To ensure that their venture does not go after an unwieldy number of opportunities, entrepreneurs must be selective in their responses to opportunities. The effect of pursuing an opportunity on the venture or entrepreneurs’ identity is an important criterion that can guide selection or avoidance. Potential negative identity ramifications of an opportunity can be a strong motivator for entrepreneurs to avoid this opportunity despite its viability and financial lucrativeness. However, to elicit agreement from their Venture Capital (VC) investors, entrepreneurs must emphasize financially relevant information in their justification or risk disagreement. Additionally, to mitigate potential disagreement, entrepreneurs can frame their decision such that it prompts the VC to focus on higher order strategic goals on which the VC and entrepreneur are better aligned. We are empirically validating these claims and uncovering underlying mechanisms using vignette-based experiments and semi-structured interviews with VCs.
