Speculation in investment in technology firms: a trust-based perspective

Abstract

Purpose

We analyze the role of trust as a driver of speculative investment decisions in technology firms.

Design/methodology/approach

Structural Equation Modeling analysis in the context of blockchain technology supports our hypotheses.

Findings

Our findings indicate that a general propensity to trust technology leads to trusting beliefs in a service based on technology and that trusting beliefs in a technological service leads to a higher propensity to invest in any firm associated with that service. In addition, we show that in a non-technological context, there is no evidence for such an effect of trusting beliefs in a service on investment decisions. These results support the notion that trusting beliefs are facilitators of speculative investment in technology firms.

Research limitations/implications

The research advances knowledge about the influence of trust in technology on investment decisions; its findings can help build new theoretical models regarding investment decisions using Fintech.

Practical implications

For investors, it is important to realize the potential bias identified in this study, so they can actively avoid adhering to it, thus avoiding exposure to unnecessary risk. Further, beyond individual investors, investment firms take active measures to avoid biases in their own decision-making. Banks and investment firms can help guide their clients about trust-based bias when building their investment portfolio.

Originality/value

Although trust in information systems has been studied extensively, research on the relationship between trust in technology and decisions to invest in technology-related firms is limited.