DO WE ALWAYS NEED A STORY? THE ROLE OF CATEGORY STRUCTURES IN ENTREPRENEURIAL COMMUNICATION AND SOCIAL EVALUATIONS

Entrepreneurial narratives are widely viewed as powerful sense-giving devices, yet empirical evidence reveals that stories do not always persuade. Integrating research on narrative persuasion, dual-processing cognition, and market categorization, we theorize that cue specificity - the proportion of concrete, verifiable commercial information embedded in an entrepreneurial story - exerts a curvilinear (inverted-U) effect on venture performance because it initially boosts credibility and cognitive elaboration but eventually burdens audiences with extraneous detail. Further, we argue that optimal cue specificity depends on the structural characteristics of market categories. Specifically, we predict that the positive portion of the curve expands when categories are cognitively fuzzy and when ventures span multiple categories. We test these predictions with an original panel of 74,654 Etsy ventures (1.7 million shop-months, 2022–2024). Narrative cue specificity is coded via a two-stage GPT-4 routine validated against expert ratings (Krippendorff’s α = .81). Negative-binomial regressions support all three hypotheses; robustness checks confirm stability across alternative specifications. Our results contribute to cultural entrepreneurship by identifying linguistic contingencies of narrative effectiveness, advance category theory by linking macro-level fuzziness to micro-level storytelling tactics, and demonstrate how large-scale language models can enrich organizational scholarship. We close by outlining practical heuristics for founders, accelerators, and platform designers seeking to craft persuasive entrepreneurial narratives.