IKEA effect in relations between start-ups and investors
The IKEA effect is the phenomenon of unconscious increasing of the valuation of objects as a result of physical or intellectual effort exerted in the past to create these objects. The article considers possible impact of this effect on the relations between startups and the investors who finance the...
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| Format: | Article |
| Language: | English |
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Military University of Technology, Warsaw
2019-06-01
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| Series: | Nowoczesne Systemy Zarządzania |
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| Online Access: | https://nsz.wat.edu.pl/Efekt-IKEA-w-relacjach-nmiedzy-start-upami-a-inwestorami,129534,0,2.html |
| Summary: | The IKEA effect is the phenomenon of unconscious increasing of the valuation of objects as a result of physical or intellectual effort exerted in the past to create these objects. The article considers possible impact of this effect on the relations between startups and the investors who finance them. It contains a description of the phenomenon itself, a summary of selected empirical studies confirming its existence and a brief description of possible explanations for the occurrence of the phenomenon. It then considers how the described effect may distort the assessment of the company’s value in the eyes of its founder and the investor financing it. The conclusions include suggestions regarding the practical implications of the problem in the process of cooperation between a start-up and an investor. |
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| ISSN: | 1896-9380 2719-860X |