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Leveraging Institutional Intermediaries: Entrepreneurial Strategies on a Fundraising Platform

2019; Academy of Management; Volume: 2019; Issue: 1 Linguagem: Inglês

10.5465/ambpp.2019.19400abstract

2376-7197

You Wu, Song Wang,

Corporate Finance and Governance

How do entrepreneurs leverage institutional intermediaries to overcome institutional voids? We tackle this question by examining entrepreneurial strategies to contact investors on a fundraising platform. We find that the effects of institutional intermediaries depend on how entrepreneurs leverage the them. Specifically, we find that stepping-stone strategies are rewarded, whereas status-picking strategies are penalized online. Moreover, stepping-stone strategies are more beneficial in less developed regions and without quality signals, whereas status-picking strategies are less penalized in more developed regions and with quality signals. This paper contributes to prior literature on institutional intermediaries, network tie formation, and platforms. First, while prior work focuses on how institutional intermediaries impact entrepreneurs, we explore how entrepreneurs leverage intermediaries. Second, we contribute to network dynamics by investigating sequential attempts for initial tie formation and discussing initial tie formation online versus offline. Finally, while prior work on platforms focuses on the strategy of platform providers, this paper examines the strategy of platform users.