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Entrepreneurs (novices vs. experts) and investors: Interaction and rationality dynamics (effectual vs. causal)
[Entrepreneurs (novice vs. expert) et investisseurs : interactions et dynamique des rationalités (effectuale vs. causale)]

Author

Listed:
  • Laurence Cohen

    (Laboratoire de Recherche Magellan - UJML - Université Jean Moulin - Lyon 3 - Université de Lyon - Institut d'Administration des Entreprises (IAE) - Lyon)

  • Kirsten Burkhardt

    (CREGO - Centre de Recherche en Gestion des Organisations (EA 7317) - Université de Haute-Alsace (UHA) - Université de Haute-Alsace (UHA) Mulhouse - Colmar - UB - Université de Bourgogne - UBFC - Université Bourgogne Franche-Comté [COMUE] - UFC - Université de Franche-Comté - UBFC - Université Bourgogne Franche-Comté [COMUE])

Abstract

The paper studies the mechanisms that govern the interactions between the entrepreneur (novice or expert) and the specific investors of emerging firms (business angels (BAs) and venture-capital firms (VCs)). Combining both literatures on entrepreneurship and entrepreneurial finance, our aim is to understand if the rationalities of these three actors help them or not to interact, and, to study how they influence each other during the firm's growth. In order to do so, we undertake two processual case studies. Our results show that effectual rationality underlines the interaction between the entrepreneur and the BAs at the creation of the firm, whilst causal rationality is helpful in the search for VC-investors in order to enable the firm's rapid growth. Finally, the BAs (previous successful entrepreneurs) can play the role of an intermediary, helping the novice entrepreneur to move from an effectual to a causal reasoning which help them to attract financing sources from VCs

Suggested Citation

  • Laurence Cohen & Kirsten Burkhardt, 2019. "Entrepreneurs (novices vs. experts) and investors: Interaction and rationality dynamics (effectual vs. causal) [Entrepreneurs (novice vs. expert) et investisseurs : interactions et dynamique des ra," Post-Print hal-02177388, HAL.
    • Handle: RePEc:hal:journl:hal-02177388
    Note: View the original document on HAL open archive server: https://univ-lyon3.hal.science/hal-02177388
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    References listed on IDEAS

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    Keywords

    causation; governance; venture capital; growth of the firm; effectuation; croissance de la firme; business angels; rationalités effectuale / causale; capital-risque; gouvernance; start-ups;
    All these keywords.

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