A Process Perspective on Venture Capitalists’ Investment Decision-Making

Although some organisations still develop weak business cases, the vast majority does an adequate job in order to build a sound justification for their investment decision-making. However, according to some scholars, a transformation is therefore in which the perspective on business cases shifts from document thinking to process thinking. This study presents a part of an exploration of a process perspective on business cases. In order to achieve this objectives, a group of academic and practitioner experts participated in a Delphi study and validated in total 31 business case practices, of which the majority was perceived as highly effective to support the objectives of a business case process. The paper ends with an exploration of the practical application of business case process practices in the context of COBIT 5, as an instance of a widely used practitioners framework.

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Research on the Relationship Between Venture Capitalists’ Trust in Entrepreneur and Their Investment Behaviors

Entrepreneurship Research Journal ◽

10.1515/erj-2020-0151 ◽

2020 ◽

Vol 0 (0) ◽

Author(s):

Sulei Li ◽

Hongtao Yang

Keyword(s):

Decision Making ◽

Positive Impact ◽

Investment Decision ◽

Psychological State ◽

Investment Behavior ◽

Venture Capitalists ◽

Investment Decision Making ◽

Risk Appetite ◽

Key Factor ◽

The Relationship

AbstractVenture capitalists’ trust in entrepreneurs and their investment behaviors does not interact directly; Trust is a psychological state rather than static and stable phenomena. The relationship is affected by multiple factors. This study aims to develop a better understanding of the complex relationship and to show the degree of influence among factors, and to reveal “The Bewilderment of Decision-making” of VC. Based on SEM, this paper analyzes the relationship between the factors: the influencing factors at the initial stage of trust, trust, investor risk appetite, entrepreneurs’ behaviors, capitalists’ decision-making Behaviors, capitalists’ post-investment Behaviors. Our qualitative analysis is based on data by issuing 323 questionnaire surveys of 104 Chinese venture capital firms which are divided into different regions by Global Entrepreneurship Monitor (GEM). By analyzing various behaviors, we find that entrepreneurs’ behavior is a key factor in this relationship. Several factors studied earlier have a positive impact on the capitalist’s pre-investment decision-making behavior, but no significant impact on post-investment behavior. These results include trust and investor risk appetite. Through interviews, it was found that the capitalist’s post-investment behavior was related to the capitalist’s ability, resources, management mechanism and other factors.

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Trust Cognition of Entrepreneurs’ Behavioral Consistency Modulates Investment Decisions of Venture Capitalists in Cooperation

Entrepreneurship Research Journal ◽

10.1515/erj-2017-0084 ◽

2017 ◽

Vol 8 (3) ◽

Author(s):

Hongtao Yang ◽

Haiyan Li

Keyword(s):

Decision Making ◽

Interpersonal Trust ◽

Investment Decision ◽

Investment Decisions ◽

Trust Game ◽

Venture Capitalists ◽

Behavioral Consistency ◽

Neutral Information ◽

Investment Decision Making ◽

Behavior Consistency

AbstractPrevious studies have established that venture capitalists (VCs) adjust their investment decisions according to the economic outcome of their cooperation with entrepreneurs. However, investment decisions made by VCs are embedded in social interaction and influenced by information from third parties. Therefore, research studies on interpersonal trust in the disciplines of economics, psychology and neuroscience were integrated in this paper to explore how the trust cognition of VCs in entrepreneurs’ behavior consistency affects their investment decision-making. First, behavioral consistency is the criterion used by VCs to assess the credibility of entrepreneurs. Second, a trust game was designed for VCs and entrepreneurs, during which EEG (electroencephalogram) of the VCs was recorded. Finally, a learning model was developed on each participant’s behavior and showed the process of investment decision-making. The results indicated that investment decisions of VCs are significantly affected by trust cognition and rewards of cooperation, VCsʼ investment decisions are guided by their trust cognition in the behavioral consistency of entrepreneurs and investment experiences have a significant impact on investment decisions when VCs are cooperating with entrepreneurs with a moderate level of behavioral consistency. One explanation for these findings may be a result of the fact that the neutral information is ambiguous and uncertain; thus, VCs preferred to rely on the outcome of cooperation to adjust their investment decisions.

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A Business Case Process for IT-Enabled Investments

Strategic IT Governance and Alignment in Business Settings - Advances in Business Information Systems and Analytics ◽

10.4018/978-1-5225-0861-8.ch001 ◽

2017 ◽

pp. 1-23 ◽

Cited By ~ 1

Author(s):

Kim Maes ◽

Steven De Haes ◽

Wim Van Grembergen

Keyword(s):

Decision Making ◽

Conceptual Model ◽

Delphi Study ◽

Investment Decision ◽

Business Case ◽

Investment Decision Making ◽

Interesting Part ◽

Process Thinking ◽

Business Cases ◽

Process Perspective

Many organisations perform an adequate job in order to build a sound justification for their decision-making on IT enabled investments. It is recognised that developing a detailed business case is an essential step in order to realise the value potential of IT enabled investments. However, many business cases are often disregarded after the investment approval. Such an attitude towards business case use might be risky. Moreover, several advantages attributed to business cases could only be achieved if they are used continuously throughout the investment life cycle. It is suggested that the latter approach would be more capable to enable benefit realisation and increase the investment success. According to some scholars, a rational transformation is therefore required in which the perspective on business cases shifts from document thinking to process thinking. This study presents an interesting part of the exploration of a process perspective on business cases. Prior research has been helpful to explore individual practices that could support a continuous business case approach and to develop a conceptual model for a business case process. As an important step to increase the validity of the conceptual model and business case practices, the present study investigates through what practices the business case process can be effective in order to enable well-founded investment decision-making and to ultimately increase investment success? Therefore, the article has a threefold aim: (1) to obtain a validated list of business case practices and definitions, (2) to understand the practices' perceived effectiveness / ease of implementation, and (3) to identify a minimum set of key business case practices. In order to achieve these objectives, a group of academic and practitioner experts participated in a Delphi study and validated in total 31 business case practices, of which the majority was perceived as highly effective to support the objectives of a business case process. The paper ends with an exploration of the practical application of business case process practices in the context of COBIT 5, as an instance of a widely used practitioner's framework.

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