Ambivalence Between Entrepreneurs and Investors: The Consequence of Perceived Immoral Action

This paper examines the impact of perceived immoral action by entrepreneurs, angel investors and venture capitalists on their conflict process. For this purpose, we use an embedded case study design to provide a diversity of perspectives on the topic at hand. From the eye of the beholder, i.e.investor, entrepreneur or both, 11 conflict situations were analyzed for any perceived immoral action. Based on findings from within- and cross-case analysis, we propose that perceived immoral action among venture partners triggers conflicts between them through increased fault attribution or blaming. Further, we propose that perceived immoral action affects venture partners’ choice of conflict management strategy and increases the likelihood of and of conflict having a negative partnership outcome such as failure or another form of involuntary exit. As such, this paper contributes to the entrepreneurship literature by addressing calls for more research on the darker sides of investor–investee relationships.