Entrepreneurial actions and optimistic overconfidence: The role of motivated reasoning in new product introductions

The Psychology of Entrepreneurship

“…On one hand, scholars have noted that overconfidence/overoptimism is necessary to initiate entrepreneurial action given the uncertainty entrepreneurs are facing (Cassar 2010, Simon & Shrader 2012. On the other hand, scholars have argued that overconfidence/ overoptimism has detrimental effects because entrepreneurs make strategic mistakes or take on too many tasks, resulting in overextension (Hmieleski & Baron 2009).…”

“…Motivational theories assert that higher outcome and ability expectations are positively related to performance (Van Eerde & Thierry 1996). Accordingly, it is possible that overconfidence/overoptimism increases entrepreneurs' motivation to initiate action and to persist even in the presence of high failure rates and low expected returns (Cassar 2010, Simon & Shrader 2012. Furthermore, entrepreneurs face many setbacks and obstacles in the entrepreneurial process, and overconfidence/overoptimism may increase their emotional and cognitive resilience, helping them to deal with the challenges (Hayward et al 2010, Hmieleski & Baron 2009).…”

“…For example, Cooper et al (1988) examined 2,994 entrepreneurs and showed that a third of the entrepreneurs believed that their odds of success were 100%. This overconfidence/overoptimism is related to actually initiating the necessary activities to launch a venture (Koellinger et al 2007) and to the successful introduction of more pioneering or radically innovative products and services (Simon & Houghton 2003, Simon & Shrader 2012. Thus, research suggests that unrealistic expectations in the form of overconfidence/overoptimism may be an important prerequisite to entering the entrepreneurial process, particularly when the new product or service is pioneering or radically new.…”

The Expected Job Satisfaction Affecting Entrepreneurial Intention as Career Choice in the Cultural and Artistic Industry

“…Job satisfaction is a positive emotion and can be interpreted as a success or a reward for self-determination. According to previous studies, overconfidence is strengthened when people have positive emotions and experience compensation or success [40,43]. Unlike previous studies [34,39] in which overconfidence leads to optimistic results in entrepreneurial intentions, no statistically significant effect was seen.…”

“…Positive feelings, success or rewards reinforce individual overconfidence [40][41][42]. Further, satisfaction with job performance influences overconfidence [43]. The expected satisfaction of a job is a positive result from self-determination of the job choice and a small success or a reward.…”