The entrepreneur-financier relationship across institutional logics: A study in Thailand

Abstract

Ph. D. Thesis.Entrepreneurs can draw support from various types of financiers, including crowdfunding, angel investors, venture capital funds, corporate venture capital funds, and public subsidies. However, most research focuses on a single source of finance, most often venture capital funds. Prior studies do not give a complete picture of how the relationship between entrepreneurs and investors unfolds over time. The focus is mainly on how investment decisions aremade, even though engagements after striking a deal are equally crucial to the relationship. These gaps in understanding offer an opportunity to understand entrepreneurs and their contexts, particularly when looking at the microlevel entrepreneur-financier dyad. In addition, as Welter (2011) notes, contexts matter. These contexts have a multiplicity of levels in that they both intertwine with and shape regulatory and normative contexts at wider levels (community, regional, and national). The entrepreneurfinancier dyadic relationship is arguably formed in a broader context. It is thus worth considering the potential effect of context on the relationship. This research explores the relationships between entrepreneurs and financiers in Thailand using an institutional logics perspective: a value system that prescribes behavioural templates for focal actors (Thornton et al. 2012). The focus is on the context of how a relationship is fostered during a new venture financing process. By examining fine-grain differences in practices between entrepreneurs and various financiers, the research deconstructs what comprises the emergence of their relationships and explains the distinct context within which each pathway is formed. This is a promising lens for explaining differences in entrepreneur-financier relationships. The literature has conceptually suggested that each type of financiers will possess dominant institutional logics, and such logics will shape their interactions with entrepreneurs when assessing prospective deals. The study utilises a qualitative research design involving indepth interviews with entrepreneurs and financiers – corporate venture capitalists, venture capitalists, angel investors, and government funding agencies – in Thailand. A total of 36 interviews were conducted with 20 entrepreneurs and 16 financiers. This thesis proposes a comprehensive framework that delineates the emerging relationships between entrepreneurs and various types of financiers. Each path develops under its own practices with hybrid logics that are underpinned by the broader context. However, the institutional logics shaping the relationship deviate from those previously characterised in the 3 literature. The most striking findings involve entrepreneurs’ relationships with corporate venture capital and angel investors. The former are shaped by both corporate and professional logics, whereas quasi-community logics shape the latter. A different relationship pattern is found in government funding, shaped by state logic complemented by market logic. Practices with venture capitalists coincide with those in the literature, indicating a predominance of professional logics in the relationship. Based on these findings, practical recommendations are provided for entrepreneurs planning to approach financiers in relation to what financiers look for at different phases of relationship formation and what entrepreneurs can expect from financiers. Policy recommendations are also offered for those interested in championing entrepreneurship through the design of financing tools concerning institutional logics found in entrepreneur-financier dyads in emerging economies