Date of Award

Spring 2020

Document Type


Degree Name

Doctor of Philosophy (PhD)




Business Administration -- Strategic Management

Committee Director

Anil Nair

Committee Member

Andrew Bennett

Committee Member

David Selover

Committee Member

Ryan Klinger


This dissertation has two essays examining negotiations between entrepreneurs and angel investors. In Essay 1, I study the dual roles of equity from the angel investor’s perspective, where the equity position sought in an embryonic firm creates two concerns. The first concern relates to the risks involved in generating returns from the initial capital investment. The second is a governance concern due to the challenges involved in managing future interactions between the firm and its environment. Because the angel investor is beholden to the entrepreneur for the proper execution of the embryonic firm’s strategy, this governance concern involves incentivizing the entrepreneur using equity. These simultaneous concerns represent the two sides of a coin that Commons (1934) refers to as a strategic transaction that is completed when the parties reach a negotiated agreement. I extend the governance literature to include the embryonic firm, and contribute by highlighting how the firm-environment exchange influences firm complexity, which in turn impacts the angel investor’s final equity position. I also contribute to the entrepreneurship literature, by applying theories of risk and governance to the embryonic firm context to explain the outcomes of angel and entrepreneur negotiations.

In Essay 2, I study how anchoring effects influence negotiations between entrepreneurs and angel investors. I argue that in negotiations involving new ventures there exists two tensions: uncertainty and power differentials. Entrepreneurial opportunities are inherently uncertain and the unfolding negotiation occurs along two interdependent dimensions of value (capital and equity) where each dimension adds a degree of uncertainty. Moreover, power differentials create an additional layer of tension. I explore how such tensions impact anchoring effects by studying negotiations on the TV show Shark Tank. I contribute to the anchoring literature by studying a context where true value is unknowable, and to the negotiation and power literatures by studying the direct impact of power in a natural negotiation setting. In terms of anchoring effects, I observe an effect with the capital dimension but not with the equity dimension. For this capital dimension, I raise the possibility that the observed effect is a function of the negotiation task and not necessarily due to cognitive bias. For the equity dimension, it appears angels may be immune to the cognitive effects of anchoring. I also find that shifting power dynamics benefit the entrepreneur with a larger final capital position and a lower final equity position, suggesting that the effects of power and cognition may be confounded during an actual negotiation.


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