Entrepreneurial Market Leadership Claims, Cultural Resonance, and Investor Evaluations in Nascent Markets: The Goldilocks Effect

Abstract

Cultural entrepreneurship research emphasizes entrepreneurs’ use of cultural resources to influence audience evaluations through resonance. However, the process by which such cultural resonance is achieved remains underexplored, particularly as an intermediary outcome. We investigate how cultural resonance may be attained by focusing on entrepreneurs’ use of a prevalent cultural resource in nascent markets: market leadership claims. Incorporating insights from social psychological research, we propose that the frequency of these claims becomes an important prompt in triggering investors’ cognitive processing and affects the attainment of cultural resonance. Specifically, we theorize a ‘Goldilocks effect’: a venture’s increased claiming frequency initially enhances resonance with investors, resulting in more favourable evaluations, but excessive claims reduce it, resulting in less favourable evaluations. Using a multimethod approach comprising an archival study and an experiment, we find support for our theory. These findings offer new insights into research on cultural entrepreneurship, discursive strategy, and nascent market strategies.