Evaluation of Early-Stage Ventures: Coherent Combinations of Experimentation, Planning, and Structure

45 Pages Posted: 29 May 2018 Last revised: 10 Nov 2018

See all articles by Andrea Contigiani

Andrea Contigiani

University of Pennsylvania - The Wharton School

Trevor Young-Hyman

University of Pittsburgh

Date Written: April 23, 2018

Abstract

Scholars have argued that evaluators of early-stage ventures privilege organizational characteristics that signal legitimacy. Yet, legitimacy is institutionally specific, and for early-stage ventures the institutional context is often ambiguous. In this situation, we argue that evaluators will not base their evaluations on individual characteristics but on the coherence among multiple characteristics. We hypothesize that early-stage ventures combining experimental strategy and less formal structure or planning strategy and more formal structure will receive more positive evaluations relative to those choosing alternative combinations. Using a proprietary dataset of venture pitches from a university-based venture competition, we find robust evidence supporting our hypothesis. Additional analysis suggests that the evaluators theoretically more attentive to legitimacy signals are more strongly influenced by coherent combinations, providing evidence for the legitimacy mechanism.

Keywords: Entrepreneurship, Legitimacy, Experimentation, Structure, Venture Competition

JEL Classification: M13, M21

Suggested Citation

Contigiani, Andrea and Young-Hyman, Trevor, Evaluation of Early-Stage Ventures: Coherent Combinations of Experimentation, Planning, and Structure (April 23, 2018). Available at SSRN: https://ssrn.com/abstract=3179697 or http://dx.doi.org/10.2139/ssrn.3179697

Andrea Contigiani (Contact Author)

University of Pennsylvania - The Wharton School ( email )

3641 Locust Walk
Philadelphia, PA 19104-6365
United States

Trevor Young-Hyman

University of Pittsburgh ( email )

United States

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