An experimental analysis of risk and entrepreneurial attitudes of university students in the USA and Brazil

Abstract

There is a long-standing debate about whether entrepreneurs and nonentrepreneurs differ in risk aversion levels. The paper addresses international differences in risk and entrepreneurial attitudes of university students, specifically in the USA and Brazil. This paper also aims to add to the ongoing debate surrounding the risk attitudes of entrepreneurial persons when compared to non-entrepreneurial persons. The data from the paper was generated from an economic experiment. The economic experiment included a sample of students from both the USA and Brazil. Subjects completed a shortened version of the Entrepreneurial Attitude Orientation (EAO) and then participated in an investment game. Summary HighlightsContributions: This paper contributes to the debate surrounding international entrepreneurial attitudes and risk attitudes. The paper employs a unique research methodology when approaching this topic. An economic experiment is used to empirically test for differences in risk attitudes based on entrepreneurial attitudes. Research questions/purpose: There are two primary purposes of this study. One is to investigate whether individuals with entrepreneurial attitudes are more likely to invest in a risky asset when compared to subjects with non-entrepreneurial attitudes. The second is to determine if individuals in the USA were more or less entrepreneurial than subjects in Brazil and if they demonstrated differing risk attitudes. Results/findings: The findings suggest that the US subjects were more entrepreneurial than those in Brazil, and this held true for two different specifications of the entrepreneurial variable. Individuals in Brazil and the USA did not differ in their risk-taking behavior. Finally, entrepreneurial individuals were more willing to invest at a higher rate into a risky asset when compared to non-entrepreneurial subjects. Limitations: There are a couple of limitations due to the research methodology and sample population. First, all subjects in the experiments, in both the USA and Brazil, were university students. This leads to difficulty in generalizing the results to the general public. Also, the sample size was limited to 78 in the USA and 54 in Brazil. Finally, the study measured entrepreneurial attitudes among individuals who were not actually entrepreneurs. The instrument used, the Entrepreneurial Attitude Orientation, has predictive validity; however, it has not been testing for temporal predictive validity. Theoretical implications and recommendations: Theory suggests that risk-taking is a component of entrepreneurial orientation. This paper adds to this theory by finding support for a positive relationship between financial risk-taking and entrepreneurial attitudes. Practical implications and recommendations: The practical implications are relevant primarily for policy makers. The individual-level, microdata gives insight into the differences in risk-taking between entrepreneurial and non-entrepreneurial individuals.Subjects in the USA were found to be more entrepreneurial than the sampl...

Entrepreneurial intention: An analysis of the role of Student-Led Entrepreneurial Organizations

“…In addition, as in previous studies, students' age has also been included as an additional control (Barber 2015;Minola et al 2016;Criaco et al 2017;Laskovaia et al 2017;Morris et al 2017;Smolka et al 2018). Students' age can be correlated with entrepreneurial risk taking (Barber 2015). Previous works have shown that age is correlated with entrepreneurial intention (Hatten and Ruhland 1995;Harada 2003;Schwarz et al 2009;Criaco et al 2017;Smolka et al 2018).…”

“…Empirical evidence also indicates that, despite the growth in female entrepreneurship, men entrepreneurs are still almost twice as many as women entrepreneurs (Bosma and Levie 2009). In addition, as in previous studies, students' age has also been included as an additional control (Barber 2015;Minola et al 2016;Criaco et al 2017;Laskovaia et al 2017;Morris et al 2017;Smolka et al 2018). Students' age can be correlated with entrepreneurial risk taking (Barber 2015).…”

“…Prior family business exposure is another factor that has been associated with the formation of entrepreneurial intent (Carr and Sequeira 2007). Additionally, the age and gender of students can affect entrepreneurial risk taking (Barber 2015) and, ultimately, entrepreneurial intention (e.g. Shinnar et al 2012;Barber 2015;Minola et al 2016).…”

“…Additionally, the age and gender of students can affect entrepreneurial risk taking (Barber 2015) and, ultimately, entrepreneurial intention (e.g. Shinnar et al 2012;Barber 2015;Minola et al 2016). It has also been found that the lack of a steady job stimulates people to become entrepreneurs (Audretsch and Thurik 2001;GEM 2002), thus pointing to the importance of the welfare of a country.…”

Risk Preferences and Entrepreneurial Decision-Making: Evidence from Experimental Methods in Vietnam

“…Previous research has been conducted to examine the relationship between risk and entrepreneurial intention or decision. The majority merely compares the risk preferences of entrepreneurs with those of employed individuals to find potential differences [4,13,14]. The role of an individual's risk preferences at the time that person decides to become selfemployed remains largely untested [15].…”