Institutional Logics and the Post-Financing Relationship Between Investors and Entrepreneurs

How the investor–entrepreneur relationship can be better managed and maintained during the post-financing stage is a central question for investors and entrepreneurs alike, particularly given the large numbers of failed new venture collaborations. Extant research has generally underexplored the two-sided nature of this process, which requires both investors and entrepreneurs to opt in, while treating the norms and values underlying such behaviours as relatively homogeneous. Drawing on the institutional logics perspective, this study offers an alternative framework to explain the effective maintaining of the crucial investor–entrepreneur relationship. This framework suggests that a similarity in the two parties' institutional logics will facilitate the formation of aligned motives and shared perceptions between investors and entrepreneurs, which helps to maintain the relationship. Moreover, the interaction foundation provided by logic similarity is situated in context, and its activation depends on investment- and context-specific stimuli that can influence investors and entrepreneurs' interpretation and choice of appropriate behaviour. Empirical analyses of 2052 deals made by 1032 investors in 382 portfolio firms during the period 2000–2018 in high-tech industries in China provide general support for these arguments.