This study highlights how firm reputation both enables and constrains engagement in novel actions that fall outside established business practices. In a study of venture capital (VC) investment in the emerging clean energy sector, we find that VC firms with medium reputation are more likely to engage in novel action and tend to do so earlier than either their high or low reputation peers. However, VCs with either low or high reputation exhibit greater commitment to the novel actions. Together, these findings suggest that firms with medium level of reputation devise an “early entry-low level of commitment” strategy, whereas the most reputable firms and those still in process of developing their reputation tend to engage in later but more significant commitment to novel action.
Petkova, Antoaneta P.; Wadhwa, Anu; Yao, Xin; and Jain, Sanjay
"BEING FIRST OR MAKING A DIFFERENCE? A STUDY OF U.S. VENTURE CAPITAL INVESTMENTS INTO THE "CLEAN" ENERGY SECTOR,"
Frontiers of Entrepreneurship Research: Vol. 31
, Article 3.
Available at: http://digitalknowledge.babson.edu/fer/vol31/iss2/3