Opportunity Evaluation under Risky Conditions: The Cognitive Processes of Entrepreneurs

Keh, Hean Tat; Foo, Maw‐Der; Lim, Boon Chong

doi:10.1111/1540-8520.00003

Cited by 482 publications

(493 citation statements)

References 46 publications

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“…While the effects of the Great Recession have deleterious effects for home ownership, home values, and employment, the presence of slack labor markets represents a type of opportunity that outweighs other negative consequences. These findings provide some initial insights into the effects of a global economic recession, but they do not clearly explain how entrepreneurs perceive the recession as it relates to perceptions of opportunity which represent the essence of entrepreneurship (Keh et al, 2002).…”

Section: Perceived Global Economic Slowdown Impact and Perceived Oppomentioning

confidence: 71%

“…Opportunities are chances for success that have important consequences for startup activities Keh et al, 2002). Entrepreneurs create businesses to produce favorable outcomes in their lives, in their communities, and in the marketplace.…”

Section: Discussionmentioning

confidence: 99%

“…Identifying an opportunity is a cognitive process (Baron and Ensley, 2006;Gregoire, Barr, and Shepherd, 2010) that seeks the possibility for gain and a more favorable future outcome (Keh et al, 2002). It is a subjective process which results in different outcomes depending on the alertness of the potential entrepreneur (Krueger, 1993) and the availability of resources to create new possibilities (Casson, 1982;Shane and Venkataraman, 2000).…”

Section: Perceived Global Economic Slowdown Impact and Perceived Oppomentioning

confidence: 99%

“…Failing to see a favorable outcome in a game where the chances for loss are greater than the chances for gain (Keh, et al, 2002) will more often than not lead to alternative choices (Das and Teng, 1997;Palich and Bagby, 1995). When presented with the opportunity to create or join a fast growing high tech startup that one believes will increase their personal wealth faster than more stable employment alternatives, individuals may choose to pursue the startup holding all things constant.…”

Section: Perceived Opportunity and Startup Activitymentioning

confidence: 99%

“…Clearly, such an approach offers meaningful insights. However, it tends to ignore the reality that individuals make decisions based on their perceptions of opportunities and threats under risky and uncertain conditions (Keh, Foo, and Lim, 2002;Palich, and Badgy, 1995;Tversky, and Kahneman, 1974). Hence, some decisions may not adhere to economic assumptions of rationality.…”

Section: Introductionmentioning

confidence: 99%

See 4 more Smart Citations

How Perceptions of the Global Economic Slowdown Impact and Local Risks Adversely Affect Perceived Opportunities and Subsequent Startup Activities

Robinson¹,

Grayson²

2014

BMR

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The Great Recession which began in 2008 is the worst global recession since World War II. Arguably, this global economic slowdown began with failures in financial regulation and housing policies. Undisputable are the adverse effects of this global financial crisis. Worldwide wealth was destroyed. Unemployment rose precipitously. Small businesses and medium businesses found it difficult to access funding sources. Large businesses reduced investments. However, little has been empirically established regarding the effects of the global slowdown on entrepreneurial startups. This study applies a cognitive lens to examine the effects of the perceived global slowdown impact along with the effects of perceived local risks on startup activities when mediated by perceived opportunities. All hypothesized relationships are found to be significant. Equally important, perceived opportunity is found to fully mediate the relationship between perceived global slowdown impact and startup activity. It is also found to partially mediate the relationship between perceived local risks and startup activities. Hence, this manuscript establishes the basis for beginning to understand how the perceived global slowdown impact is relevant for global startup activity.

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Section: Perceived Global Economic Slowdown Impact and Perceived Oppomentioning

confidence: 71%

Section: Discussionmentioning

confidence: 99%

Section: Perceived Global Economic Slowdown Impact and Perceived Oppomentioning

confidence: 99%

Section: Perceived Opportunity and Startup Activitymentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

See 3 more Smart Citations

How Perceptions of the Global Economic Slowdown Impact and Local Risks Adversely Affect Perceived Opportunities and Subsequent Startup Activities

Robinson¹,

Grayson²

2014

BMR

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Opportunity Identification

Grégoire

Shepherd

2015

Wiley Encyclopedia of Management

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In this article, we summarize the bases and achievements of extant research on the identification, recognition, discovery, imagining and/or creation of entrepreneurial opportunities. After situating this topic's emergence within contemporary entrepreneurship research, we discuss a series of theoretical and methodological challenges inherent to studying opportunity identification. We then describe key empirical findings, and suggest avenues for future investigation.

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A Psychological Approach to Microfinance Credit Scoring via a Classification and Regression Tree

Baklouti

2014

Intell. Sys. Acc. Fin. Mgmt.

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Microfinance institutions' (MFIs') peculiar lending methodology is characterized by an unchallenged decisionmaking predominance from the part of loan officers. Indeed, the latter are in charge of providing a great deal of diagnostic information regarding the entrepreneur's psychological traits likely to help them run a business. This paper constitutes an initial attempt towards exploring the role of borrowers' psychological traits in predicting future default occurrences. It builds on a nonparametric credit scoring model, based on a decision tree, including borrowers' quantitative behavioural traits as input for the final scoring model. On applying data collected from a Tunisian microfinance bank, the major depicted result lies in the fact that borrowers' psychological traits constitute a major information source in predicting their creditworthiness. Actually, the variables deployed have helped reduce the proportion of bad loans classified as good loans by 3.125%, which leads to a decrease in MFIs' losses by 4.8%. In addition, the results indicate that the scoring model based on a classification and regression tree (CART) outperforms the classic techniques. Actually, implementing this CART model might well help MFIs reduce misclassification costs by 6.8% and 13.5% in comparison with the discriminant analysis and logistic regression models respectively. Our conceived model, we consider, would be of great practical implication for microfinance and may provide a means for securing competitive advantage over other MFIs that fail to implement such a methodology.1 These quantitative criteria are gathered from the loan application form. Usually, the loan officers collect and verify the personal identification of a borrower (identity card), their educational level and their professional experience. 2 Sociologists define social capital as the social networks, norms, and cooperation and trust created by human interactions in a community (e.g. see Putnam (1995)). 3 Basically, quantitative information is objective; qualitative is subjective. b AUC(1) and AUC(2) are statistically significant at the threshold of 1%.

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Opportunity Evaluation under Risky Conditions: The Cognitive Processes of Entrepreneurs

Cited by 482 publications

References 46 publications

How Perceptions of the Global Economic Slowdown Impact and Local Risks Adversely Affect Perceived Opportunities and Subsequent Startup Activities

How Perceptions of the Global Economic Slowdown Impact and Local Risks Adversely Affect Perceived Opportunities and Subsequent Startup Activities

Opportunity Identification

A Psychological Approach to Microfinance Credit Scoring via a Classification and Regression Tree

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