Signaling sustainability: Can it entice business angels' willingness to invest?

Despite increasing attention to sustainability as a source of new business opportunities, current research on new ventures has hardly considered this factor with respect to access to funding. This paper examines the role of new venture sustainability signals on business angels' willingness to i...

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Bibliographic Details
Published in:Business strategy and the environment 2024-05, Vol.33 (4), p.2832-2848
Main Authors: Shahid, Subhan, Liouka, Ioanna, Deligianni, Ioanna
Format: Article
Language:English
Subjects:
Angel investors
Certification
Design of experiments
Entrepreneurship
Experimental design
Funding
Labels
perceived startup prestige
signaling theory
Sustainability
sustainability certification
sustainable entrepreneurship label
Willingness
willingness to invest
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Summary:Despite increasing attention to sustainability as a source of new business opportunities, current research on new ventures has hardly considered this factor with respect to access to funding. This paper examines the role of new venture sustainability signals on business angels' willingness to invest. Specifically, it considers the effects of third‐party sustainability certification and the self‐proclaimed label of sustainable entrepreneurship as congruent reputational signals for inducing angel investors' willingness to invest. Three studies were conducted using a 2 × 2 between‐subject experimental design on certification and label conditions, respectively, in two samples from the Amazon MTurk crowdsourcing marketplace and one from business angels. Results show that early‐stage ventures would use such signals in their sustainability exemplification strategy to convey quality and prestige and eventually improve their chances of raising business angel funding. Implications for theory and practice are discussed.
ISSN:0964-4733
1099-0836
DOI:10.1002/bse.3638