Homophily and peer influence in early‑stage new venture informal investment

Abstract

Conceptualising early-stage new venture informal investors as co-entrepreneurs whose actions are socially embedded, we examine the role of social influence and how it interplays with entrepreneurial experience at the individual level leading to informal investment. We extend theories of social homophily and social influence to argue that informal investment decisions are influenced by shared experience and entrepreneurism in peer groups. We test our hypotheses with a multi-level model using first a large cross-country dataset and next in depth within a country. Our analysis reveals that both individual entrepreneurship experience and peer group-embedded experience significantly influence the likelihood that an individual becomes an early-stage investor. Furthermore, these social effects substitute for the lack of individual entrepreneurial experience.

Publication DOI: https://doi.org/10.1007/s11187-021-00523-3
Divisions: College of Business and Social Sciences > Aston Business School > Economics, Finance & Entrepreneurship
College of Business and Social Sciences > Aston Business School
Additional Information: © The Author(s) 2021. This article is licensed under a Creative Commons Attribution 4.0 International License, which permits use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons licence, and indicate if changes were made. The images or other third party material in this article are included in the article’s Creative Commons licence, unless indicated otherwise in a credit line to the material. If material is not included in the article’s Creative Commons licence and your intended use is not permitted by statutory regulation or exceeds the permitted use, you will need to obtain permission directly from the copyright holder. To view a copy of this licence, visit http://creativecommons.org/licenses/by/4.0/
Uncontrolled Keywords: Angel investors,Entrepreneurial experience,Entrepreneurship capital,Global Entrepreneurship Monitor (GEM),Informal investors,Peer influence,Social homophily,Business, Management and Accounting(all),Economics and Econometrics
Full Text Link:
Related URLs: https://link.sp ... 187-021-00523-3 (Publisher URL)
http://www.scop ... tnerID=8YFLogxK (Scopus URL)
PURE Output Type: Article
Published Date: 2021-08-03
Published Online Date: 2021-08-03
Accepted Date: 2021-06-10
Authors: Qin, Fei
Mickiewicz, Tomasz (ORCID Profile 0000-0001-5261-5662)
Estrin, Saul

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