When less is more: EO's influence upon funds raised by young technology firms at IPO

This study examines the influence of entrepreneurial orientation (EO) on the amount of capital raised by a young technology firm at the time of its initial public offering (IPO). We draw on signaling theory and an exploration–exploitation theoretical perspective to develop insights concerning the influence of EO upon IPO valuation. Results indicate a negative relationship between EO, as signaled within the firm prospectus, and IPO value. Moreover, top management team (TMT) external board activities are found to moderate the EO–IPO value relationship. With TMT external board activities, a more pronounced negative relationship is indicated. However, without TMT external board activities, stronger EO signals are found to positively impact the amount of funds raised at IPO. The implications of these findings are discussed.