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Entrepreneurial Risk: Have We Been Asking the Wrong Question?

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Abstract

Entrepreneurs are often thought to engage in "risky" behaviors. Thus, they may be seen as more willing than average to take risks. We offer a dissenting view. Central to entrepreneurship is the alertness perspective which suggests that entrepreneurs may assess opportunities and threats differently than non-entrepreneurs. That differential assessment may be understood in terms of Bayesian probability. The Bayesian model argues that differing assessments of prospective outcomes may be attributable to differences in prior information. This perspective on risk assessment has implications for entrepreneurial decision making, whether to launch a new venture or adopt a growth strategy. The literature is reviewed, a synthesis is offered, a numerical example is developed, and a research agenda is proposed.

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Authors and Affiliations

  1. College of Business and Public Administration, University of Louisville, Louisville, KY, 40292, U.S.A

    William I. Norton Jr.

  2. The Darla Moore School of Business, University of South Carolina, Columbia, SC, 29208, U.S.A

    William T. Moore

Authors
  1. William I. Norton Jr.
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  2. William T. Moore
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Norton, W.I., Moore, W.T. Entrepreneurial Risk: Have We Been Asking the Wrong Question?. Small Business Economics 18, 281–287 (2002). https://doi.org/10.1023/A:1015231318265

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