The Influence of Risk Assessment on Venture Launch or Growth DecisionsThe Babson-Kauffman Foundation Entrepreneurship Research Conference (1998)
Entrepreneurs are generally believed to engage in riskier behavior than non-entrepreneurs. We propose an alternative explanation. Central to entrepreneurship is the alertness perspective. The Austrian school argues that entrepreneurs hold a dissenting view of the future. That perspective suggests that entrepreneurs may discover arbitrage opportunities overlooked by others. We believe that entrepreneurs do not exhibit risky behavior when compared with others but rather that they assess opportunities and threats differently than non entrepreneurs.
The empirical study was a simulation. Risk tolerance, industry experience, and classification (eneur vs. non-eneur) were assessed in a decision making exercise. The sample frame yielded relative homogeneity across the dimensions of education, credentials, and career opportunities. A random sample of 53 entrepreneurs and non-entrepreneurs was examined.
We found that entrepreneurs do not differ significantly in risk tolerance from non-entrepreneurs. Additionally, we found strong relationships between industry experience, entrepreneurial behavior, and the willingness to adopt a launch or growth strategy.
It appears that decision makers who are young (in the context of industry experience) and entrepreneurial are most likely to assess opportunities optimistically. The preliminary results also suggest that entrepreneurial behavior may be predicted using Bayesian probability, explicitly answering the question: who is a (likely) entrepreneur?
- Risk assessment,
- Venture launch,
- Growth decisions,
- Risk tolerance
Citation InformationWilliam I. Norton and William T. Moore. "The Influence of Risk Assessment on Venture Launch or Growth Decisions" The Babson-Kauffman Foundation Entrepreneurship Research Conference (1998)
Available at: http://works.bepress.com/william-norton/23/