THE MYTH OF MEDIA: THE IMPACT OF EARLY-STAGE MEDIA ATTENTION ON STRATEGIC CHANGE IN STARTUPS

Research suggests that media attention provides substantial benefits for startup fims, particularly in the early stages of their development. Yet, the costs associated with such attention remains underexamined. This study delves into the relationship between early-stage media coverage and startups’ propensity for strategic change, focusing on technological pivots in their patenting strategies. While early media attention can enhance legitimacy and provide access to critical resources that can enable change, excessive attention may lead to strategic inertia, hindering timely adaptation due to pressure from stakeholder expectations and entrepreneurial overconfidence. Analyzing data from 1,339 IT startups founded between 2000 and 2020, we find an inverted U-shaped relationship between early media coverage and the likelihood of strategic change. We also examine two key sources of heterogeneity among startups: venture capital (VC) affiliation and founders’ entrepreneurial experience. Our findings show that VC-backed startups are more sensitive to the effects of media attention, which amplifies strategic inertia at high levels of coverage, while experienced entrepreneurs are less prone to such constraints. These findings contribute to research on media and entrepreneurship, shedding light on the dual role of early media attention as both a facilitator and inhibitor of strategic change.