Do the Stories They Tell Get Them the Money They Need? the Role of Entrepreneurial Narratives in Resource Acquisition

The authors contributed equally to this paper and are listed in increasing order of seniority. We are grateful to Hillary Higgins, Jason Moschella, and Melissa Toffanin for their research assistance, and to Kai Lamertz, Mike Lounsbury, Noam Wasserman and three anonymous reviewers for their valuable feedback on earlier versions of this work. We recognize the funding provided by the Entrepreneurial Adopting a narrative approach to resource acquisition research, this paper examines the effects of storytelling on a firm's ability to secure externally-provided capital. We argue that narratives act as a resource-leveraging mechanism by conveying a comprehensible identity for an entrepreneurial firm, elaborating the logic behind proposed means of exploiting opportunities, and embedding entrepreneurial endeavors within broader contextual discourses. Using a mixed-methodology approach, we analyze all IPO prospectuses issued between 1996-2000 by firms in three high-tech industries. Our qualitative findings reveal how identity constructions, story elaboration and contextual embedding are invoked within entrepreneurial narratives. Our quantitative findings show that these aspects of storytelling impact resource acquisition above and beyond previously-emphasized factors. 2 INTRODUCTION Although the " linguistic turn " may have taken longer to reach the entrepreneurship literature than other areas of organizational research (Hjorth & Steyaert, 2004: 3), there is increasing recognition that storytelling is an essential component of an entrepreneur's toolkit. Successful entrepreneurs often possess reputations as effective " raconteurs " (Smith & Anderson, 2004: 126), with some of the most successful themselves professing that " every entrepreneur is a great storyteller " (Roddick, 2000: 40). Accordingly, a growing number of researchers have called attention to the role that stories play in the entrepreneurial process—particularly for the critical yet challenging task of attracting resources from external sources As of yet, however, very little empirical research exists on the relationship between entrepreneurial storytelling and external resource acquisition. One important exception is O'Conner's (2004) pioneering work, which documented how the founders of a new venture deliberately and successively reshaped their company story to enhance the likelihood of securing investment capital. Although offering a provocative behind-the-scenes glimpse into the story-crafting process, O'Conner's (2004) single-case design limits the conclusions that can be drawn about the effects of storytelling on resource acquisition in entrepreneurial firms. As a result, we do not know whether the stories that entrepreneurs tell help them garner the resources they need to pursue identified entrepreneurial opportunities. To our knowledge, this paper offers the first systematic, large-sample test of the overarching …