In the high-stakes context of early-stage entrepreneurship, entrepreneurs can be tempted to make business decisions that prioritize monetary gains over ethical considerations. Across two experimental studies, we examine the consequences early-stage entrepreneurs face for conducting profitable but unethical behavior. Building on attribution theory, we test how such behavior impacts an entrepreneur’s access to funding and the likelihood of being broadcasted by investors. Furthermore, following role congruity theory, we investigate whether female entrepreneurs experience more negative consequences for behaving unethically than their male counterparts. Using a pilot experiment (N = 169) and a preregistered incentive-compatible experiment (N = 434), we find that when behaving unethically, entrepreneurs are evaluated less positively, receive less funding, and are less frequently broadcasted by investors. We also find that reduced funding and visibility are mainly driven by investors’ negative moral-social evaluations of unethical entrepreneurs. Surprisingly, we do not find that female entrepreneurs face more negative consequences for unethical behavior than their male counterparts. Our findings contribute to the literature on ethics in entrepreneurship and business ethics by demonstrating that while entrepreneurs might be drawn to prioritize profitability over ethicality, investors penalize entrepreneurs’ unethical behavior.
