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Why do startups pursue initial coin offerings (ICOs)? The role of economic drivers and social identity on funding choice

Published on May 4, 2020in Small Business Economics
· DOI :10.1007/S11187-020-00337-9
Magnus Schückes1
Estimated H-index: 1
,
Tobias Gutmann1
Estimated H-index: 1
Abstract
  • References (108)
  • Citations (1)
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References108
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#1Tiona Zuzul (UW: University of Washington)H-Index: 3
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Through an inductive, comparative study of four early entrants in the nascent air taxi market, we examine why start-ups, generally characterized as flexible, malleable entities, might instead exhib...
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This paper examines the market for initial coin offerings (ICOs). ICOs are smart contracts based on blockchain technology that are designed for entrepreneurs to raise external finance by issuing tokens without an intermediary. Unlike existing mechanisms for early-stage finance, tokens potentially provide investors with rapid exit opportunities thanks to liquid trading platforms. The marketability of tokens offers novel insights into entrepreneurial finance, which I explore in this paper. First, ...
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#2Lori DiVito (Hogeschool van Amsterdam)H-Index: 5
We provide greater theoretical precision to the concept of productive opportunities of Penrose. We show firm emergence as a recursive cycle of changing productive opportunities. We show how those opportunities result from the technological base of the firm and are associated with the particular characteristics of the technology. We also show how productive opportunities require the assembly of different internal and external resources, and therefore partners. We address explicitly how the firm a...
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#1Romi Kher (CUNY: City University of New York)H-Index: 1
#2Siri Terjesen (NHH: Norwegian School of Economics)H-Index: 1
Last. Chen Liu (Trinity Western University)H-Index: 1
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Blockchain, a decentralized validation protocol in which no one individual entity completely controls the process or information, is labeled both a “techno tour de force” and a “fraud.” Austrian School researchers view the blockchain application Bitcoin as an ideal example of currency decentralization while ethics scholars fret about this very lack of control. Given the significant importance of the future of blockchain technology to a range of disciplines and the fragmented knowledge base with ...
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In a large survey (n = 1928), we examine whether entrepreneurs differ in their decision-making style from managers and employees. Besides two self-reported measures taken from psychology, we build on Rubinstein (Quarterly Journal of Economics 131: 859–890, 2016) by including two behavioral measures derived from response times and the nature of the strategic choices made. Supporting conventional wisdom, entrepreneurs report a stronger Faith in Intuition than others. Their actual choices are partl...
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Entrepreneurial judgment is crucial for entrepreneurial success. Extant literature argues that prior experience influences entrepreneurial decisions and the identification of attractive decision spaces for entrepreneurial activity is impacted by subjective risk perception and response to this risk. We posit that entrepreneurs develop different preferences for risk and prediction and their decisions reflect these preferences. To understand the strategic orientations of nascent entrepreneurs, usin...
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Abstract The emergence of novel and powerful digital technologies, digital platforms and digital infrastructures has transformed innovation and entrepreneurship in significant ways. Beyond simply opening new opportunities for innovators and entrepreneurs, digital technologies have broader implications for value creation and value capture. Research aimed at understanding the digital transformation of the economy needs to incorporate multiple and cross-levels of analysis, embrace ideas and concept...
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Abstract Under what conditions does digital technology adoption increase cross location knowledge flows within firms? We investigate this question by studying the impact of adopting basic Internet access on cross-location knowledge flows within the same firm. We construct a large data set of Internet adoption and patent citations among dyadic pairs of firm-locations between 1992–1998. We find that when both locations in the pair adopt basic Internet there is an increase in the likelihood of a ci...
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#1Christian Fisch (EUR: Erasmus University Rotterdam)H-Index: 9
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Last. Joern H. Block (EUR: Erasmus University Rotterdam)H-Index: 31
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Abstract Research on initial coin offerings (ICOs) is nascent and assesses ICOs from the perspectives of ventures and regulators. Little is known about the equally important group of investors who provide their capital to ventures in ICOs. Using a primary dataset of 517 ICO investors, we identify and categorize the motivations to invest in ICOs using factor analysis. We find that investors are driven by ideological, technological, and financial motives. Regarding the relative importance of the m...
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OverviewCorporate venture capital (CVC) units help their ventures flourish by offering value-adding services. Effective CVC initiatives offer services that help ventures design, implement, and mana...
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#1Joern H. BlockH-Index: 31
#2Alexander GrohH-Index: 1
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Entrepreneurial finance markets are in a dynamic state. New market niches and players have developed and continue to emerge. The rules of the game and the methods for receiving financial backing have changed in many ways. This editorial and the special issue of Small Business Economics focus on crowdfunding (CF) and initial coin offerings (ICOs), which are two distinct but important entrepreneurial finance market segments of the future. Although the two market segments initially appear to be sim...
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