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‘I Like How You Think’: Similarity as an Interaction Bias in the Investor–Entrepreneur Dyad
Author(s) -
Murnieks Charles Y.,
Haynie J. Michael,
Wiltbank Robert E.,
Harting Troy
Publication year - 2011
Publication title -
journal of management studies
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 4.398
H-Index - 184
eISSN - 1467-6486
pISSN - 0022-2380
DOI - 10.1111/j.1467-6486.2010.00992.x
Subject(s) - dyad , similarity (geometry) , venture capital , investment (military) , entrepreneurship , process (computing) , business , social venture capital , marketing , economics , microeconomics , industrial organization , psychology , finance , social psychology , political science , computer science , artificial intelligence , politics , law , image (mathematics) , operating system
Investigating the factors that influence venture capital decision‐making has a long tradition in the management and entrepreneurship literatures. However, few studies have considered the factors that might bias an investment decision in a way that is idiosyncratic to a given investor–entrepreneur dyad. We do so in this study. Specifically, we build from the literature on the ‘similarity effect’ to investigate the extent to which decision‐making process similarity (shared between the investor and the entrepreneur) might bias or otherwise impact the investor's evaluation of a new venture investment opportunity. Our findings suggest venture capitalists evaluate more favourably opportunities represented by entrepreneurs who ‘think’ in ways similar to their own. Moreover, in the presence of decision‐making process similarity, the impacts of other factors that inform the investment decision actually change in counter‐intuitive ways.