The Face Value of a Social Venture: How a Social Entrepreneur's Facial Characteristics Influence Investors' Venture Evaluations

Abstract

The social entrepreneurship literature has identified multiple personality traits associated with the intention to pursue social entrepreneurial opportunities, yet the characteristics of social entrepreneurs that impact social venture evaluations have been largely ignored. Meanwhile, recent psychological studies report that people use facial characteristics to form first impressions as to a person's competence or trustworthiness and that these social judgments influence a variety of business decisions, yet little research has investigated the intriguing role of facial characteristics in forming first impressions during the initial interactions between investors and social entrepreneurs. In this thesis, we develop a conceptual model and conduct five studies to test and explore the underlying psychological processes of how a social entrepreneur's facial characteristics influence investors' venture evaluations. The first three studies were conducted in a university context using student samples. Study 1, an experimental study, provides an initial test of the relationships between the two facial dimensions (i.e., trustworthiness and competence) and investor evaluations (i.e., ratings of a social venture proposal) through two types of perceived risks (relationship risk and execution risk) using faces from an existing database. Studies 2 and 3, using two sets of student participants, further investigate the effects in a multilevel experimental design across 4 scenarios with pretested faces. The last two studies were conducted in a community context with participants from the general public in the U.S. Study 4 tests the basic effects and explores the interactions between facial trustworthiness and competence in their influence on venture evaluations. Study 5 builds the overall model using a cross-sectional design with 20 randomly selected faces in an exploratory way and confirms the effects found in previous studies with path analysis. Overall, our results showed that higher facial trustworthiness and higher facial competence indirectly lead to higher venture evaluations through lower anticipated relationship and execution risks.