Disentangling the multiple effects of affiliate reputation on resource attraction in new firms

Tom Vanacker, Daniel P. Forbes

Research output: Contribution to journalArticlepeer-review

23 Scopus citations

Abstract

Past research has established that new firms can enhance their attractiveness to prospective resource providers by affiliating with more reputable firms. But research on this process has yet to fully account for two critical realities underscored by recent research: (1) firms need to acquire resources from different groups of resource providers and (2) reputation is multidimensional. Drawing on the organizational reputation literature and on information processing theory, we propose that two groups of resource providers will respond differently to new firms' affiliations in accordance with differences in the groups' abilities to recognize and interpret reputation-related signals. We also propose that within a single group of resource providers, distinct characteristics of the affiliate will exert different influences. We test these propositions using longitudinal data from Belgian firms that affiliated with venture capital (VC) investors. Consistent with our predictions, we find that characteristics of a VC affiliate exert more influence on prospective financiers than on prospective employees. We further find that prospective financiers were more influenced by a VC's industry-specific experience than by its media prominence, whereas prospective employees were more influenced by a VC's media prominence than by its industryspecific experience. Taken together, the findings show that new firms' resource attraction trajectories are shaped by their affiliates in more complex ways than past research has accounted for.

Original languageEnglish (US)
Pages (from-to)1525-1547
Number of pages23
JournalOrganization Science
Volume27
Issue number6
DOIs
StatePublished - 2016

Bibliographical note

Funding Information:
The authors are grateful to Erkko Autio, Fr?d?ric Delmar, Gary Dushnitsky, Martin Ganco, Aseem Kaul, Mirjam Knockaert, Hans Landstr?m, Jiao Luo, Sophie Manigart, Chris Nachtsheim, Tim Pollock, Akshay Rao, Peter Roosenboom, Harry Sapienza, Myles Shaver, Aaron Sojourner, PK Toh, and Mary Tripsas, as well as to three anonymous Organization Science reviewers, among others, for helpful feedback. This paper further benefited from presentations at The Sol C. Snider Entrepreneurial Research Center (The Wharton School), the 2010 Academy of Management Meeting, and the 2012 Strategic Management Society Conference. The authors gratefully acknowledge the financial support of the Hercules Foundation [Grant AUGE/11/13], the Research Foundation Flanders [Grant FWO11/PDO/076], and the Richard M. Schulze Family Foundation.

Keywords

  • Growth
  • Information processing
  • New ventures
  • Reputation
  • Venture capital

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