Venture Capital Decision-Making and the Cultures of Risk: An Application of Q Methodology to US and UK Innovation Clusters

Competition and Change, Vol. 9, No. 4, pp. 329-356, November 2005

28 Pages Posted: 14 Mar 2009

See all articles by T. L. Babcock-Lumish

T. L. Babcock-Lumish

Roosevelt House Public Policy Institute at Hunter College

Date Written: November 1, 2005

Abstract

This paper presents a comparative perspective on risk perception and decision-making within United States (US) and United Kingdom (UK) entrepreneurial communities since the bursting of the technology, media, and telecommunications (TMT) bubble in 2000. Using an empirical approach drawn from political science literature, this paper relies upon interviews and Q (rather than R) methodology to analyze the experiences and insights of individuals throughout innovation investment communities, including entrepreneurs, investment angels, venture capitalists, and institutional investors. This study sheds light on post-boom behavioral trends and risk propensities, in relation to actors' interrelated decision-making processes. From decision-makers' reported and ranked perceptions, factor analysis in conjunction with additional contextual evidence was used to identify four influential groups of individuals with shared approaches to early-stage innovation investment: American-style managers, junior venture professionals, experienced angel investors, and committed business builders. From this study of the social and economic geography of American and British innovation communities, implications are drawn for understanding the effectiveness of staged-funding networks in the innovation process and subsequently for community and economic development. Furthermore, this analysis represents a foray into application of Q methodology to the study of economic geography generally and innovation clusters specifically.

Keywords: angel investment, decision-making, entrepreneurship, financial geography, Q methodology, venture capital

JEL Classification: D82, G24, L14, O30

Suggested Citation

Babcock-Lumish, Terry, Venture Capital Decision-Making and the Cultures of Risk: An Application of Q Methodology to US and UK Innovation Clusters (November 1, 2005). Competition and Change, Vol. 9, No. 4, pp. 329-356, November 2005 , Available at SSRN: https://ssrn.com/abstract=1358917

Terry Babcock-Lumish (Contact Author)

Roosevelt House Public Policy Institute at Hunter College ( email )

695 Park Avenue
New York, NY 10065
United States
+1 202 489 4379 (Phone)

HOME PAGE: http://roosevelthouse.hunter.cuny.edu

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