What competition? Myopic self-focus in market-entry decisions

What competition? Myopic self-focus in market-entry decisions

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Article ID: iaor20082292
Country: United States
Volume: 18
Issue: 3
Start Page Number: 440
End Page Number: 454
Publication Date: May 2007
Journal: Organization Science
Authors: , ,
Keywords: marketing
Abstract:

This paper documents egocentric biases in market-entry decisions. We demonstrate self-focused explanations for entry decisions made by three groups of participants: actual entrepreneurs (founders), working professionals who considered starting their own firms but did not (nonfounders), and participants in a market-entry experiment. Potential entrants based their decision to enter primarily on evaluations of their own competence (or incompetence) and paid relatively little attention to the strength of the competition. Our results suggest that excess entrepreneurial entry is more complicated than simple overconfidence, and can help explain notable patterns in entrepreneurial entry.

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