Conflicts between entrepreneurs and investors: the impact of perceived unethical behavior

V. Collewaert, Y. Fassin

Research output: Contribution to journalArticleAcademicpeer-review

Abstract

This paper examines the impact of perceived unethical behavior by entrepreneurs, angel investors and venture capitalists on their conflict process. For this purpose, we use an embedded case study design to provide a diversity of perspectives on the topic at hand. From the eye of the beholder, i.e. investor, entrepreneur or both, 11 conflict situations were analyzed for any perceived unethical behavior. Based on findings from within- and cross-case analysis, we propose that perceived unethical behavior among venture partners triggers conflicts between them through increased fault attribution or blaming. Further, we propose that perceived unethical behavior affects venture partners' choice of conflict management strategy and increases the likelihood of conflict escalation and of conflict having a negative partnership outcome such as failure or another form of involuntary exit. As such, this paper contributes to the entrepreneurship literature by addressing calls for more research on the darker sides of investor-investee relationships.
Original languageEnglish
Pages (from-to)635-649
Number of pages15
JournalSmall Business Economics
Volume40
Issue number3
DOIs
Publication statusPublished - Apr 2013

Keywords

  • Conflict
  • Business ethics
  • Venture capital
  • Business angels
  • Angel investors
  • Entrepreneurs
  • VENTURE CAPITALIST
  • INTRAGROUP CONFLICT
  • EQUITY SENSITIVITY
  • ETHICAL BEHAVIOR
  • PERSPECTIVE
  • ORGANIZATIONS
  • MANAGEMENT
  • TRUST
  • TEAMS

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