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Homophily and peer influence in early-stage new venture informal investment

Qin, Fei, Mickiewicz, Tomasz and Estrin, Saul ORCID: 0000-0002-3447-8593 (2022) Homophily and peer influence in early-stage new venture informal investment. Small Business Economics, 59 (1). 93 - 116. ISSN 0921-898X

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Identification Number: 10.1007/s11187-021-00523-3


Conceptualising early-stage new venture informal investors as co-entrepreneurs whose actions are socially embedded, we examine the role of social influence and how it interplays with entrepreneurial experience at the individual level leading to informal investment. We extend theories of social homophily and social influence to argue that informal investment decisions are influenced by shared experience and entrepreneurism in peer groups. We test our hypotheses with a multi-level model using first a large cross-country dataset and next in depth within a country. Our analysis reveals that both individual entrepreneurship experience and peer group-embedded experience significantly influence the likelihood that an individual becomes an early-stage investor. Furthermore, these social effects substitute for the lack of individual entrepreneurial experience.

Item Type: Article
Official URL:
Additional Information: © 2021 The Authors
Divisions: Management
Subjects: H Social Sciences > HB Economic Theory
H Social Sciences > HD Industries. Land use. Labor
H Social Sciences > HG Finance
JEL classification: G - Financial Economics > G3 - Corporate Finance and Governance > G32 - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure
M - Business Administration and Business Economics; Marketing; Accounting > M1 - Business Administration > M13 - Entrepreneurship
Date Deposited: 21 Jun 2021 16:06
Last Modified: 11 Jul 2022 14:54

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