Entrepreneurial Risk‐taking and the Mentoring of Entrepreneurs: the Danger of Cognitive Biases

Abstract

The concept of risk is inherent to the concept of entrepreneurship. This chapter explores the role of cognitive heuristics in the mentoring and support process, and in particular their potential effects on the two types of risk: the risk of supporting a start-up project that will never see the light of day or end in failure and the risk of refusing to support a project with high potential. It presents a variation of the substitution phenomenon and properly illustrates the functioning of the heuristic known as representativeness. The chapter illustrates the phenomena of overconfidence at work in an accompanying relationship. Planning fallacy is the phenomenon that takes place when the time necessary for the conclusion of a project is underestimated, in particular because of the adoption of an internal view focused on the specificities of the plan under consideration and neglecting both potential obstacles and the knowledge available on other comparable projects.

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