This study explores the differential benefits of media reputation for young firms obtaining venture capital (VC) under different levels of technical and market uncertainty. The analyses of the media reputation and VC funding of 414 information technology firms show that media reputation has a positive effect on the amount of VC funding they receive. This effect is particularly pronounced under conditions of market optimism, when VC investors are pressed to disburse more capital and to evaluate a larger number of young firms in a short period of time. The study contributes to reputation research and practice by drawing attention to the contingent benefits of reputation depending on the industry context in which stakeholders evaluate and compare competing firms.
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As the majority of media articles in this study (97.5 percent) were neutral in tone, it was not possible to create a meaningful measure of media tenor as prior studies of the media reputation of older and more established firms have done (eg, Deephouse, 2000; Greenwood et al., 2005; Pollock and Rindova, 2003).
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This paper has benefited from the helpful comments and suggestions of an anonymous CRR reviewer and the participants at the Western Academy of Management annual meeting.
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Petkova, A. How to Judge What Can’t be Seen and Touched? The Contingent Effect of Media Reputation on Young Firms’ Access to Venture Capital. Corp Reputation Rev 17, 273–289 (2014). https://doi.org/10.1057/crr.2014.16
- media reputation
- venture capital
- young firms