A Study of Signalling Effectiveness in Entrepreneurial Opportunity Decisions

Abstract

Signal effectiveness occurs when signals elicit the desired stakeholder validation, enabling entrepreneurs to gain confidence in opportunities, secure funding, and facilitate venture decision-making. Prior research has emphasised senders and signal attributes, but the receiver’s role in determining signal effectiveness, especially decoding heuristic signalling across different environments, remains underexplored. This study proposes a receiver-centred heuristic signalling model and tests it using structural equation modelling on survey data from 400 entrepreneurs. Findings show that receiver-centred heuristic signalling, which integrates receiver ability, identity, and rationality as core determinants of signal decoding, can be effective in entrepreneurial opportunity decisions. The study advances the entrepreneur–stakeholder signalling model by incorporating cognitive and behavioural processes, clarifying how signals are interpreted and acted upon, and highlighting the signalling environment as a critical boundary condition that determines when heuristic signals are effective.