Hot Markets, Sociocognitive Cues, and New Market Entry in the U.S. Venture Capital Industry-Reference-Cited by-同舟云学术

Hot Markets, Sociocognitive Cues, and New Market Entry in the U.S. Venture Capital Industry

Published:2023-05-15 Issue: Volume: Page:104225872311736
ISSN:1042-2587
Container-title:Entrepreneurship Theory and Practice
language:en
Short-container-title:Entrepreneurship Theory and Practice

Author:

Lo Jade Y.¹^ORCID,Xu Lei²³^ORCID,Park Haemin Dennis⁴^ORCID

Affiliation:

1. Department of Management, LeBow College of Business, Drexel University, Philadelphia, PA, USA

2. Department of Management, College of Business and Economics, University of Wisconsin Whitewater, Whitewater, WI, USA

3. Marketing & Entrepreneurship Department, College of Business and Administration, University of Missouri-St. Louis, St. Louis, MO, USA

4. Organization, Strategy, and International Management, University of Texas at Dallas, Richardson, TX, USA

Abstract

Investing in sectors that a firm has never invested in before is fundamentally a form of entrepreneurial experimentation and an integral part of wealth creation. We consider how the broader market conditions and sociocognitive cues jointly affect venture capital (VC) firms’ investment decisions in new industries that are unrelated to their past experience. Although VCs are more likely to enter an unrelated new industry when the overall market is hot, they also take sociocognitive cues from their own social contacts and news media. Using the population of U.S. VC investments between 1990 and 2016, we find support for our predictions.

Publisher

SAGE Publications

Subject

Economics and Econometrics,Business and International Management

Link

http://journals.sagepub.com/doi/pdf/10.1177/10422587231173687

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