Articlebronze2008

Entrepreneuring as a puzzle: an attempt to its explanation with truncation of subjective probability distribution of prospects

Seyda Z. Deligonul · G. Tomas M. Hult · Salih Tamer Cavusgil

23 citations0/0 files storedStrategic Entrepreneurship Journal

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Entrepreneurship Studies and Influences Decision-Making and Behavioral Economics Private Equity and Venture Capital

Abstract

Abstract This research presents entrepreneuring as a puzzle where entrepreneurs venture at a risk‐return level that is worse than that of the private equity index and much worse than the public equity index. Under subjective rationality, we explain this puzzle by the possibility that entrepreneurs configure their outlook by dismissing some possible future performance states. Their forward view reflects a truncated and conditional distribution with overcredence. The unfavorable odds under a nontruncated distribution become very attractive after truncation. Copyright © 2008 Strategic Management Society.

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References

2000The Promise of Entrepreneurship as a Field of Research 1996Clarifying the Entrepreneurial Orientation Construct and Linking It To Performance 1989Strategic management of small firms in hostile and benign environments 1983The Correlates of Entrepreneurship in Three Types of Firms 1998Investor Psychology and Security Market Under‐ and Overreactions 1961The achieving society.1993The Collapse of Sensemaking in Organizations: The Mann Gulch Disaster 1998Are Investors Reluctant to Realize Their Losses?

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