The Importance of Behavioral Factors: How Do Overconfidence Affect Entrepreneurial Opportunity Evaluation?
Even though the entrepreneurship literature places much emphasis on opportunity recognition, little is known about how entrepreneurs actually evaluate opportunities. This study uses a cognitive approach to examine opportunity evaluation, as the perception of opportunity is essentially a cognitive phenomenon. We present a model that consists of four independent variables (overconfidence, risk perception, creativity, Relational networks and environmental factors, experience, education and opportunity identification), two control variables (demographics and age), and the dependent variable (opportunity evaluation). We find that overconfidence and risk perception are related to how entrepreneurs evaluate opportunities. Our results also indicate that entrepreneurial individual factors affect opportunity evaluation.
Dennis M. Ray is a visiting scholar at both the Institute of South-east Asian Studies, Singapore, and the Institute of International Relations, Sophia University, Tokyo, Japan. This research note reports on a pilot study conducted in Singapore to test whether two scales correlated with either the level of exports or the manner in which export sales were pursued by venture business in Singapore. The study suggests that a cross-cultural experience scale along and in combination with the craftsman-opportunist typology modified to fit various culture settings may be a powerful tool for predicting export activity.