Trustworthiness: A Critical Ingredient for Entrepreneurs Seeking Investors

24 Pages Posted: 4 Sep 2014

See all articles by Moren Lévesque

Moren Lévesque

University of Waterloo

Andrew Maxwell

University of Waterloo

Date Written: September 2014

Abstract

We investigate how an entrepreneur's behaviors during an initial interaction with a business angel can build, damage, or violate trust, and how the investor's level of trust (prompted by the entrepreneur's behavior) can affect his/her decision to make an investment offer. Our empirical analysis shows that entrepreneurs who receive offers from business angels exhibit a larger number of trust‐building behaviors during the initial interaction and a smaller number of unintentional trust‐damaging behaviors than those who do not receive an offer, and display few deliberate trust‐violating behaviors. We further observe that the investor's deployment of a control mechanism is a prerequisite for receiving an investment offer for all entrepreneurs who damage or violate trust.

Suggested Citation

Lévesque, Moren and Maxwell, Andrew, Trustworthiness: A Critical Ingredient for Entrepreneurs Seeking Investors (September 2014). Entrepreneurship Theory and Practice, Vol. 38, Issue 5, pp. 1057-1080, 2014. Available at SSRN: https://ssrn.com/abstract=2491352 or http://dx.doi.org/10.1111/j.1540-6520.2011.00475.x

Moren Lévesque

University of Waterloo ( email )

Waterloo, Ontario N2L 3G1
Canada

Andrew Maxwell

University of Waterloo ( email )

Waterloo, Ontario N2L 3G1
Canada

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