When More Is Less: Explaining the Curse of Too Much Capital for Early-Stage Ventures

Author:

Murray Alex1ORCID,Fisher Greg2ORCID

Affiliation:

1. Department of Management, Lundquist College of Business, University of Oregon, Eugene, Oregon 97403

2. Department of Management and Entrepreneurship, Kelley School of Business, Indiana University, Bloomington, Indiana 47405

Abstract

This study examines how the mechanisms that entrepreneurs use to successfully mobilize financial resources influence the long-term viability of their ventures. Through an inductive analysis of crowdfunded consumer drone ventures, we empirically illustrate and theoretically conceptualize the link between the claims entrepreneurs use to mobilize resources and the actions entrepreneurs must then take to develop successful ventures. We induct a theoretical framework to suggest that unbounded claims drive up the financial resources that ventures mobilize but reduce the likelihood of their long-term viability because of unmanageable technological complexity and uncontrolled organizational scaling, whereas bounded claims limit the financial resources that ventures mobilize but increase the likelihood of their long-term viability because of manageable technological complexity and controlled organizational scaling. We contribute to the resource mobilization literature by expounding on how the mechanisms that entrepreneurs use to mobilize financial resources are critical for ventures’ long-term viability over and above the amount of resources they mobilize. We contribute to the cultural entrepreneurship literature by linking research on claim making to the actions entrepreneurs must then take to deliver on their claims. Finally, we contribute to the literature on crowdfunding by connecting entrepreneurs’ campaign actions to the postcampaign outcome of on-time and on-scope product delivery.

Publisher

Institute for Operations Research and the Management Sciences (INFORMS)

Subject

Management of Technology and Innovation,Organizational Behavior and Human Resource Management,Strategy and Management

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