When stakeholders are imposed: Non‐chosen stakeholder orientation and venture performance

Abstract Research Summary Extending stakeholder theory into the entrepreneurship context, we examine the performance implications of externally imposed stakeholder orientation, which we conceptualize as non‐chosen stakeholder orientation. Given the resource constraints, short time horizons, and high levels of uncertainty that characterize ventures, we argue that increased non‐chosen stakeholder orientation can hinder venture performance. Analyzing 3981 U.S. ventures founded between 1980 and 1995, our staggered difference‐in‐differences analysis shows that constituency statute enactment, which exogenously increases orientation toward non‐chosen stakeholders, is negatively associated with ventures' successful exits and external funding. Consistent with our theory, this effect is stronger for ventures with a majority of internal board members, as these ventures are likely to maintain a narrow set of chosen stakeholders. Our theory and findings contribute to the entrepreneurship and stakeholder management literatures by jointly considering the source of stakeholder orientation—whether voluntarily chosen or externally imposed—and the organizational context in which firms operate. Managerial Summary This study examines how engaging with “non‐chosen” stakeholders—those imposed on ventures through legal or regulatory frameworks—affects entrepreneurial outcomes. Using data from 3981 U.S. ventures founded between 1980 and 1995, we leverage the enactment of constituency statutes as an exogenous shock to non‐chosen stakeholder orientation. Our results show that greater focus on these stakeholders reduces the likelihood of successful exits, such as IPOs or acquisitions, and lowers the cumulative external funding ventures receive. This effect may arise because non‐chosen stakeholders often require time, attention, and resources, diverting focus from growth opportunities and performance goals. These findings highlight that legally imposed engagement with stakeholders can constrain entrepreneurial growth and performance.