marketing practices to improve their brand recognition. Therefore, policymakers must facilitate the food promotional activities that are critical to enhancing the perceived benefits of organic food to combat issues like obesity. This paper offers a foundation for future empirical investigations in Asia and various stakeholders on how to promote a healthy lifestyle in Asia. Specifically, the results will help policymakers to offer positive policies and procedures for the improvement of a healthy lifestyle through the understanding of the antecedents and consequences of health-conscious consumers’ healthy foods’ purchase intentions.

The influence of family firm image on access to financial resources in family SMEs: a signaling theory perspective

This study investigates whether a projected family firm image can affect access to financial resources, which is key to providing broader strategic options and meeting short-term financial needs, especially for small and medium-sized enterprises (SMEs). Building on the signaling literature, we consider the family SME leaders’ perspective and conceptually and empirically examine whether they believe a projected family firm image acts as a credible signal to the lender. We also examine additional boundary conditions influencing the family SME’s projected image–access to financial resources relationship, by specifically investigating whether firm age and size alter the degree of the signaling effect. Our unique data on 289 Spanish family SMEs reveal that projected family firm image can act as an attractive signal to lenders, leading to better access to financial resources for SMEs. Furthermore, firm size reinforces the role of the projected family firm image as a positive signal. These findings address an important practical issue in terms of family firm stakeholder perceptions, offering contributions to the corporate branding, family business, and financing literature.

Will Diversity Equity and Inclusion Commitment Improve Manufacturing Firms’ Performance? A Signaling Theory Perspective on DEI Announcements

Will Diversity Equity and Inclusion Commitment Improve Manufacturing Firms’ Performance? A Signaling Theory Perspective on DEI Announcements

Understanding academic entrepreneurship: A signalling theory perspective

Objective: The objective of the article is to apply signalling theory to explain researchers’ engagement with the industry and the barriers to collaboration. Research Design & Methods: A mixed-mode study was carried out among scholars to explain the role of signalling on academic entrepreneurial engagement. The links between signalling and entrepreneurial engagement were assessed in the quantitative part using a sample of researchers from Poland. Moreover, qualitative research helped identify additional forms and barriers of signalling, which were not considered in the quantitative part. The IBM SPSS Statistics and Atlas.ti software was used in the data analysis. Findings: In line with signalling theory, scientists’ signals were divided into three groups: individual and organizational characteristics, researchers’ actions, and third-party endorsements. Results show that the third-party endorsements expressed by researchers’ active involvement in professional organizations enhance entrepreneurial engagement. In the qualitative part the role of signalling through graduates and the problem of the signalling cost were identified. Implications & Recommendations: Signalling sheds light on university-industry relationships through a new lens, explaining the matching process and cooperation barriers. Stimulating collaboration requires understanding the specific language of signals used by both scientists and business partners. Therefore, this research calls for action to strengthen scientists’ communication skills, more frequent interpersonal contacts with business representatives, and communication of scientific and non-scientific competencies. Contribution & Value Added: The theoretical focus on signalling theory can advance the extensive research on academic entrepreneurship. This theory explains how actors are selected for cooperation and describes the mechanism of partner selection. It also enables the reinterpretation of previous research related to the characteristics and activities of researchers and their relevance for undertaking collaborations.

Broad or Narrow Stakeholder Management? A Signaling Theory Perspective

To mitigate risk, should companies signal a broad range of environmental, social, and governance (ESG) initiatives or instead focus on only a few ESG issues? Drawing on signaling theory, we propose that a broad array of ESG initiatives generates not only signal consistency but also accelerating signal costs. Our empirical results support the resultant hypothesis of a curvilinear relationship between ESG scope and equity risk. In addition, this U-shaped curve seems to become steeper when firms face multiple media-reported ESG controversies. Overall, our study qualifies the conventional wisdom that firms can reduce equity risk by attending to a wide variety of stakeholders and highlights the moderating (signal-amplifying) impact of the firm’s media environment.

Environmental Management System and Performance in SMEs. Evidence from the Abruzzo Region

Abstract The paper aims at investigating the potential effect on economic and financial performance caused by the adoption of an environmental management system ISO14001certification, by SMEs in Abruzzo region, which represent a significative case study due to the environmental capital that characterizes the whole region. From the Signaling Theory perspective, the adoption of such international environmental management system certification “signals” to the firm’s stakeholders, the engagement in adopting a sustainable management system, contributing to reduce information asymmetry and consequently, positively influence economic and financial performance. Considering a panel dataset of a total sample of 490 SMEs located in Abruzzo (observed from 2011 and 2019), constituted by 212 ISO14001 certified firms and a control group of 278 firms, selected comparing size, age and geographical location of the main group of analysis, the results show how economic and financial performance are positively related to the adoption of an environmental management system certification. JEL classification numbers: O40, O44. Keywords: ISO14001, SMEs, Environmental Management System, Signaling Theory, Abruzzo.

Exit interviews as a tool to reduce parting employees’ complaints about their former employer and to ensure residual commitment

PurposeAccording to previous research, exit interviews do not fulfil the purpose of generating useful feedback from parting employees. According to signaling theory, they might, however, serve a different purpose: to leave one last good impression on parting employees, and the aim of this study was to test this.Design/methodology/approachA survey was administered to a sample of 164 German employees.FindingsConsistent with arguments based on signaling theory, those who experienced an exit interview reported more residual affective commitment toward their former employer and less willingness to complain about it, and these effects were mediated by interpersonal fairness perceptions. In addition, the probability of having an exit interview was found to depend on the resignation style of employees.Research limitations/implicationsThis new perspective on exit interviews can renew the interest in studying how organizations manage the offboarding process.Practical implicationsThis study advises employers to conduct “exit conversations” (as two-way interactions rather than one-way interviews) and to carefully plan the exit phase.Originality/valueTo the best of the authors’ knowledge, this is the first study that proposes a signaling theory perspective of exit interviews and that links exit interviews with the literature on resignation styles.

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

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.

Antecedents and consequences of students’ attitudes towards internationally accredited business schools: a signalling theory perspective

ABSTRACT In this research we attempt to empirically validate a model – using signalling theory – that explains important antecedents and consequences of students’ attitude towards internationally accredited business schools. Using a quasi-experimental design, we collected data from undergraduate students of eight countries across four scenarios. The results of our overall model suggest that students’ concern for achievement is strongly correlated with their attitude towards international accredited schools. Students’ attitude towards accredited business school is a strong predictor of school reputation and legitimacy and both influence their support intentions. The study also indicates that multiple accreditations do not moderate the relationships in our proposed model.

When corporate brands tell stories: A signalling theory perspective

If corporate stories for branding are retrogressive and asymmetrical, it causes negative internal stakeholders’ corporate brand perceptions. This is usually accompanied by many organisational situa...

Twitter sentiment as a weak signal in venture capital financing

How do venture capitalists (VCs) incorporate weak and strong signals in the valuation of technology-based startups? Based on a sociocognitive perspective of signaling theory, we introduce Twitter sentiment as a novel and weak signal, which we juxtapose with patents as a traditional, strong signal. While we find a positive association between both signals and VCs' venture valuations, our results reveal that Twitter sentiment does not correlate with actual long-term investment success, whereas patents do. Additionally, we identify and test novelty and experience characteristics (i.e., startup age and VC firm experience) as boundary conditions for our proposed signal-valuation relationships.

Innovation dimensions and firm performance synergy in the emerging market: A perspective from Dynamic Capability Theory & Signaling Theory

ContextIn this rapidly changing business environment, innovation is the key requirement to gain a sustained advantage over competitors. Innovation helps firms grow more quickly than others grow, survive in the harsh & highly competitive business environment, and eventually become a market leader. PurposeIndia is an emerging market, and many companies are entering here and making it highly competitive. The limited study is available to measure the effect of innovation in Indian Business. Thus, the study establishes a relationship between innovation and firm performance in the Indian setting. Design/methodology/approachThis is a perception-based study and used established subjective scales to measure innovation and firm performance. I validated the scale using the measurement model in AMOS. The survey used to collect around 250 cross-sectional data from middle & higher management executives of Indian firms. Structural equation modeling in AMOS was used to test the hypothesis. FindingsThe results showed that product and marketing innovation has a significant and positive impact on the dimensions of firm performance. In contrast, Process innovation showed an indirect effect mediated through marketing innovation. These outcomes will be beneficial for the industries for taking proactive measures. Originality/valueThe examination of mediation relationships between Marketing innovation and Product & Process innovation is limited. Novelty also lies in analyzing the impact of multiple innovation types on multiple dimensions of firm performance in Indian firms to verify dynamic capability and mediating effect of marketing innovation in Indian demography to validate the signaling theory perspective. Rigor in research methods like Scale and sampling method verification test, i.e., CMB. Heteroscedasticity and Endogeneity test for applicability of OLS and verifying exogenous variables.

Voluntary Human Capital Disclosure and Firm Value Relationship in the Listed Companies of Bangladesh: A Conceptual Overview

The aim of this paper is to incorporate relevant empirical researches and literature for extending the potentials of voluntary human capital disclosure to increase the value of the listed firms in Bangladesh. Voluntary human capital disclosure reduces information asymmetry and increases the financial lucidity of the business, and hence, could minimize agency conflicts, and satisfy employees’ and other stakeholders’ of the business. However, subsequent to a 13.8 percent drop in 2018, the broad index of the Dhaka Stock Exchange Limited lost 17.3 percent in 2019. It is among the first paper focusing on the consequence of voluntary human capital disclosures on firm value from a combination of agency theory, signaling theory, and stakeholder theory perspective. Moreover, extant literature endow with inconsistent and less evidence concerning the relationship of voluntary human capital disclosure with firm value. The present paper proposes and illustrates potential proposition for future empirical investigation in the context of an emerging economy like Bangladesh. It is also expected that the present paper would endow with further knowledge to investors, managers, and other stakeholders to upgrade firm value by means of voluntary human capital disclosure in their corporate reporting practices.

Nonmarket Responses to Regulation: A Signaling Theory Approach

We examine how regulatory intensity and increases in regulation affect the nonmarket activities of firms. Using a signaling theory perspective, we seek to better understand how firms respond to regulation in terms of corporate social responsibility (CSR) and corporate political activity (CPA), the two main pillars of nonmarket activity. Examination of both CSR and CPA in concert rather than in isolation provides insights into whether they are complements or substitutes. We use textual analysis of the US Code of Federal Regulations to measure regulatory intensity and increases in regulation. Based on a sample of 331 S&P 500 firms for the period 1998–2014, our findings suggest that regulatory intensity leads to more nonmarket responses from firms. We also find support for nonlinear relationships between CSR and CPA.

Examining the Moderating Effects of Green Marketing and Green Psychological Benefits on Customers’ Green Attitude, Value and Purchase Intention

The purpose of this study is to integrate the theoretical base of green purchasing by using the signaling theory approach to green marketing. Since previous studies do not combine relevant factors from the perspective of Signaling Theory and Attitude-Behavior-Context (ABC) Theory for green purchase, this study attempts to examine the effects of green customer value and attitude towards green products on green purchase intention. Moreover, it aims to identify the moderating effects of green marketing and green psychological benefits on the relationships between customer value, attitude, and green purchase intention. This study involved a survey that comprised 319 customers with at least a year’s experience in buying green products in Cambodia. The findings empirically revealed a significant and positive influence of green customer value on attitude towards green products. Furthermore, both green customer value and attitudes towards green products have a positive effect on green purchase intention. Green marketing (environmental advertising, and green word-of-mouth) and green psychological benefits (warm glow, self-expressive benefits, and nature experience) moderate the relationships between customer value, attitude towards the green product, and green purchase intention. The results may be beneficial for managers and marketers to develop appropriate green marketing strategies. They may also be helpful for academicians to conduct further validations regarding the theoretical framework of green purchasing.

Contingent Signaling Effects of Anti-Mafia Interventions of MNEs’ Acquisitions in Italy (2000-2015)

Extant research on cross-border acquisitions argues that foreign firms’ ownership choices reflect signals about the quality of local institutions, in a way that a ‘positive’ signal is typically associated with a higher likelihood of majority ownership. In this paper, we challenge the common assumption that foreign firms univocally interpret such signals as positive or negative. We propose that MNEs may interpret the same signals differently depending on the consistency between the signal and the recipients’ mental models about the underlying phenomena. We test these conjectures in the context of government-sponsored institutional actions against mafia operations in Italy, using a dataset comprising 3,924 foreign acquisition deals in Italy in the period 2000 – 2015. Our findings indicate that MNEs’ ownership level increases as a response to anti- mafia institutional actions only when the acquirer is rooted in contexts (sectors or countries) that make the signal salient. Adopting a signaling theory perspective, our results contribute to international business research by placing a unique emphasis on signal interpretation. We also bring a more nuanced understanding of how the continued rise of organized crime as an important economic actor presents a grand challenge to a rule-based society.

Recruitment methods, recruitment outcomes and information credibility and sufficiency

PurposeRecruiters’ decision to use recruitment methods (RMs) depends on several expected outcomes such as number applications, quality of applicants, speed of filling up vacancy, post joining job performance, absenteeism, commitment and satisfaction of the applicants. RMs may vary from each other in terms of its capability to communicate different type of information. The current research aims at exploring recruiter's intention to use RMs like job advertisement (JA), online recruitment (OLR) and social media in reference to several recruitment outcomes (ROs). Further, the role of information credibility and sufficiency (ICS) on recruiter's intention to use has been studied.Design/methodology/approachData were collected from 242 recruiters from the manufacturing and service sector of India. The survey instrument consists of RMs, recruitment outcome and credibility and satisfaction that are identified following the theory of planned behavior (TPB). Confirmatory factor analysis (CFA) was used for a simultaneous assessment of overall and specific elements of measurement validity and reliability. Structural equation modeling (SEM) is used to test the hypothesized model.FindingsThe result shows that RMs significantly relates with ROs. In detail, social media recruitment (SMR) significantly relates with pre ROs and post ROs; OLR significantly relates with pre ROs and post ROs and JA significantly relates post ROs. Only JA insignificantly relates with pre ROs. The result also supports the hypothesis that ICS acts as a mediator between the influences of RMs on ROs.Research limitations/implicationsThe result of the study has important theoretical and managerial implications. The theoretical implication is explained from the perspective of signaling theory (ST) and elaboration likelihood model (ELM) theory.Originality/valueThe study is unique as multiple RMs have been studied with reference to both pre and post ROs using the data collected from the recruiters.

Effect of corporate environmental sustainability on dimensions of firm performance – Towards sustainable development: Evidence from India

ContextRelatively little research exists on a practical level of sustainable strategies, and organizations must concentrate and appreciate the gravity of the issue. Academicians have started to create awareness among the organizations. However, a consistent and exhaustive association of corporate sustainability with the firm’s performance still requires more investigation. ObjectivesThus, the key aim of this paper is to unravel the impact of environmental sustainability on multiple dimensions of a firm’s performance. Sustainability taken for the study is the environmental dimension of corporate sustainability. Method/Analysis: This study considered financial performance, customer performance, internal business process performance, and learning & growth performance as four dimensions of a firm’s performance. We used well-established scales for the concepts used in the paper, and all are validated in Indian demography using confirmatory factor analysis in AMOS. We collected 200 cross-sectional respondents sample from the senior executives of Indian business organizations. We then analyzed the association of environmental sustainability on the firm’s performance using structural equation modeling in AMOS. FindingsWe found support for our hypotheses. We observed that environmental sustainability has a positive and significant influence on the four vital functional performance of firms. NoveltyThe novelty of this research is to bridges the knowledge gap of establishing a relationship of sustainability with the firm performance considering all key functional dimensions. We also tested the theoretical propositions of stakeholder theory, signaling theory, RBV, and institutional perspective.