Publications

New venture investment decisions have gained much attention from researchers in recent times as these investments play a critical role in determining the performance of new ventures. Researchers have explored a comprehensive list of information signals significantly affecting these decisions. However, there is a lacuna of research exploring the role of information signals in the decision process, which has limited the understanding of new venture investment decisions. This article uses Herzberg's two-factor motivation theory to explore the role of information signals in new venture investment decisions. We categorize information signals as the source of satisfaction and dissatisfaction. To test our hypothesis, we utilized a mixed-method approach and conducted two studies. First is a qualitative study that analyses the interview transcripts of 23 angel investors. The second study uses a quantitative approach with an experimental setup where 336 business graduates appraise investment proposals. Results show that information signals related to risk coverage are associated with dissatisfaction while information signals related to return potential are associated with satisfaction. We provide evidence of loss aversion among new venture investors as the absence of risk coverage creates dissatisfaction while perceived return potential motivates investors.

Published in IEEE Transactions on Engineering Management, https://doi.org/10.1109/TEM.2024.3404882

Researchers have suggested that new venture investors quickly conclude their decisions and rely on heuristics. However, there is a paucity of empirical work exploring the impact of time constraints on new venture investment decisions. To fill this gap, we are exploring the impact of time constraints on the new venture investment decision process and the final investment decision using the arguments of the Dual Process Theory. A balanced experiment setup is used, where the treated group is given time constraints to make the decision. Results show that investors under time constraints consider only a subset of the available information signals to perceive the probable prospects and to make final investment decisions. This consideration of a subset of information signals results in a partial assessment of the proposal where investors focus more on return potential than risk exposure aspect of investment proposals. This inclination towards return potential increases the scale of investment.

Published in Venture Capital, https://doi.org/10.1080/13691066.2024.2360914

This study investigates the presence, direction, and scale of bias in investors’ consideration of qualitative information signals while appraising new venture proposals through a meta-analysis of 75 empirical studies published between 2000 and 2020. Our results suggest that investors evaluate different information signals differently owing to their varying abilities and motivations. High levels of ability and motivation stimulate elaboration, resulting in positive bias, whereas low levels of both ability and motivation reduce the likelihood of elaboration, resulting in negative bias. However, for lower levels of either ability or motivation, we found a mix of both positive and negative biases determined by the dominance of information cues. While considering the prospects of investment decisions, our results show that signals suggesting growth potential are preferred over those suggesting financial risk coverage. This study has substantial implications for investors to optimize their decision-making processes and enable entrepreneurs to understand investors’ appraisal processes.

Published in Journal of Business Research, https://doi.org/10.1016/j.jbusres.2022.113424

This study measures an individual's evaluation of the situation of COVID-19 and the result of such an evaluation on their business venturing decision. We have considered a three-step model of exposure–evaluation–action using partial least squares (PLS)-based structural equation modeling with a sample of 497 working-class members and small business owners. Unlike previous researches on “economic uncertainty,” our results show that the systemic economic uncertainty during COVID-19 inhibited business venturing. This was caused by the negative opportunity cost due to higher sustenance costs during the pandemic. We further found that “entrepreneurial intent” independently did not lead to business venturing, but the act of venturing depended on the recognition of opportunity.

Published in Managerial and Decision Economics, https://doi.org/10.1002/mde.3417

Investments in new ventures are risky due to lack of conventional form of quantitative information and untested products. Venture capitalists (VCs) are seen to target such new ventures for high-risk premium but with little success. Existing research has investigated and identified a variety of qualitative factors that impact VCs’ investment decisions; however, many research gaps still exist. Works published in the last two decades show the evolution in the preference of factors with the focus shifting from venture’s team and product to factors such as intellectual property rights, economic crisis and social capital. It was found that the factor’s role was limited to the binary scale (positive and negative), which undermines its effect. The purpose of this review is to provide a comprehensive framework of factors that influence VCs’ investment decisions and show theoretical research gaps. Accordingly, we have segmented factors into two macro-categories: ‘internal’ and ‘external environment’, and presented a detailed framework of the factors that influence VCs’ investment decisions. Further, we argue to consider the subjectivity of qualitative factors and to explore the role of a factor in the decision-making.

Published in Journal of Entrepreneurship, https://doi.org/10.1177/09713557211025654 

Pandemics create survival uncertainty through infection possibilities, food scarcity, and unemployment. Being the largest democracy in the world, we have explored the response of Indian citizens on the COVID-19’s lockdown and defined an anxiety response model using PLS based Structural Equation Modeling(SEM). For a comprehensive understanding, we have measured the response at two levels of individual and government. Though the types of anxieties are related, we observed that a specific response is linked with a specific type of anxiety and all responses are not anxiety-driven. We have found that the response mechanism of Health and Food anxieties follow very different paths and that the role of information is not significant in all anxieties. Our results will help policymakers in understanding how to respond to a crisis and optimize policy implementation accordingly. It will further help the scholars understand the difference in the anxieties caused by the pandemic and the layers of responses individuals take in such situations.

Published in Current Psychology, https://doi.org/10.1007/s12144-020-01210-4