Values and judgment under uncertainty: evidence from venture capitalist assessments of founders

Abstract

We examine how judgments in the context of uncertainty vary, depending on the values of those making these judgments. We test these ideas in the context of venture capitalists' (VCs') evaluations of founders. Drawing on theoretical and empirical research on the role of values in judgment and decision making and on Schwartz's (1992Schwartz's ( , 1996 conceptualization of the basic motivational dimensions underlying human values, we hypothesize and fi nd that decision makers' process values (i.e., values governing the types of means to an end that an individual values) infl uence the perceived worth of founders' human capital. We discuss implications of these fi ndings for judgment and decision-making research, as well as practical implications for entrepreneurs and venture capitalists.

The “why” of international entrepreneurship: uncovering entrepreneurs’ personal values

“…Second, we contribute more generally to the entrepreneurship literature by answering calls for new research about the role of personal values in entrepreneurship (e.g., Fayolle et al 2014;Holland and Shepherd 2013;Matusik et al 2008). In line with previous literature, our study highlights the role of personal values as abstract, desirable end-states that motivate entrepreneurs to engage in potential entrepreneurial action (Holland and Shepherd 2013;Licht 2007;McMullen and Shepherd 2006;Shane et al 2003).…”

Attributes of Angel and Crowdfunded Investments as Determinants of VC Screening Decisions

“…The company description was modeled after a real-world company that has recently been considered for VC funding. In the scenario description, we controlled for a set of factors that previous research has indicated to be influential, such as referral, characteristics of the management team, deal strategy, and equity stake 10 ENTREPRENEURSHIP THEORY and PRACTICE (Franke, Gruber, Harhoff, & Henkel, 2008;Fried & Hisrich, 1994;Matusik, George, & Heeley, 2008;Petty & Gruber, 2011). Each respondent was then presented with a series of prospective investment opportunity profiles to consider, which were associated with a different configuration of affiliated angel characteristics (experiment 1) or affiliated crowdfund characteristics (experiment 2).…”

Strategic Alliances of Entrepreneurial Firms: Value Enhancing Then Value Destroying

“…In fact, venture capitalists are specialized financial intermediaries who connect investors and entrepreneurs (Wang et al, 2012). For example, Matusik, George, and Heeley (2008) examined the worth of founders' human capital as perceived by venture capitalists. Consistent with previous empirical studies (e.g., Nicholson et al, 2005), the natural logarithm of valuation is used in order to normalize the distribution.…”