The effect of entrepreneurial rhetoric on microlending investment: An examination of the warm-glow effect

Abstract

Microlending provides a valuable alternative to traditional financing for entrepreneurs in impoverished countries. Drawing from theory on political rhetoric and the concept of warm-glow giving, we examine characteristics of entrepreneurial narratives that are related to how quickly entrepreneurs receive funding. Using a sample of 6051 narratives from entrepreneurs in developing countries, we demonstrate that narratives higher in language indicating blame and present concern lead to more rapid funding, while narratives higher in accomplishment, tenacity, and variety lead to slower funding. Our findings suggest that the presentation of investment profiles should be carefully managed to maximize funding likelihood.