Therefore, the present study investigates the effect of overconfidence on entrepreneurial intention among individuals that still must choose their main occupation to establish if overconfidence is related to entrepreneurial entry. More importantly, because entrepreneurial experience may induce overconfidence, it is difficult to conclude from these studies whether overconfidence is indeed a driver of (excess) business entry. However, existing field studies on entrepreneurial overconfidence focused only on a relatively specific control group, such as managers, or have no control group. Several studies argued that entrepreneurs are more prone to overconfidence than wage workers. The main contribution of the present study is the empirical investigation into how overconfidence influences market entry (entrepreneurial intention) and market position (entrepreneurial orientation) using field data. The market position of a business (i.e., entrepreneurial orientation) plays a crucial role in competitiveness, business performance, and business survival and is directly linked to the characteristics and behavior of the owner-manager in SMEs. In addition, we analyze how overconfidence and optimism are related to entrepreneurial orientation among small- and medium-sized enterprise (SME) owners. Students still need to choose their main occupation and effects of entrepreneurial experience on overconfidence or optimism are disregarded. First, we analyze entrepreneurial intention among students to circumvent the potential danger of reverse causality between labor market status, and overconfidence and optimism. This current study attempts to address this research question by analyzing how a particular underresearched type of overconfidence, overprecision, and optimism are related to two aspects of the entrepreneurial process. Hence, establishing whether overconfidence drives excess market entry using field data is important. ![]() also noted that, “multiple measures and definitions across empirical studies have made it hard to pin down the precise bias that may be behind entrepreneurship”. At the risk of sounding pedantic, this practice should be discouraged in future.”. Unsurprisingly, Parker’s review of the empirical literature on entrepreneurial overconfidence, ends with the conclusion that, “Despite the fact that optimism and overconfidence are distinct concepts, much of the literature confusingly conflates them. Nevertheless, interpreting overconfidence as a proxy for optimism appears warranted : lacking entrepreneurial skills is unimportant because everything will turn out well. argued that self-reports on the lack of importance of entrepreneurial skills proxies overconfidence in entrepreneurial abilities. For example, Trevelyan used entrepreneurial self-efficacy as a proxy for overconfidence, which is conceptually more closely related to optimism than to overconfidence. doi:10.1037//0278-6133.14.2.Second, measures for overconfidence and optimism are often conflated in empirical studies. Resistance of personal risk perceptions to debiasing interventions. Unrealistic optimism: east and west? Front Psychology. Shepperd JA, Klein WMP, Waters EA, Weinstein ND. Pantheon/Random House 2011.Ĭarver CS, Scheier MF, Segerstrom SC. The Optimism Bias: A Tour of the Irrationally Positive Brain. ![]() ![]() Optimism bias within the project management context: a systematic quantitative literature review. Unrealistic optimism about future life events.
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