Entrepreneurial Success and Failure: Confidence and Fallible Judgment

Hogarth, Robin M.; Karelaia, Natalia

doi:10.1287/orsc.1110.0702

Cited by 117 publications

(117 citation statements)

References 62 publications

(49 reference statements)

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“…Any intervention that occurs when X 1 is unusually low will be associated with a performance increase (Cohen and March 1974). Asymmetries in the extent to which regression to the mean operates or is observed can generate other patterns (Denrell 2005, Hogarth andKarelaia 2012). For example, low values of X 1 may not be observed because of selection.…”

Section: Flooring and Ceiling Effectsmentioning

confidence: 99%

Perspective—Chance Explanations in the Management Sciences

Denrell

Fang

Liu

2015

Organization Science

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W e propose that random variation should be considered one of the most important explanatory mechanisms in the management sciences. There are good theoretical reasons to expect that chance events strongly impact organizational behavior and outcomes. We argue that models built on random variation can provide parsimonious explanations of several important empirical regularities in strategic management and organizational behavior. The reason is that random variation in a structured system can give rise to systematic patterns at the macro level. Here, we define the concept of a chance explanation; describe the theoretical mechanisms by which random variation generates patterns at the macro level; outline how key empirical regularities in management can be explained by chance models; and discuss the implications of chance models for theoretical integration, empirical testing, and management practice.

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Section: Flooring and Ceiling Effectsmentioning

confidence: 99%

Perspective—Chance Explanations in the Management Sciences

Denrell

Fang

Liu

2015

Organization Science

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“…The phenomenon of overconfidence may represent a driving force for engaging in various positive behaviors, including entrepreneurship entry decisions (e.g., Hogarth & Karelaia, 2012;Lafuente, Vaillant & Rialp, 2007) or enhanced safety behavior (Zohar, 2002;Zohar & Luria, 2005). But, overconfidence may also have negative consequences, such as strikes, litigation or entrepreneurial failure (Howard, 1983;Camerer & Lovallo, 1999;Malmendier & Tate, 2005;Neale & Bazerman, 1985).…”

Section: Overconfidencementioning

confidence: 99%

“…For example, the overestimation of one's own entrepreneurial abilities has been found to explain both excess entrepreneurial entry and failure (Hogarth & Karelaia, 2012). Over-placement or better-than-average bias appears when people believe themselves to be better than the majority at any focal task (such as when a majority of people rate themselves better than the median at any task).…”

Section: Overconfidencementioning

confidence: 99%

Safety disconnect: Analysis of the role of labor experience and safety training on work safety perceptions

Lafuente¹,

Abad²,

Vaillant³

2018

JIEM

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Abstract:Purpose: This study analyzes work safety perceptions among workers and safety experts in the construction industry. Furthermore, we evaluate whether experiential learning (i.e., labor experience) and knowledge-enhancing practices, that we link to safety training, explain the differences in work safety perceptions of workers and safety experts by triggering different types of overconfidence biases.Design/methodology/approach: The proposed hypothesis are tested by applying ordered probit models on a unique dataset comprising information for 558 employees and 215 safety experts working in the Spanish construction sector. Findings:The results reveal that previous labor market experience has a significantly negative effect on perceived work safety, that is, risk awareness decreases with respect to labor experience. However, the findings indicate that differences in perceived work safety between workers and safety experts are not explained by previous labor experience. Furthermore, the results suggest that higher levels of safety training, which we link to the acquisition of codified knowledge, negatively impacts workers' safety perceptions, while this effect turns positive among safety experts. This result suggests that safety experts' perceived work safety is affected by overconfidence that results from their greater safety-specific training (over-precision bias).Originality/value: Work safety constitutes a relevant key performance indicator. The proposed analysis of the role of labor experience and safety training on perceived work safety in different types of employees contributes to better understand how organizations can improve the management of their workforce by triggering specific actions, such as the design of customized training programs, that may help in reducing the safety disconnect between employees, in terms of perceived work safety.

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“…This personality trait of entrepreneurs has been highlighted in recent research due to the effect of their decision making on the performance of the company (Lowe & Ziedonis 2006;Hmieleski & Baron 2009;Landier & Thesmar 2009;Cassar 2010;Hogarth & Karelaia 2012;Hyytinen et al 2014). On the one hand, it encourages the self-employed to follow their dreams and believe in their success, but, on the other hand, it also poses some problems for the sustainable growth and survival of new firms.…”

Section: Introductionmentioning

confidence: 99%

Entrepreneurs’ Over-optimism During the Early Life Course of the Firm

Kambourova

Stam

2017

Foundations of Economic Change

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Recent research on cognitive biases in decision making suggests that over-optimism critically influences entrepreneurs' decisions to establish and sustain new firms. This paper looks at entrepreneurs' over-optimism during the early life course of the firm, in order to uncover the dynamics and persistence of over-optimism. We use a representative sample of start-ups in the Netherlands, which we divide into solo selfemployed and employer firms. We find that while there is a persistence of overoptimism for the solo self-employed, namely initial over-optimist are more likely to be overoptimistic in subsequent periods; this is not the case for the employer firms.

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Entrepreneurial Success and Failure: Confidence and Fallible Judgment

Cited by 117 publications

References 62 publications

Perspective—Chance Explanations in the Management Sciences

Perspective—Chance Explanations in the Management Sciences

Safety disconnect: Analysis of the role of labor experience and safety training on work safety perceptions

Entrepreneurs’ Over-optimism During the Early Life Course of the Firm

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