Are Entrepreneurs More Optimistic and Overconfident than Managers and Employees?

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. November 5, 2015 Terms of use: Documents in AbstractEmpirical evidence supports the conventional wisdom that entrepreneurs are more optimistic and overconfident than others. However, the same holds true for top managers. In this lab-inthe-field experiment we directly compare the scores of entrepreneurs, managers and employees on a comprehensive set of measures of optimism and overconfidence (n = 2,058). The results show that on average entrepreneurs are more optimistic than others in their dispositional optimism and attributional style when bad events occur. For incentivized measures of overconfidence we find no di↵erence between entrepreneurs and managers, although both are more prone to it than employees. Finally, exploration of within-group heterogeneities shows that optimism and success are more strongly related for managers than for entrepreneurs and that an average entrepreneur is not more optimistic than successful managers. We conclude that optimism and overconfidence are indeed characteristics of entrepreneurs, but they are not unique when compared to (top) managers.

Connecting Social Capital, Cognitive Bias, and Entrepreneurial Intentions: About Gender Differences

“…Optimism will positively affect entrepreneurs' overconfidence (Schaefer, Williams, Goodie, & Campbell, 2004). Palich and Bagby (1995) and Koudstaal, Sloof, and Van Praag (2015) indicated that entrepreneurs are more optimistic and less psychologically vulnerable than non-entrepreneurs, and are less able to resist risks. Further, they indicated that non-entrepreneurs do not put as much effort into risk assessment and prevention.…”

Overconfidence, Optimism and Entrepreneurship

“…Two earlier studies related both overconfidence and optimism simultaneously to aspects of the entrepreneurial process. The working paper by Koudstaal et al [33] showed that entrepreneurs are more optimistic than managers and employees, but they found no difference between entrepreneurs and managers with regard to overconfidence (viz. overestimation).…”

Picking Up the Reigns: The Crucial Role of Psychological Capital in the Transition from Long-Term Unemployment to Entrepreneurship

“…Indeed, research consistently shows a strong association between (financial) optimism and self-employment (e.g., Cooper, Woo, & Dunkelberg, 1988;Fraser & Greene, 2006). The relationship between optimism and self-employment seems to be bi-directional: Not only are self-employed individuals more optimistic than employees (e.g., Koudstaal, Sloof, & Van Praag, 2015), optimistic individuals seem to be drawn to self-employment (Dawson, de Meza, Henley, & Arabsheibani, 2014). And although some studies report negative associations between (over)optimism and entrepreneurial outcomes, in general optimism has positive effects on self-employed individuals' judgments and decision-making about their firms (e.g., Koudstaal et al, 2015).…”

“…The relationship between optimism and self-employment seems to be bi-directional: Not only are self-employed individuals more optimistic than employees (e.g., Koudstaal, Sloof, & Van Praag, 2015), optimistic individuals seem to be drawn to self-employment (Dawson, de Meza, Henley, & Arabsheibani, 2014). And although some studies report negative associations between (over)optimism and entrepreneurial outcomes, in general optimism has positive effects on self-employed individuals' judgments and decision-making about their firms (e.g., Koudstaal et al, 2015). Indeed, a study about the moderating role of PsyCap on the relationship between start-up capital and entrepreneurial success in Uganda, has shown that optimism had the strongest influence (Baluku et al, 2016), and that PsyCap predicted business success over and above the presence of start-up grants.…”