Journal of Business Venturing: Lingling Pan, Xiumei Li, Jianhong Chen, Tianxu Chen

Journal of Business Venturing xxx (xxxx) xxx–xxx
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Journal of Business Venturing

journal homepage: www.elsevier.com/locate/jbusvent
Sounds novel or familiar? Entrepreneurs' framing strategy in the

venture capital market☆
Lingling Pana, Xiumei Lib, , Jianhong Chenc, Tianxu Chend
⁎
a
Joseph M. Katz Graduate School of Business, University of Pittsburgh, Pittsburgh, PA 15260, USA
b
Department of Management, LeBow College of Business, Drexel University, Philadelphia, PA 19104, USA
c
Department of Management, Peter T. Paul College of Business and Economics, University of New Hampshire, Durham, NH 03824, USA
d
School of Business Administration, Portland State University, Portland, OR 97207, USA
ARTICLE INFO ABSTRACT
Keywords: This study offers a theoretical perspective from which to examine entrepreneurial ventures'
Entrepreneurship linguistic strategies. Drawing on the framing perspective, we introduce two concepts—novelty
Linguistic strategy frames and familiarity frames—and examine how the use of these linguistic frames may influence
Framing entrepreneurial ventures' ability to obtain funding from venture capitalists (VCs) in different
Venture capital
industry contexts. Based on a sample of 2883 U.S. information technology (IT) ventures and 5849
investment events from 2003 to 2014, we show that novelty and familiarity frames individually
and interactively shape the amount of funding. We also found that industry capital intensity
enhances the positive effects of familiarity frames. These findings highlight the role of en-
trepreneurial ventures' linguistic frames in shaping their funding opportunities.
Executive summary
Entrepreneurial ventures strategically use linguistic operations in their communication with stakeholders to simultaneously reveal
the novelty of their business and create a sense of familiarity. However, extant research has neither formally theorized this twofold
linguistic strategy, nor tied this strategy to entrepreneurial ventures' resource acquisition from venture capitalists (VCs). In this paper,
we address this void by drawing on the framing perspective. We particularly focus on the framing that concerns how entrepreneurial
ventures influence VCs' funding decision by using novelty frames and familiarity frames. We hypothesize that novelty and familiarity
frames will individually and jointly drive the amount of funding. We further explore the potential tension between novelty and
familiarity frames by considering industry capital intensity as a boundary condition. We propose a dilemma facing entrepreneurial
ventures: industry capital intensity may change the effectiveness of novelty frames and familiarity frames, but in opposite directions,
thereby preventing entrepreneurial ventures from simultaneously maximizing the effectiveness of both frames.
We test our hypotheses using data from 2883 U.S.-based information technology (IT) ventures that were involved in 5849 in-
vestment events from 2003 to 2014. Empirical findings from this study lead to several insights. First, entrepreneurial ventures may
leverage linguistic frames in public media to gain VC funding. In particular, our study found interaction effects of different linguistic
frames: although novelty and familiarity frames each exerted a positive influence on investment amount, the simultaneous use of
both frames made the framing effects even stronger. Such finding suggests that to obtain the utmost funding outcome, entrepreneurial
☆
A previous version of this paper was presented at the 2016 Academy of Management Conference. This research did not receive any specific grant
from funding agencies in the public, commercial, or not-for-profit sectors.
⁎
Corresponding author at: 3220 Market Street, Room 632, Philadelphia, PA 19104, USA.
E-mail addresses: lpan@katz.pitt.edu (L. Pan), xl345@drexel.edu (X. Li), jianhong.chen@unh.edu (J. Chen), chen36@pdx.edu (T. Chen).
https://doi.org/10.1016/j.jbusvent.2019.02.003
Received 16 October 2017; Received in revised form 8 November 2018; Accepted 25 February 2019
0883-9026/ © 2019 Published by Elsevier Inc.
Please cite this article as: Lingling Pan, et al., Journal of Business Venturing, https://doi.org/10.1016/j.jbusvent.2019.02.003
L. Pan, et al. Journal of Business Venturing xxx (xxxx) xxx–xxx
ventures may need to use a mixture of both novelty and familiarity frames. Second, our empirical findings suggest that while industry
capital intensity moderates the impact of familiarity frames, it does not moderate the impact of novelty frames. Thus, it is possible
that in industries with high capital intensity, both frames may be necessary for positive funding outcome; whereas, in industries with
low capital intensity, while using novelty frames is important, the usefulness of familiarity frames declines.
Our research makes several contributions. First, we contribute to entrepreneurship research by being the first to use the framing
perspective to examine entrepreneurial ventures' linguistic strategies. Linking linguistic frames to VC funding, our study demonstrates
that novelty and familiarity frames positively influence the amount of funding and that the simultaneous use of both frames will
further strengthen this influence. Thus, our study highlights the importance of linguistic frames in entrepreneurial ventures' funding
strategy. Second, our study contributes to the framing literature by introducing two new framing concepts, novelty and familiarity
frames, which are extensively used in entrepreneurial contexts. We offer evidence that entrepreneurial ventures' strategic use of
linguistic frames (e.g., novelty and familiarity frames) may lead to concrete outcomes such as enhanced opportunities for funding,
particularly when these frames fit the industry conditions. To have a successful framing strategy, entrepreneurial ventures must
consider both increasing the salience of their framing contents and aligning the contents to the key interests of stakeholders.
1. Introduction
The business of entrepreneurial ventures is often embedded in innovative technologies and creative business ideas. Despite their
innovativeness, entrepreneurial ventures suffer from skepticism about their ability to create value, which prevents them from
achieving market success or gaining critical resources (Aldrich and Fiol, 1994; Fisher et al., 2016; Santos and Eisenhardt, 2009). To
address this issue, entrepreneurial ventures often leverage public language in mass media (e.g., newspapers, press releases) as a
strategic means to justify their value and to make their business meaningful to external stakeholders such as investors. Such linguistic
strategies are particularly meaningful because external stakeholders have relatively little access to entrepreneurial ventures' internal
information and therefore often rely on their self-disclosure to evaluate their prospects and to make relevant strategic decisions. As a
result, entrepreneurial ventures' press releases, which “announce important milestones, actions and achievements,” become a va-
luable information source for external stakeholders (Busenbark et al., 2017; Narayanan et al., 2000; Petkova et al., 2013: 873;
Rindova et al., 2007). For example, professional investors often use press releases to seek potential investments (Teten and Farmer,
2010). As a result, entrepreneurial ventures' linguistic strategies, such as storytelling or narratives (Garud et al., 2014; Lounsbury and
Glynn, 2001; Martens et al., 2007), identity claims (Navis and Glynn, 2010, 2011; Petkova et al., 2013; Santos and Eisenhardt, 2009),
and analogies and metaphors (Cornelissen and Clarke, 2010), play a crucial role in their efforts to gain legitimacy, to establish new
markets, and to acquire resources from investors.
Despite the cumulative insights, extant research in this vein has yet to theorize an important phenomenon in entrepreneurial
ventures' strategic use of public language. On the one hand, they must reveal the novelty of their business to set a clear distinction
from established practices and to underscore their unique value to stakeholders. The strategy to do so includes highlighting char-
acteristics such as original or updated features of their products, their avant-garde technologies or technological improvements over
existing technologies, as well as the creativeness of their business ideas (Navis and Glynn, 2010). On the other hand, entrepreneurial
ventures' technologies and business ideas are often unestablished practices, and stakeholders may have difficulty understanding what
they do (Hargadon and Douglas, 2001). As a result, entrepreneurial ventures must facilitate comprehension by using linguistic
operations that create a sense of familiarity and highlight the commonalities and linkages between their new offerings and existing
ones (Hargadon and Douglas, 2001; Navis and Glynn, 2010). As noted by Hargadon and Douglas (2001), entrepreneurial ventures
need to show the novelty of their innovations but must “present the meaning and value of their innovations” in language that offers
the innovations “the appearance of familiar ideas” (p. 478). Similarly, Navis and Glynn (2010) argued that to make their products
understandable and attractive, entrepreneurial ventures should describe “the unfamiliar in terms of the familiar” (p. 443). Despite
such understandings, existing research has neither formally theorized entrepreneurial ventures' language about novelty and famil-
iarity as a twofold linguistic strategy, nor tied this strategy to their resource acquisition from venture capitalists (VCs). As a result, we
do not fully understand the theoretical mechanisms associated with such linguistic operations or their impact on entrepreneurial
ventures' growth, which constitutes a significant gap in the literature.
In this paper, we address this void by drawing on the framing perspective to conceptualize entrepreneurial ventures' linguistic
strategy about novelty and familiarity. Although different framing perspectives exist, we particularly focus on the framing that
concerns how social actors influence audiences' interpretation and action by using linguistic frames, constructed by selective use of
vocabularies (Benford and Snow, 2000; Entman, 1993). Our research addresses the following question: How will novelty and familiarity
frames used by entrepreneurial ventures influence their VC funding opportunities? We choose to study this research question because VCs
have become a major source of financing for entrepreneurial ventures. Indeed, by working with VCs, entrepreneurial ventures may
benefit in multiple ways to improve their chance of survival and overall performance (Dutta and Folta, 2016; Frankie et al., 2006;
Stuart et al., 1999). To capture entrepreneurial ventures' funding opportunities, we follow previous studies to focus on the total
amount of funding an entrepreneur may obtain in a particular investment event (Tian, 2011). We hypothesize that novelty and
familiarity frames will individually and jointly drive the amount of funding. We further explore the potential tension between the two
frames by examining industry capital intensity as a boundary condition of novelty and familiarity frames. We test our hypotheses
using data from 2883 U.S.-based information technology (IT) ventures that were involved in 5849 investment events from 2003 to
2014.
Our research makes several contributions. First, it contributes to the entrepreneurship literature by being the first to use the
framing perspective to theorize and analyze entrepreneurial ventures' linguistic strategies. Linking linguistic frames to VC funding,
2
our study demonstrates that novelty and familiarity frames positively influence the amount of funding and that the simultaneous use
of both frames will further strengthen this influence. Thus, our study highlights the importance of linguistic frames in entrepreneurial
ventures' funding strategy. We also suggest that the effectiveness of linguistic frames may be industry-specific. Second, our study
contributes to the framing literature by introducing two new framing concepts, novelty and familiarity frames, which are extensively
used in entrepreneurial contexts. We offer evidence that entrepreneurial ventures' strategical use of linguistic frames (e.g., novelty
and familiarity frames) may lead to concrete outcomes such as enhanced opportunities for funding, particularly when these frames fit
the industry conditions.
2. Theory and hypotheses
2.1. Linguistic frames in entrepreneurship
Framing is a communicative strategy used by a social actor (an individual or an organization) to delimit stakeholders' attention to
certain aspects of reality and to influence their interpretations and actions toward an issue of interest (Benford and Snow, 2000;
Cornelissen and Werner, 2014; Fiss and Zajac, 2006; Giorgi and Weber, 2015). Framing may take various forms; despite this variety, a
stream of framing research has particularly highlighted the role of linguistic frames, defined as the selective use of vocabularies to
construct meaning of a particular version of reality and to shape target audiences' understandings, garner their appreciation, and
influence their behaviors (Cornelissen and Werner, 2014; Entman, 1993; Giorgi, 2017; Giorgi and Weber, 2015; Goffman, 1974;
Loewenstein et al., 2012). Linguistic frames are useful when a social actor competes for attention and appreciation, especially when
audiences must make critical decisions under the circumstances characterized by ambiguity and uncertainty (Giorgi, 2017). Em-
pirical studies have found that linguistic frames may help framers convince targeted audiences of the appropriateness of their
intended actions (Hallett and Ventresca, 2006; Powell and Colyvas, 2008), formulate public opinion and responses (Giorgi and
Weber, 2015; Staw et al., 1981), and shape people's belief about new phenomena such as nascent markets (Anteby, 2010; Giorgi and
Weber, 2015; Navis and Glynn, 2010).
Linguistic frames influence audiences' actions through two mechanisms. The first is salience. Typically, if a linguistic frame is more
noticeable and accessible to audiences, the possibility that they will later use the frame for judgment and decisions becomes greater
(Entman, 1993; Fiske and Taylor, 1991; Pollock et al., 2008). Because a social phenomenon is often complex, the repeated ap-
pearance of vocabularies about a particular frame may increase its noticeability, thereby implying its significance (Cornelissen and
Werner, 2014). Repeating vocabularies also makes a frame widely available and more accessible (Tversky and Kahneman, 1973). As a
result, audiences will be more likely to notice and digest the frame, which elevates the probability that they will interpret, memorize,
and integrate the intended messages in their subsequent valuation and decisions (Scheufele and Iyengar, 2012). Thus, the salience of
a linguistic frame is a positive function of the recurrent appearance and repetition of vocabularies about the frame (Entman, 1993). A
wide range of studies has found increased salience an effective strategy for shaping audience attitude and behaviors (Cappella and
Jamieson, 1996; Entman, 1989, 1993; Iyengar, 1987; Iyengar and Simon, 1993).
The second mechanism associated with linguistic frames is resonance, an interpretative process in which information carried by
linguistic frames aligns with the beliefs, expectations, understandings, or values of audiences, thereby prompts them into forming
opinions on the basis of the frames and to act accordingly (Benford and Snow, 2000; Entman, 1993; Giorgi, 2017). Resonance is
critical to determining whether a frame will achieve intended goals (Benford and Snow, 2000; Giorgi, 2017). Because resonance
reflects “an audience's experienced personal connection with a frame” (Giorgi, 2017: 716), a frame will be able to “strike a responsive
chord” only when the interpretations it evokes are central to and aligned with the beliefs of the audiences (cf., Giorgi, 2017; Snow
et al., 1986: 477). As Giorgi and Weber noted, a frame will lead to favorable outcomes if it “suggests the fulfillment of needs,
expectations, and interests that arise from audience members' tasks and goals” (Giorgi and Weber, 2015: 340). Research has shown
that frame resonance is often associated with audiences' appreciation and tend to result in outcomes in favor of the framer, such as
awards or recognition in the professional field (Giorgi and Weber, 2015) and support from a wide range of constituents (Benford and
Snow, 2000).
Using linguistic frames is essential to entrepreneurial ventures (Fisher et al., 2017). First, entrepreneurial ventures must compete
to show their market potentials to garner investors' attention and positive evaluations. By using carefully designed linguistic frames,
entrepreneurial ventures may directly influence the attention focus of investors and foster their appreciation. Second, because the
quality of entrepreneurial ventures' offerings is often unknown and their prospects are uncertain, investing in these ventures is a risky
business and decisions must be made under ambiguity and uncertainty. Linguistic frames can guide investors into a particular way of
thinking in favor of entrepreneurial ventures. Studies have shown that linguistic strategies help entrepreneurial ventures create
legitimacy (Navis and Glynn, 2010) and attract investors (Martens et al., 2007).
Our study examines how entrepreneurial ventures may use linguistic frames to attract VC funding. VCs are “active investors that
take equity positions in ventures that might otherwise be unable to acquire adequate financing” (Arthurs and Busenitz, 2006: 197).
We specifically focus on VC funding because it constitutes the highest proportion of investments in entrepreneurial ventures spe-
cialized in certain sectors (e.g., IT sector) and ventures may benefit from such equity relationships in multiple ways1 (see review,
Sharma, 2015). For instance, VCs may help entrepreneurial ventures increase their innovation outputs, establish more efficient
governance, and speed up commercialization of new products, thereby enhancing their overall performance (Dutta and Folta, 2016;
1
We thank the anonymous reviewer who points out this to us.
3
Gans et al., 2000; Hsu, 2006; Sorenson and Stuart, 2001). At the same time, VCs also face the challenge of sourcing potential
investments (Teten and Farmer, 2010). Researchers indicated that VCs choose which entrepreneurial ventures to fund based on a list
of factors, including the characteristics of the founding team, the quality of the product idea, the attractiveness and risk of the product
market, as well as financial factors that influence the ventures' chance of success (Goslin and Barge, 1986; Hisrich and Jankowicz,
1990; Petkova et al., 2013). VCs often actively search information about entrepreneurial ventures from multiple channels among
which press releases represent a critical information source (Kollmann and Kuckertz, 2010; Petty and Gruber, 2011; Sharma, 2015;
Teten and Farmer, 2010; Tyebjee and Bruno, 1984). Even though press releases by entrepreneurial ventures may deliver information
to the general audience and their framing strategies are not necessarily targeted at VCs, VCs may use the press releases as the basis to
identify information relevant to their funding decisions. According to David Teten, the managing partner of HOF Capital, and Chris
Farmer, the founder and investor of SignalFire,2 the use of commercial databases such as Lexis-Nexis to source potential investments
has become a widely adopted practice among professional VCs (Teten and Farmer, 2010). Thus, linguistic frames used by an en-
trepreneurial venture in news releases may serve to draw the attention of VCs, to convince them of its value, and thereby to attract
their funding. In this paper, we build on this logic to study two linguistic frames that are frequently used by entrepreneurial ventures:
novelty frames and familiarity frames, and link them to VC funding. In the following sections, we define these two concepts and discuss
how entrepreneurial ventures may use these two frames to create salience and resonance in the VC market, thus enhancing their
funding opportunities.
2.2. Novelty frames, familiarity frames, and VC funding
Schumpeter (1942) has highlighted entrepreneurial “creative destruction” as a powerful driver in wealth creation. Because en-
trepreneurs' creativity “... incessantly revolutionizes the economic structure” by “incessantly destroying the old one” while “in-
cessantly creating a new one” (Schumpeter, 1942: 83), investors tend to be excited by new businesses that are embedded in radical or
updated technologies and business ideas, in particular those that emerge as technological discontinuities or that have the potential to
change the established “rules of engagement” in the industry (Anderson and Tushman, 1990; Navis and Glynn, 2010; Rindova et al.,
2009). In view of this, entrepreneurial ventures often highlight the novelty of their businesses and use linguistic operations pertaining
to novelty to secure opportunities for resource acquisition and future growth. Conceptually, we draw upon the framing perspective to
introduce the concept of novelty frames, defined as units of linguistic representations describing new features of entrepreneurial
ventures' technologies, products or services, and business models, including both radical and unprecedented innovations of business
attributes as well as updates and incremental enhancements of current practices. For example, 4INFO, Inc., a leading mobile search
startup, has used novelty frames such as “unique interface,” “revolutionizing the way people use their mobile phones,” and “newest
elegant new offering” to depict its offering as a radical innovation (PR Newswire, August 29, 2006). Similarly, BitFury Group, a
startup specializing in bitcoin transaction, frequently used novelty frames, such as “BitFury's latest generation devices,” “a new ex-
ecution methodology for enhanced design scalability,” and “the most advanced silicon process nodes,” to highlight the advanced
features of its products (Business Wire, 9/15/2014).
The impact of novelty frames is based on salience and resonance. As already discussed, novelty frames contain information about
the radical nature or updated features of an entrepreneurial venture's business. As the frequency of novelty frames increases in
publicly visible sources such as news releases, the salience of the novelty featuring the ventures' business increases, which increases
the probability that these ventures will capture the attention of VCs. In particular, recurrent appearance and highlighting of novelty
features may be self-reinforcing, which makes the information about the entrepreneurial ventures' novel practices more accessible to
VCs, thereby increasing VCs' awareness and comprehension (Cornelissen and Werner, 2014; Entman, 1993; Pollock et al., 2008).
Once VCs notice and process the novelty features associated with entrepreneurial ventures, novelty frames will then serve to
create resonance. The framing literature suggests that frames will encourage participation if they align with the core interests of
audiences (Benford and Snow, 2000; Giorgi, 2017). For VCs, the primary goal is to pursue high investment returns from emerging
business territories, which are often embedded in the new technologies and novel business models possessed by entrepreneurial
ventures (Maula et al., 2013). Thus, VCs typically are more interested in new business opportunities that can generate “creative
destruction” (Baum and Silverman, 2004; Gompers, 1995; Pahnke et al., 2015; Pontikes, 2012). Therefore, entrepreneurial ventures'
innovative technologies and updated business concepts highlighted by novelty frames may well resonate with the interests and value
systems of VCs, making them believe that the entrepreneurial ventures' businesses are worthy of investing (Lounsbury and Glynn,
2001; Martens et al., 2007). In addition, by highlighting departure from existing practices, entrepreneurial ventures show their
potential to bring change to the technological or business landscape, and to create market opportunities and thus stand out among
competitors. Such signals align well with the interests of VCs. Therefore, we hypothesize that:
Hypothesis 1. Novelty frames used by an entrepreneurial venture will be positively related to the amount of VC funding it attracts.
VCs are professional investors, and although they have cumulative experience in specific industries, they may not have adequate
knowledge about entrepreneurial ventures' business models or technological details, particularly those in emerging fields. In view of
such challenges, entrepreneurial ventures often use linguistic operations that highlight the link between their offerings and estab-
lished practices, thereby making their novel technologies and business ideas seemingly familiar to stakeholders (Gioia and
Chittipeddi, 1991; Hargadon and Douglas, 2001; Heath and Heath, 2008). Drawing on the framing perspective, we conceptualize
2
A venture capital firm
4
such linguistic operations as familiarity frames, defined as the units of linguistic representations that highlight the commonalities and
linkages between entrepreneurial ventures' technologies, products or services, and business models and those of existing ones. The
case of E Ink Corporation offers an illustration of familiarity frames used by an entrepreneurial venture. When it announced its new
active matrix electronic ink display, the world's first display of its kind, it used familiarity frames such as “a typical laptop computer
monitor” and “compatible with the necessary electronics” (Business Wire, 4/10/2001). These familiarity frames highlighted the shared
features between the new display and existing ones as well as its compatibility with existing laptops and other forms of electronic
devices.
Similar to novelty frames, familiarity frames also influence VC investment decisions by salience and resonance. VCs typically have
pre-established logics and cumulative knowledge about various existing businesses. The recurrent appearance of familiarity frames
allows VCs to link a particular form of new business to established practices and to understand the unfamiliar from existing
knowledge bases. By highlighting such linkages and commonalities through familiarity frames, entrepreneurial ventures make their
businesses more noticeable and more accessible to VCs, thereby increasing the probability that they will make investment decisions
on the basis of this information later on (Entman, 1993; Pollock et al., 2008).
In addition, the use of familiarity frames may foster resonance with VCs. Indeed, although investing in innovation is in line with
their core interest, VCs may lack domain knowledge necessary to comprehend the value of the innovative ideas, technologies, or
products of entrepreneurial ventures (Chemmanur et al., 2014). Familiarity frames become particularly useful in this regard. By
linking new offerings to established knowledge, familiarity frames may enhance investors' comprehension, thereby making it easier
for VCs to predict the viability and prospects of the new business, thereby facilitating their appreciation of the value of the en-
trepreneurial venture (Giorgi, 2017). Because of this function, familiarity frames may help achieve resonance with VCs (Gioia and
Chittipeddi, 1991; Giorgi, 2017; Hargadon and Douglas, 2001; Heath and Heath, 2008). The framing literature suggests that once
frames resonate favorably with audiences' core interests, the audiences will act in favor of the framer (Benford and Snow, 2000;
Giorgi, 2017). Therefore, we hypothesize that:
Hypothesis 2. Familiarity frames used by an entrepreneurial venture will be positively related to the amount of VC funding it
attracts.
Although novelty and familiarity frames are distinct linguistic operations and each impacts the amount of VC funding, using only
one type or the other may be associated with the risk of undermining its utmost effectiveness. For example, although novelty frames
help entrepreneurial ventures highlight the uniqueness of their business, these frames may not be recognized or understood without
the presence of familiarity frames. Similarly, although familiarity frames enhance the understanding of entrepreneurial ventures'
business, the distinction between the new offerings and old practices may be unclear if these frames are used alone without the
presence of novelty frames. Ultimately, using novelty and familiarity frames simultaneously may serve to achieve the maximum
framing effects. Indeed, entrepreneurship scholars have highlighted the notion of “optimal distinctiveness,” suggesting that en-
trepreneurial ventures may need to blend the new in the existing and the unfamiliar in the familiar (Navis and Glynn, 2010; Zhao
et al., 2017).
Following this logic, we expect that joint use of novelty and familiarity frames may enhance the effectiveness of entrepreneurial
ventures' framing. When ADT Corp introduced its new product ADT QuietCare Plus, the home monitor system targeted at elderly
residents, it simultaneously used novelty frames such as “a unique mix of this new technology” and familiarity frames such as “the
more familiar technology of the medical alert pendant” (PR Newswire, 3/29/2005). Framing scholars have suggested that blending
unfamiliar with familiar elements helps achieve frame salience and resonance (Cornelissen and Clarke, 2010; Giorgi, 2017; Giorgi
and Weber, 2015). Incorporating this idea into the notion of linguistic strategy, we argue that entrepreneurial ventures may si-
multaneously employ novelty frames and familiarity frames to achieve the utmost outcomes. Therefore, we hypothesize that:
Hypothesis 3. The interaction between an entrepreneurial venture's familiarity frames and novelty frames will be positively related
to the amount of VC funding it attracts.
2.3. The contingency of the framing effect: industry capital intensity
Thus far, we have theorized funding amount as a function of either independent or joint effect of novelty and familiarity frames.
However, framing perspective suggests that external, contextual factors may influence how frames resonate with audiences (Benford
and Snow, 2000; Rhee and Fiss, 2014) and thus, the effects of proffered frames may depend on contextual factors. In our research
context, although both novelty and familiarity frames may resonate with VCs and thus enhance the funding opportunity of en-
trepreneurial ventures, their underlying mechanisms differ. Specifically, while novelty frames appeal to VCs' core interest by high-
lighting the distinction and departure of entrepreneurial ventures as evidence of value creation, familiarity frames speak to VCs' needs
for uncertainty reduction by emphasizing the commonalities and linkages between the known and what the entrepreneurial ventures
offer. Therefore, it is possible that in specific contexts, novelty frames may be more influential or more conducive than familiarity
frames, or vice versa, which prevents entrepreneurial ventures from being able to maximize the utility of both frames simultaneously.
To explore these possibilities, we consider industry factors as potential moderators of the framing effects. Prior research suggests
that VCs assess target ventures differently depending on the industry context (Sharma, 2015; Sorenson and Stuart, 2001) and it
follows that the same frames may resonate differently with VCs in distinct industry contexts. We specifically focus on industry capital
intensity, defined as the amount of financial capital required to run a business in an industry (Datta and Rajagopalan, 1998; Hambrick
and Lei, 1985). As we will theorize below, this construct is relevant to VCs' valuation of entrepreneurial ventures and is therefore
5
likely to change the level of resonance specific frames may generate.

We propose that industry capital intensity will reduce the positive effect of novelty frames on the amount of funding. Industry
capital intensity reflects the amount of financial resource required to start a firm in the industry (Katila et al., 2008; Porter, 1980).
When it is high, entrepreneurial ventures face excessive entry barriers and must obtain a significant amount of financial capital to
start their business (Basu et al., 2011; Bowen and Wiersema, 2005; Dewan et al., 2007). Such high sunk costs in the upfront sig-
nificantly increase the risk level of their business. Therefore, VCs may perceive a higher risk when investing in such industries.
Because novelty frames promote the change of and deviations from existing practices, which provides reference to risk factors such as
demand uncertainties, undefined market structures and lack of legitimacy, the use of these frames in industries characterized by high
capital intensity may increase the salience of perceived risks and thus hinder the creation of resonance with VCs. In addition, in
industries with high capital intensity, fixed costs are high and innovation tends to be expensive, which is likely to create strategic
rigidity, making it more difficult to introduce changes (Datta et al., 2005; Datta and Rajagopalan, 1998; Hambrick and Lei, 1985).
Consequently, it is not conducive for entrepreneurial ventures to create or to promote new business offerings in those industries,
which increases VCs' concern that change and innovation proposed by ventures may not happen as planned. As a result, the in-
novation and change highlighted by novelty frames may sound unpractical to VCs, thereby reducing the likelihood that they will
appreciate such frames.
In contrast, when industry capital intensity is low, entrepreneurial ventures have lower entry barriers and face lower sunk costs
(Datta and Rajagopalan, 1998; Datta et al., 2005), which reduces VCs' perceived risk. Thus, they will be less sensitive about the risk
implications associated with novelty frames. Besides, an industry with low capital intensity is more conducive to innovation and
change (Acs and Audretsch, 1988; Basu et al., 2011), which increases the possibility to actualize the novel or innovative offerings of
new ventures, thereby making novelty frames sound practical and real. As a result, novelty frames used by ventures in industries of
low capital intensity may be more likely to resonate with VCs than those in industries of high capital intensity. Thus, we hypothesize
that:
Hypothesis 4a. Industry capital intensity will attenuate the effect of novelty frames used by an entrepreneurial venture on the
amount of VC funding it attracts.
The impact of industry capital intensity on the relationship between familiarity frames and funding amount follows a different
pattern. When entrepreneurial ventures operate in capital-intensive industries characterized by high sunk costs and risks (Datta et al.,
2005), familiarity frames, which highlight linkages between the offerings of the ventures and the established practices, will be
particularly useful. Indeed, these frames may legitimate the ventures' new practices by increasing understandability and reduce the
perceived risks by describing the unfamiliar as linked to the familiar, thereby generating resonance with VCs. In addition, when sunk
costs are significant and perceived risks are high, highlighting conformity of new business to established practices serves to enhance
the belief that the value offered by entrepreneurial ventures has a good chance to materialize, thereby speaking to VCs' interests.
In contrast, when industry capital intensity is low, VCs' overall perception about investment risk is relatively low, and thus
changes and innovations are less likely to receive resistance among stakeholders (Bowen and Wiersema, 2005; Dewan et al., 2007),
which reduces the need to highlight the link between the old and the new. Thus, familiarity frames used in industries of low capital
intensity will be less critical to creating resonance with VCs than those in industries of high capital intensity. Thus, we hypothesize
that:
Hypothesis 4b. Industry capital intensity will strengthen the effect of familiarity frames used by an entrepreneurial venture on the
amount of VC funding it attracts.
3. Methods
3.1. Data and sample
The population of our study consisted of entrepreneurial ventures that used linguistic strategy to obtain external funding. We
focused on technology startups founded between 2003 and 2012 in the U.S. IT sector. Entrepreneurial ventures in the IT sector
typically possess new technologies and novel products (Mendelson, 2000) and have a strong need to use novelty and familiarity
frames to gain support from stakeholders (Hargadon and Douglas, 2001). In addition, these ventures have been of primary interest to
VC investors (Gompers and Lerner, 2001). Some now-established IT companies such as Cisco Systems, Intel, Sun Microsystems, and
Yahoo obtained VC funding when they were young (Hellmann, 2000). We focused on entrepreneurial ventures founded between
2003 and 2012, for two reasons. First, the time window covered the resurgence of VC investments. According to the National Venture
Capital Association (NVCA), VC investment peaked in 2000 and has been steady at a high level since 2003 (2015 NVCA Yearbook).
Second, the 10-year time window covered the times of economic upturns (i.e., the 2003–2007 economic expansion), downturns (i.e.,
the subprime mortgage crisis in 2007–2009), and recovery (i.e., 2009–2012). Thus, focusing on ventures founded between 2003 and
2012 allowed us to include a significant number of startups of varied technologies and strategies across a variety of economic
conditions.
We used the VentureXpert database to arrive at an appropriate sample. Prior studies used the VentureXpert database extensively
to research entrepreneurial ventures and venture capital (Fitza et al., 2009; Petkova et al., 2013; Sorenson and Stuart, 2008). The
database offers detailed information about investment events of a comprehensive list of ventures, such as the date and amount of each
investment event, the names and types (e.g., VC, angel, or CVC.) of investors involved, the industry affiliation and geographic
6
location of each venture, and its liquidity event if any (i.e., acquisition or IPO). The database also provides industry classification of
each venture. We first downloaded all U.S.-based ventures whose industry class was labeled as “information technology” by the
VentureXpert database and then restricted the sample to ventures founded between 2003 and 2012 (5598 ventures). For each
entrepreneurial venture, we collected investment data in the sampled time frame 2003–2014. If a venture experienced a liquidity
event, we only used its investment events before the liquidity event because such an event may significantly change its linguistic
strategy.
We collected framing data for entrepreneurial ventures from the LexisNexis database, a comprehensive information source
composed of press releases and media reports from various business wires and newspapers. Unlike established firms that have
institutionalized information outlets such as SEC filings and annual reports, entrepreneurial ventures typically lack trackable records
for VCs to use in assessing them. VCs have suggested that press releases from commercial databases such as Lexis-Nexis are often used
to collect information about entrepreneurial ventures and to source potential investment targets (Teten and Farmer, 2010). Similarly,
prior studies have also suggested that the general investor community uses press releases as one important source to gather in-
formation about firms (Davis et al., 2012; Fiss and Hirsch, 2005; Navis and Glynn, 2010). Thus, press releases from the Lexis-Nexis
database serve as an appropriate source to study entrepreneurial ventures' framing.
To ensure a comprehensive capture of entrepreneurial ventures' press releases from the Lexis-Nexis database, we triangulated
multiple news outlets, including Business Wire, Canadian NewsWire, Gannett News Service, M2 Presswire, Marketwired, PR Newswire, and
the Associated Press (Pollock et al., 2008; Rindova et al., 2010). We then matched the framing data to investment events based on their
temporal sequence, such that each investment event was associated with the framing data preceding it.3Some entrepreneurial
ventures had no news releases and were therefore excluded from our sample, which resulted in a sample of 3204 entrepreneurial
ventures (founded between 2003 and 2012) involved in 7153 investment events (invested between 2003 and 2014). Missing data in
investment amount further reduced our sample to 2883 entrepreneurial ventures and 5849 investment events.
3.2. Measures
3.2.1. Novelty and familiarity frames

Prior studies have shown that words and vocabularies are central to meaning construction and persuasion (Jones and Livne-
Tarandach, 2008; Loewenstein et al., 2012; Nigam and Ocasio, 2010). Following these studies, we operationalized novelty and
familiarity frames on the basis of words and vocabularies.4 We first used the keywords approach to generate measures for the two
frames and then validated the measures using the coding approach.
Following Martin (2016), we first created dictionaries for novelty and familiarity frames. We derived keywords that mapped onto
the broad definitions of novelty and familiarity frames. We extensively read research as well as practitioner articles to generate initial
lists of words and vocabularies pertaining to the two frames and then extended the lists of keywords by developing a thesaurus for
each concept, which yielded 375 keywords for novelty frames and 329 keywords for familiarity frames.
We then established the substantive validity of novelty and familiarity frame keywords, using Anderson and Gerbing's (1991)
item-sort task. The substantive validity of a measure reflects “the extent to which that measure is judged to be reflective of, or
theoretically linked to, some construct of interest” (Anderson and Gerbing, 1991: 732). The authors recommended assessing sub-
stantive validity on the basis of judgments made “either by experts or by individuals considered representative of a population of
interest” (p. 733). Following their recommendation, we used a panel of 5 strategic management researchers independent of the
research to validate the novelty and familiarity frame keywords. We provided the researchers with the definitions of novelty and
familiarity frames and asked them to categorize each word/phrase into one of three categories: “The word/phrase reflects the
novelty/familiarity frame,” “It's not clear to me,” and “The word/phrase does not reflect novelty/familiarity frame.” We calculated
the content-validity ratio (CVR) for each keyword from the formula below:
ne N /2
CVR =
N /2
where ne denotes the number of panelists who judged a word/phrase to reflect the frame and N is the total number of panelists. CVR
ranges from −1.0 to 1.0, with a larger value indicating greater substantive validity for a word or a phrase. We arrived at the final
novelty and familiarity frame dictionaries by including only keywords with a CVR greater than or equal to 0.80. In Appendix A, we
provide some examples of these keywords. We used 246 keywords to construct the final novelty frame dictionary and 213 keywords
to construct the final familiarity frame dictionary.
Next, testing our hypotheses required the appropriate arrangement of time frames that allow the novelty and familiarity frames to
precede the investment events in a reasonable manner. In particular, our sampled entrepreneurial ventures were involved in two
types of investment events: (1) those in which the ventures received VC funding for the first time and (2) those in which the ventures
received additional VC funding (i.e., they have involved in at least one previous investment event). If a focal investment event was the
first investment event for an entrepreneurial venture, the time frame used to calculate the linguistic frames covered the time frame
3
We used the total number of novelty and familiarity frames obtained from news releases preceding each investment event. If an entrepreneurial
venture was involved in more than one investment event, we used the total number of frames between two consecutive investment events.
4
Notably, our conception of novelty frames only reflects the intensity that an entrepreneurial venture uses words and vocabularies retaining to
new features of its business and does not capture the degree of innovativeness of its business.
7
from the venture's founding date up to the investment event date (24.2%). If a focal investment was an additional investment event
for a venture, the calculation covered the time frame between the two consecutive investment event dates (75.8%). This operation
prevented double-counting the effects of the same frames.
Finally, we measured novelty frames as the total number of novelty frame keywords divided by the total number of words across
all press releases published by entrepreneurial ventures in specific time frames established in the prior step. This percentage measure
assured that the novelty frame scores were not dependent on the number of press articles. We used LIWC (Pennebaker and Francis,
1999), a software package extensively used in management research for content analysis of archival data (Gamache et al., 2015;
Nadkarni and Chen, 2014; Pfarrer et al., 2010), for calculations. We measured familiarity frames in the same way.
We validated our novelty frame and familiarity frame measures. The primary purpose was to investigate whether using LIWC
dictionary approach could capture the level of novelty and familiarity frames in the text. To do so, we first randomly selected 50 press
releases from our sample and used the keyword approach to compute the novelty and familiarity frame scores. Then, two coders
independently read each press release to assess the extent to which the article has used novelty frames and familiarity frames. Next,
each coder reported a novelty frame rating score and a familiarity rating score based on the 5-point Likert scale, with 1 indicating “no
use of novelty frames at all” or “no use of familiarity frames at all” and 5 indicating “heavy use of novelty frames” or “heavy use of
familiarity frames” (ICC = 0.86 for novelty frames; ICC = 0.82 for familiarity frames). Finally, we used the mean scores of the two
coders' ratings to assess the reliabilities between the novelty frame as well as the familiarity frame measures derived respectively from
the LIWC dictionary approach and the rating approach. The ICC for novelty frame measures was 0.73, and the ICC for familiarity
frame measures was 0.74. These results ensured the validity of our frame measures.
3.2.2. Industry capital intensity

We measured industry capital intensity as the average ratio of fixed assets to sales in each industry based on four-digit SIC codes
(Chang and Singh, 1999; Datta et al., 2005; Katila et al., 2008). We used data from COMPUSTAT to compute this measure and lagged
this variable by one year in the analyses (Katila et al., 2008).
3.2.3. Investment amount

The VentureXpert database reported the total amount of investment an entrepreneurial venture received in an investment event.
From this information, we measured investment amount by using logarithm transformation (Park and Steensma, 2012).
3.2.4. Control variables

We controlled the firm, industry, and periodic effect that may potentially influence entrepreneurial ventures' funding opportu-
nities. At the firm level, we controlled for the perceived novelty of each entrepreneurial venture's technology or business idea, because
VC's decision to invest in an entrepreneurial venture may depend not only on how the entrepreneur depicted the novelty of its
business but also on the extent to which the entrepreneurial venture was perceived to offer novel technologies or have a novel
business model. To operationalize this variable, we collected information about each entrepreneurial venture's technology and
business and then asked two IT experts who were independent of the study to rate the level of a venture's novelty on the basis of a 1–5
Likert scale ranging from “not novel at all” (a score of 1) to “very novel” (a score of 5) (κ = 0.82).
We controlled for the effects of entrepreneurial ventures' age, stage, location, funding received in the previous round, and the
number of press releases. We measured a venture's age as the number of years from the venture's founding year to the focal in-
vestment event year. Because VCs' decision to invest in an entrepreneurial venture may be a function of the venture's stage (e.g.,
early, expansion, or later stage) (Dushnitsky and Shapira, 2010), we created dummy variables to control the effect. We used a
dichotomous variable to control for the venture's location; the value was 1 if the venture was in California or Massachusetts, and 0
otherwise, because prior research suggests that location of entrepreneurial ventures in these two locations is more advantageous to
acquiring funding (Hochberg et al., 2007). To partial out the effects of each venture's investment in the prior round, we included three
variables. First, we included each venture's prior investment amount, measured as the logarithm of the funding amount received in the
prior round. Second, we used a dichotomous variable, prior CVC, to indicate whether a CVC invested in a venture in the prior round.
Third, we counted each entrepreneurial venture's prior number of investors (Lerner, 1994; Sorenson and Stuart, 2008). To account for
the intensity of a venture's press releases, we counted the number of press releases each venture released before the investment event
(Petkova et al., 2013).
3.3. Analytical approach
We used the generalized estimating equations (GEE) regression method to estimate our models. The method accounts for non-
independence of multiple observations of the same subject, thus is suitable for cross-sectional time-series data (Liang and Zeger,
1986). In all models, we specified a normal distribution with an identity link function and within-group (i.e., three-digit SIC) cor-
relation structure (Ballinger, 2004). We reported QIC (Quasi-likelihood under the Independence model Criterion) to select and test
model fit. We standardized all the independent variables except the dichotomous ones.
4. Results
Table 1 reports descriptive statistics and correlations. The variance inflation factors (VIF) of all variables are below 10, indicating
that multicollinearity was not a serious concern (Graham, 2003). Table 2 summarizes the test results based on GEE models.
8
Table 1
Descriptive statistics and correlationsa,b.
Variables Mean SD 1 2 3 4 5 6 7 8 9 10
Dependent variables
1. Investment amountc 15.41 1.41 1
Study variables
2. Novelty framesd 3.71 1.19 −0.003 1
3. Familiarity framesd 1.20 0.54 0.050 −0.028 1
4. Industry capital intensity 0.39 0.38 0.055 −0.035 −0.008 1
Controls
5. Perceived novelty 3.09 1.37 −0.014 0.009 0.022 0.019 1
6. Age 3.69 2.27 0.165 −0.081 −0.006 0.028 0.005 1
7. Location 0.58 0.49 0.154 −0.001 −0.004 0.044 −0.002 −0.029 1
8. Prior investment amountc 11.26 6.54 0.195 −0.014 0.045 0.066 −0.020 0.299 0.078 1
9. Prior CVC 0.13 0.34 0.094 0.002 −0.014 0.055 −0.002 0.126 0.053 0.238 1
10. Prior number of investors 2.15 1.93 0.194 −0.004 0.011 0.091 −0.039 0.239 0.091 0.681 0.406 1
11. Number of press releases 5.87 8.84 0.167 −0.082 −0.004 −0.047 −0.009 0.181 0.023 0.083 0.053 0.102
a
A total number of 2883 ventures and 5849 investment events comprise the data.
b
All correlations greater than .034 (absolute value) are significant at p < .01.
c
The variables were logarithm transformed.
d
The measure represents percentage.
Table 2
GEE regression results.
Variables Model 1 Model 2 Model 3 Model 4 Model 5
Intercept 16.550*** 16.480*** 16.473*** 16.484*** 16.477***

(0.318) (0.278) (0.282) (0.279) (0.283)
Study variables
Novelty frames 0.038* 0.039* 0.038* 0.039**
(0.018) (0.018) (0.015) (0.015)
Familiarity frames 0.059*** 0.060*** 0.063*** 0.064***
(0.017) (0.017) (0.013) (0.013)
Industry capital intensity 0.059*** 0.059*** 0.066*** 0.066***
(0.015) (0.014) (0.014) (0.013)
Novelty × Familiarity 0.019* 0.019*
(0.008) (0.009)
Novelty × Industry capital intensity 0.015 0.015
(0.009) (0.010)
Familiarity × Industry capital intensity 0.051** 0.051**
(0.018) (0.018)
Controls
Perceived novelty −0.015* −0.018* −0.019* −0.018* −0.018*
(0.007) (0.008) (0.008) (0.008) (0.008)
Age 0.040 0.040 0.040 0.040 0.039
(0.033) (0.034) (0.034) (0.034) (0.034)
Location 0.425*** 0.421*** 0.420*** 0.421*** 0.420***
(0.049) (0.052) (0.052) (0.052) (0.052)
Prior investment amount 0.086*** 0.081*** 0.081*** 0.084*** 0.083***
(0.016) (0.017) (0.017) (0.016) (0.016)
Prior CVC 0.061 0.059 0.059 0.063 0.062
(0.068) (0.067) (0.067) (0.069) (0.069)
Prior number of investors 0.111*** 0.106*** 0.107*** 0.103*** 0.103***
(0.018) (0.018) (0.018) (0.018) (0.018)
Number of press releases 0.127*** 0.132*** 0.133*** 0.133*** 0.133***
(0.007) (0.009) (0.009) (0.009) (0.009)
Stage dummies Yes Yes Yes Yes Yes
Year dummies Yes Yes Yes Yes Yes
QIC 5861.06 5860.35 5859.93 5859.27 5858.84
N = 5849.
*** p < .001, ** p < .01, * p < .05; Robust standard errors in parentheses.
9
Fig. 1. The interaction effect of novelty frames and familiarity frames on investment amount.
4.1. Direct and joint effects of novelty and familiarity frames
Hypothesis 1 (H1) predicts that novelty frames will be positively related to the investment amount it obtains. In model 2, the
coefficient for novelty frame is positive and significant (β = 0.038, s.e. = 0.018, p < .05), supporting H1. Turning to the magnitude of
this effect, because our dependent variable is logged, the regression coefficient can be interpreted as the percentage change in the
dependent variable associated with one unit increase in the independent variable (i.e., 100*β). Specifically, because we standardized
all independent variables, one unit increase in novelty frames (one SD change) would result in a change of VC funding at about 4%. In
our sample, the average value of VC funding is $12.8 million, implying that if a firm uses novelty frames (one SD change), it will
generate, on average, a $0.5 million more funding. Hypothesis 2 (H2) predicts that familiarity frames will be positively related to the
investment amount it obtains. In model 2, the coefficient for familiarity frame is positive and significant (β = 0.059, s.e. = 0.017,
p < .001), supporting H2. Specifically, one unit increase of familiarity frame in an entrepreneurial venture's press releases is as-
sociated with a 6% increase (about $0.8 million) in funding amount.
Hypothesis 3 (H3) predicts that familiarity frames will interact with novelty frames to influence investment amount. In model 3,
the interaction term novelty frame × familiarity frame is significant and positive (β = 0.019, s.e. = 0.008, p < .05). Fig. 1 offers a
graphic presentation of the interaction effect. The regression coefficient and the interaction plot together suggest that the positive
relationship between novelty frame and investment amount becomes stronger when familiarity frame is high. Thus, our hypothesis 3
is supported. Specifically, when familiarity frame is high (one SD above the mean), one unit increase of novelty frame will be
associated with 2% (about $0.3 million) greater increase of investment amount than when familiarity frame is low (one SD below the
mean).
4.2. The interaction between frames and industry capital intensity
Hypothesis 4a (H4a) predicts that industry capital intensity will attenuate the effect of novelty frames. In model 4, the coefficient
for the interaction term novelty frame × industry capital intensity is not significant (β = 0.015, s.e. = 0.009, n.s.). Thus, H4a is not
supported.
Hypothesis 4b (H4b) predicts that industry capital intensity will strengthen the effect of familiarity frames on investment amount.
In model 4, the interaction term familiarity frame × industry capital intensity is positive and significant (β = 0.051, s.e. = 0.018,
Fig. 2. The interaction effect of familiarity frames and industry capital intensity on investment amount.
10
p < .01). Fig. 2 offers a graphic presentation of the interaction effect. The regression result and the interaction plot together support
our prediction that the positive effect of familiarity frames on investment amount will be stronger in high industry capital intensity
than in low industry capital intensity. Thus, H4b is supported. Specifically, when industry capital intensity is high (one SD above the
mean), one unit increase of familiarity frame is associated with 5% (about $0.7 million) increase in investment amount than when
industry capital intensity is low (one SD below the mean).
4.3. Additional analyses
4.3.1. Correction for sample selection bias

Our sample may be subject to two sources of selection biases. First, it included only entrepreneurial ventures that received at least
one round of VC funding, excluding those that did not receive any VC funding. To correct for this potential bias, we used the two-
stage regression procedure suggested by Heckman (Heckman, 1979). To enable this correction, we first selected a random list of
entrepreneurial ventures that were comparable with our main sample based on three criteria: (1) they must have been founded
between 2003 and 2012, the timeframe we used to arrive at our main sample; (2) they must have operated in the same industries and
geographic locations as our sampled ventures; (3) they must not have received VC funding during the study period. We were able to
obtain 460 entrepreneurial ventures from the PrivCo database. By adding them to our test sample, we created a dichotomous variable
differentiating the two groups of ventures. Using probit regression, we regressed this variable on a set of other variables: SIC dummies,
venture founding year, and venture location dummies. We computed the inverse-Mills ratio and included it as a control in the GEE
models (Heckman, 1979). Our results remained consistent.
The second source of possible selection bias might be our inclusion of only entrepreneurial ventures that had at least one press
release and exclusion of those that did not have any. We used the two-stage regression procedure to correct for this selection bias. We
first created a dichotomous variable that differentiates entrepreneurial ventures having at least one press release and those that did
not have any, and regressed this variable on all the control variables in the main analyses (except the number of press releases). We
computed the inverse Mills ratio and controlled it in the models (Heckman, 1979). All results remained consistent.
4.3.2. Recency effects

The effects of novelty and familiarity frames may decline over time; as a result, frames that are published early may have a weaker
impact on audiences than frames published more recently. Thus, we calculated weighted measures for novelty and familiarity frames,
allowing the effect of frames to drop by 10% each year. For example, if a news release's score for novelty frames was 4% in the first
year, the score became 4% × (1–10%) = 3.6% in the next year, and 3.6% × (1–10%) score 3.24% in the following year. We reran all
the analyses based on the weighted measures of novelty and familiarity frames and obtained similar results.
4.3.3. Subsample test

Our sample included both first-round investment events as well as investment events in later rounds. To test whether our findings
are robust to this difference, we constructed a subsample that included only first-round investment events and reran all the tests
(Table 3). Findings based on subsample tests were consistent with our main analyses.
5. Discussion
Our study links the entrepreneurial ventures' linguistic strategy to their acquisition of VC funding. We draw on the framing
perspective and theorize the effects of two linguistic frames frequently used by entrepreneurial ventures — novelty frames and
familiarity frames — on the amount of VC funding in different industry contexts. Our study yielded two major sets of findings. First,
novelty and familiarity frames individually and interactively influenced the amount of VC funding. Second, industry capital intensity
moderated the independent effect of familiarity frames. Our results not only advance the entrepreneurship research but also con-
tribute to the framing perspective. Below, we discuss the theoretical implications, acknowledge the limitations, and suggest directions
for future research.
5.1. Entrepreneurship research
Our study furthers research on entrepreneurial ventures' linguistic strategy by introducing the framing perspective. This approach
is particularly meaningful because, although the literature has documented several linguistic strategies used by entrepreneurial
ventures (e.g., storytelling or narratives, identity claims, analogies, and metaphors) (Cornelissen and Clarke, 2010; Lounsbury and
Glynn, 2001; Martens et al., 2007; Navis and Glynn, 2010), few studies have formally conceptualized entrepreneurial ventures' choice
of specific linguistic operations in communicating with stakeholders. By incorporating the framing perspective, our study departs
from the literature to unpack the notion of entrepreneurial ventures' linguistic strategy on the basis of linguistic frames, a concept that
offers concrete analysis of entrepreneurial ventures' choice of specific words and phrases to communicate with stakeholders in public
media. Specifically, we study how entrepreneurial ventures may capture the attention of stakeholders to obtain critical resources such
as VC funding by effectively using novelty and familiarity frames. Building on prior framing studies (Benford and Snow, 2000;
Entman, 1993; Giorgi, 2017; Pollock et al., 2008), we argue that the effects of novelty and familiarity frames may be related to two
mechanisms: salience and resonance. To have a successful framing strategy, entrepreneurial ventures must consider both increasing
the salience of their framing contents and aligning the contents to the key interests of stakeholders.
11
Table 3
GEE regression results (first investment event only).
Variables Model 6 Model 7 Model 8 Model 9 Model 10
Intercept 17.278*** 17.177*** 17.165*** 17.163*** 17.149***

(0.313) (0.261) (0.271) (0.240) (0.249)
Study variables
Novelty frames 0.040** 0.045** 0.042** 0.049***
(0.014) (0.014) (0.014) (0.014)
Familiarity frames 0.086** 0.086** 0.100*** 0.101***
(0.026) (0.028) (0.027) (0.027)
Industry capital intensity 0.076* 0.077* 0.109*** 0.112***
(0.034) (0.035) (0.030) (0.031)
Novelty × Familiarity 0.048** 0.052***
(0.016) (0.014)
Novelty × Industry capital intensity 0.010 0.013
(0.019) (0.017)
Familiarity × Industry capital intensity 0.088** 0.091**
(0.031) (0.031)
Controls
Perceived novelty −0.051* −0.057** −0.059** −0.059** −0.062**
(0.023) (0.020) (0.020) (0.020) (0.020)
Age 0.122*** 0.125*** 0.122*** 0.120*** 0.116***
(0.028) (0.027) (0.026) (0.029) (0.029)
Location 0.355*** 0.358*** 0.357*** 0.357*** 0.355***
(0.039) (0.036) (0.036) (0.034) (0.034)
Number of press releases 0.093*** 0.094*** 0.095*** 0.094*** 0.095***
(0.017) (0.017) (0.017) (0.017) (0.017)
Stage dummies Yes Yes Yes Yes Yes
Year dummies Yes Yes Yes Yes Yes
QIC 1414.85 1414.11 1414.02 1412.24 1411.71
N = 1414.
*** p < .001, ** p < .01, * p < .05; Robust standard errors in parentheses.
Prior investment amount, prior CVC, prior number of investors were dropped from these models because we only included ventures' first investment
events and there was no prior investment event for these observations.
In addition, we contribute to entrepreneurship research by theorizing industry context as a contingency of entrepreneurial

ventures' framing strategy. With a particular focus on industry capital intensity, we propose a dilemma facing entrepreneurial
ventures: industry capital intensity may change the effectiveness of novelty frames and familiarity frames, but in opposite directions,
thereby preventing entrepreneurial ventures from simultaneously maximizing the effectiveness of both frames. Our empirical find-
ings, however, suggest that while industry capital intensity moderates the impact of familiarity frames, it does not moderate the
impact of novelty frames. Thus, it is possible that in industries with high capital intensity, both frames may be necessary for positive
funding outcome; whereas, in industries with low capital intensity, while using novelty frames is important, the usefulness of fa-
miliarity frames declines.
Future studies may further this line of research in two ways. First, our study considers VCs as a uniform group of investors.
However, different types of VCs exist, and future research could explore the effect of entrepreneurial ventures' linguistic strategy on
distinct types of VCs (Fisher et al., 2017). In a set of unreported analyses, we explored how novelty and familiarity frames influenced
the likelihood of entrepreneurial ventures forming investment relationships with corporate venture capitalists (CVCs). We found that
although using novelty frames enhanced this likelihood, using familiarity frames decreased it. Thus, though using familiarity frames
may help entrepreneurial ventures obtain more funding, it may reduce their chance to form investment relationships with CVCs,
resulting in a dilemma concerning their linguistic strategy. This insight is important because stakeholders from whom entrepreneurial
ventures try to obtain vital resources may have diverse backgrounds and may assess the same depiction of business features dif-
ferently, leading to varied funding opportunities (Fisher et al., 2017). Thus, devising linguistic operations attending to different
audiences is of strategic significance.
Second, future research may investigate the role of framing in VCs' funding decision process from a more granular perspective. VC
scholars have identified three important steps that VCs use in their decision process when funding entrepreneurial ventures: 1) deal
origination in which VCs primarily discover promising investment opportunities; 2) deal screening in which VCs reduce large
quantities of potential investment targets to a manageable set; and 3) deal evaluation in which VCs conduct a detailed analysis of
each entrepreneurial venture (Kollmann and Kuckertz, 2010; Tyebjee and Bruno, 1984). In each step, VCs rely on information they
collect from various sources (e.g., company news releases) to evaluate entrepreneurial ventures' product attributes and market
potentials, and then decide which ventures to invest (Sharma, 2015; Petty and Gruber, 2011; Teten and Farmer, 2010). Given this
decision process, an entrepreneurial venture may leverage framing to draw VCs' attention and to convince them of its market value.
However, because VCs' goals and intensity of information search may vary at different stages, future research may develop a stage
model to theorize such effects formally.
12
5.2. Framing perspective
Our study contributes to the framing literature by conceptualizing two linguistic frames — novelty and familiarity frames—used
frequently by entrepreneurial ventures. Indeed, although the framing literature is rich, few studies have examined how the notion of
framing plays out in the entrepreneurial setting. With a particular focus on framing in entrepreneurial contexts, this study offers
evidence that entrepreneurial ventures may leverage linguistic frames in public media to gain VC funding, a critical step in the early
development of entrepreneurial ventures. In particular, our study found interaction effects of different linguistic frames: although
novelty and familiarity frames each exerted a positive influence on investment amount, the simultaneous use of both frames made the
framing effects even stronger. Theoretically, this finding expands the scope of the framing perspective by linking it to the idea of
“optimal distinctiveness”: maximum appreciation of a frame could be achieved when framers highlight their businesses as novel
practices, but embed such newness and the unfamiliar in the existing and the familiar (Navis and Glynn, 2010; Zhao et al., 2017).
Thus, to obtain the utmost funding outcome, entrepreneurs' framing strategy may need to be a mixture of multiple frames.
Future studies may extend framing research in several ways.5 First, future studies may theorize additional forms of framing that
may exist in the entrepreneurial setting. For example, mentioning market categories or market memberships such as “semiconductor”
or “satellite radio” in entrepreneurial ventures' press releases may serve as frames and influence stakeholders' evaluation (Navis and
Glynn, 2010). Second, future research may further unpack entrepreneurial ventures' framing strategy by differentiating framing at
the levels of technology, product, or business. For example, research may examine whether entrepreneurial ventures consistently use
novelty frames across different levels, or whether emphasizing novelty or familiarity frames at different levels produces different
outcomes. Third, future research may explore additional contingencies associated with entrepreneurial ventures' framing strategy. In
particular, the effectiveness of framing may depend on characteristics of the ventures as well as those of VCs (Rhee and Fiss, 2014).
For instance, the credibility of an entrepreneurial venture, reflected in factors such as prior performance or innovation capability,
may influence the association between the venture's novelty and familiarity frames and its funding outcome. Similarly, attributes of
VCs with different prior experience, status, and reputation might also moderate the effectiveness of framing (Pahnke et al., 2015).
Finally, other contextual factors such as the economic condition may influence the effectiveness of framing strategy. In an unreported
test, we found that the presence of economic crisis6 moderated the impact of novelty frames on investment amount but not the impact
of familiarity frames. Future research could fully theorize these effects.
5.3. Limitations and future research
Our study has several limitations. First, our study focuses only on entrepreneurial ventures in the IT sector, which may limit the
generalizability of our findings. Second, we use only the frequency of novelty and familiarity frames in conceptualizing and testing
the framing effect. Though our approach is consistent with that of prior studies (e.g., Fiss and Hirsch, 2005), future studies may
explore the effect of the nature of those frames. For instance, funding outcomes may differ between novelty frames highlighting
radical versus incremental changes. Finally, although novelty and familiarity frames are linguistic operations frequently used by
entrepreneurial ventures, other frames, such as risk and opportunity frames, are also important. Future studies may explore the
impact of these frames.
6. Conclusion
Adding to the linguistic perspective of the entrepreneurial literature, our study theorizes and tests how the use of linguistic frames
(novelty and familiarity frames) by entrepreneurial ventures affect their funding opportunities in the VC market. In addition to its
theoretical contribution, our study has practical implications for ventures seeking external funding. Our findings suggest that en-
trepreneurial ventures could leverage the twofold linguistic strategy to mobilize and optimize VC support. More specifically, while
ventures may attract investors' attention and resonate with their primary interests through either novelty frames or familiarity
frames, they might achieve a better funding outcome by using the two frames simultaneously. However, such strategies may be
conditional upon the industry in which the venture operates.
Acknowledgements
We thank the Field Editor, Professor Greg Fisher, and three anonymous reviewers for their developmental comments, which
helped us significantly improve the paper. We also thank the participants of research seminars at Drexel University and Michigan
State University for their constructive feedback at the early stage of the project.
5
We want to thank the anonymous reviewers for their suggestions about directions for future research.
6
Economic crisis was measured as a dummy variable. We coded years from 2008 to 2010 as 1, and other years as 0.
13
Appendix A. Examples of novelty and familiarity frame keywords
Keywords Quotes from press releases
Novelty framesa
breakthrough, burgeon, create, deviate, differ, discover, disruptive, dissimilar, distinct,
distinguish, divergent, earliest, emerging, fledging, initial, initiate, initiative, inno-
vative, introduce, invent, latest, launch, leading-edge, nascent, new, novel, original, APT Technology's breakthrough is…
•
pioneer, unfamiliar, unique, unlike –GTronix, Inc., PR Newswire, April 14, 2008
BitFury's latest generation devices will use a new execution methodology

•
–BitFury Group, Business Wire, September 15, 2014
GTronix, Inc., a…company developing novel …technology

•
–GTronix, Inc., PR Newswire, April 14, 2008
by incorporating GTronix's leading-edge…techniques

•
–GTronix, Inc., PR Newswire, April 14, 2008
Familiarity framesa
alike, common, compatible, conform, convention, copy, correspond, current, duplicate,
existing, experienced, extant, familiar, fit, former, identical, imitate, incumbent, i-
nherent, maintain, match, mature, norm, ordinary, proven, resemble, routine, same, To make the electronic ink easily compatible with the necessary
•
similar, typical, undifferentiated, uniform electronics
–Electronic Ink, Business Wire, May 10, 2001
Pano Logic solves major challenges inherent in the current PC-based…

•
model, while providing…the same, familiar… experience.”
–Pano Logic, Business Wire, May 11, 2010
a
The complete list of keywords is available upon request.
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Contents lists available at ScienceDirect

Journal of Business Venturing

Sounds novel or familiar? Entrepreneurs' framing strategy in the

ARTICLE INFO ABSTRACT

2. Theory and hypotheses

2.1. Linguistic frames in entrepreneurship

2.2. Novelty frames, familiarity frames, and VC funding

2.3. The contingency of the framing effect: industry capital intensity

likely to change the level of resonance specific frames may generate.

3.1. Data and sample

3.2.1. Novelty and familiarity frames

3.2.2. Industry capital intensity

3.2.3. Investment amount

3.2.4. Control variables

3.3. Analytical approach

Intercept 16.550*** 16.480*** 16.473*** 16.484*** 16.477***

4.1. Direct and joint effects of novelty and familiarity frames

4.2. The interaction between frames and industry capital intensity

4.3. Additional analyses

4.3.1. Correction for sample selection bias

4.3.2. Recency effects

4.3.3. Subsample test

5.1. Entrepreneurship research

Intercept 17.278*** 17.177*** 17.165*** 17.163*** 17.149***

In addition, we contribute to entrepreneurship research by theorizing industry context as a contingency of entrepreneurial

5.2. Framing perspective

5.3. Limitations and future research

Appendix A. Examples of novelty and familiarity frame keywords

Keywords Quotes from press releases

BitFury's latest generation devices will use a new execution methodology

GTronix, Inc., a…company developing novel …technology

by incorporating GTronix's leading-edge…techniques

Pano Logic solves major challenges inherent in the current PC-based…

Organizational Institutionalism. Sage, London, pp. 276–298.

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Intercept 16.550* 16.480* 16.473* 16.484* 16.477***

Intercept 17.278* 17.177* 17.165* 17.163* 17.149***