Abstract

Decision making tasks comprise both a cognitive component as well as an environmental component (Brunswik, 1955; Simon, 1945, 1956), yet the interaction between these two are often ignored in research. In particular, this lack of regard for the structure of the task environment is a defining feature of research on venture capital (VC) decision making. Although extant studies provide a wealth of important insights on VC decision making (Franke et al., 2006; MacMillan, Siegel, & Subba Narasimha, 1985; Shepherd, Zacharakis, & Baron, 2003; Zacharakis & Meyer, 2000), this defining characteristic of current research unfortunately also limits our understanding of the subject area; for instance, we still lack a clear understanding of how the availability of fund capital or the composition of the existing portfolio may affect VC investment decisions over time. We set out to investigate the dynamics of VC decision making by focusing on the following research question: What is the impact of a change in the task environment, which may be driven by firm-level constraints (i.e., time, portfolio character, available capital) on a VC’s investment decision making over the life of a fund?

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