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Turning extreme distinctiveness into an asset? How radically innovative ventures can achieve optimal distinctiveness in early-stage funding contexts

  • This study relies on optimal distinctiveness theory to investigate how radically innovative ventures might attract funding. Conforming with existing norms can help new ventures gain legitimacy from resource providers, yet radically innovative ventures instead feature extreme distinctiveness. The results of three complementary empirical studies affirm that these radically innovative ventures suffer from reduced funding chances among equity crowdfunders. Contributing to optimal distinctiveness theory, the authors show that extremely distinctive ventures can shift to become optimally distinctive. Thus, radically innovative ventures can reverse the negative effect and avoid the downsides of non-conformity by leveraging external legitimacy sources, such as endorsements from alliance partners or professional investors. The optimal level of distinctiveness also varies by audience, such that radically innovative ventures’ extreme distinctiveness evokes more negative judgments among equity crowdfunders who expect returns than among rewardThis study relies on optimal distinctiveness theory to investigate how radically innovative ventures might attract funding. Conforming with existing norms can help new ventures gain legitimacy from resource providers, yet radically innovative ventures instead feature extreme distinctiveness. The results of three complementary empirical studies affirm that these radically innovative ventures suffer from reduced funding chances among equity crowdfunders. Contributing to optimal distinctiveness theory, the authors show that extremely distinctive ventures can shift to become optimally distinctive. Thus, radically innovative ventures can reverse the negative effect and avoid the downsides of non-conformity by leveraging external legitimacy sources, such as endorsements from alliance partners or professional investors. The optimal level of distinctiveness also varies by audience, such that radically innovative ventures’ extreme distinctiveness evokes more negative judgments among equity crowdfunders who expect returns than among reward crowdfunders who seek novelty. Surprisingly though, without external legitimacy sources, radical innovativeness is never favored, even by novelty-seeking audiences. This fresh evidence that radical innovativeness constitutes both a liability and an asset, contingent on new ventures’ external endorsements and audience expectations, points to important boundary conditions for optimal distinctiveness theory.show moreshow less

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Metadaten
Author: Kazem Mochkabadi, Simon KleinertORCiD, Diemo UrbigORCiD, Christine Volkmann
ISBN:978-0-910897-00-6
Title of the source (English):Frontiers of entrepreneurship research 2022: Proceedings of the forty-second annual Babson College Entrepreneurship Research Conference
Publisher:Arthur M. Blank Center for Entrepreneurship
Place of publication:Babson Park, Massachusetts
Document Type:Conference publication peer-reviewed
Language:English
Year of publication:2022
Tag:Crowdfunding; Entrepreneurship
First Page:73
Last Page:78
Faculty/Chair:Fakultät 5 Wirtschaft, Recht und Gesellschaft / FG ABWL, insbesondere empirische Unternehmensforschung und Transformation
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