Abstract

Exploring the dispositional characteristics of entrepreneurs is one of the many approaches that have explained why individuals choose entrepreneurial careers over others (Hyytinen et al., 2013). Studies have examined individuals’ risk tolerance (Stewart & Roth, 2001), optimism (Hmieleski & Baron, 2009), and over-confidence (Koellinger et al., 2007) within this realm of research. Yet, most studies are focused only on a snapshot of entrepreneurship – the career choices of individuals or the influence of dispositional characteristics on their venture performance. Even though individuals start up based on their biased prediction, it is unlikely that such expectations hold after business results become available. This leads to our research question: Under what conditions, and how might entrepreneurs’ optimism and overconfidence change (or not) over time? We investigate dynamic relationships between entrepreneurs’ assessments of their venture performance and their confidence/optimism levels over time. We argue that while entrepreneurs have optimistic views about their business start-up and confidence about their skills to succeed, they eventually correct their assessment of their business success upon learning from financial results.

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