The technology bias in entrepreneur-investor negotiations

Abstract

Entrepreneur-investor negotiations are pivotal for ventures in need of funding. However, to date, little is known about the dynamics of these negotiations. We investigate a critical feature of this phenomenon by examining the role of technology, via cognitive heuristics, in shaping entrepreneur and investor perceptions and subsequent negotiation outcomes. In a controlled laboratory setting, we simulate 103 negotiations between entrepreneurs and investors. We hypothesize and find that there is a pervasive technology bias that influences the perceptions of both parties of the negotiation and, consequently, negotiation outcomes. Our findings offer unique insights into the relationships of technology, cognitive heuristics, and negotiations. We discuss the implications for both practitioners and theoreticians in the areas of technology, decision making, negotiation, and entrepreneurial financing.