IDEAS home Printed from https://ideas.repec.org/a/plo/pone00/0197085.html
   My bibliography  Save this article

“Yes, we know!” (Over)confidence in general knowledge among Austrian entrepreneurs

Author

Listed:
  • Viktorija Ilieva
  • Thomas Brudermann
  • Ljubomir Drakulevski

Abstract

Overconfidence has been reported to be a common bias among entrepreneurs and might be one cause of the high failure rates observed for new ventures. In this study, we investigate the overconfidence bias in a sample of 92 Austrian entrepreneurs, who responded to a general-knowledge questionnaire. Their levels of overconfidence were assessed by their responses to hard, medium and easy knowledge questions, and the relations of individual, organizational and environmental factors to the bias score were analyzed. The results confirmed that entrepreneurs are indeed prone to expressing overprecision, a type of overconfidence, but not when answering questions of all levels of difficulty. Being a single founder instead of a co-founder was identified as a significant predictor of overconfidence. Confidence, on the other hand, was associated with age and prior entrepreneurial experience, while accuracy was determined solely by age. The results of this study only partly agree with those of previous studies conducted in different national and cultural settings.

Suggested Citation

  • Viktorija Ilieva & Thomas Brudermann & Ljubomir Drakulevski, 2018. "“Yes, we know!” (Over)confidence in general knowledge among Austrian entrepreneurs," PLOS ONE, Public Library of Science, vol. 13(5), pages 1-15, May.
    • Handle: RePEc:plo:pone00:0197085
    DOI: 10.1371/journal.pone.0197085
    as

    Download full text from publisher

    File URL: https://journals.plos.org/plosone/article?id=10.1371/journal.pone.0197085
    Download Restriction: no
    File URL: https://journals.plos.org/plosone/article/file?id=10.1371/journal.pone.0197085&type=printable
    Download Restriction: no
    File URL: https://libkey.io/10.1371/journal.pone.0197085?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Klayman, Joshua & Soll, Jack B. & Gonzalez-Vallejo, Claudia & Barlas, Sema, 1999. "Overconfidence: It Depends on How, What, and Whom You Ask, , , , , , , , ," Organizational Behavior and Human Decision Processes, Elsevier, vol. 79(3), pages 216-247, September.
    2. Ucbasaran, Deniz & Westhead, Paul & Wright, Mike & Flores, Manuel, 2010. "The nature of entrepreneurial experience, business failure and comparative optimism," Journal of Business Venturing, Elsevier, vol. 25(6), pages 541-555, November.
    3. Verheul, I. & Carree, M.A., 2008. "Overoptimism among Founders: The Role of Information and Motivation," ERIM Report Series Research in Management ERS-2008-008-ORG, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam.
    4. Koellinger, Philipp & Minniti, Maria & Schade, Christian, 2007. ""I think I can, I think I can": Overconfidence and entrepreneurial behavior," Journal of Economic Psychology, Elsevier, vol. 28(4), pages 502-527, August.
    5. Philipp Koellinger, 2008. "Why are some entrepreneurs more innovative than others?," Small Business Economics, Springer, vol. 31(1), pages 21-37, June.
    6. Rietveld, C.A. & Groenen, P.J.F. & Koellinger, Ph.D. & van der Loos, M.J.H.M. & Thurik, A.R., 2013. "Living Forever: Entrepreneurial Overconfidence at Older Ages," ERIM Report Series Research in Management ERS-2013-012-STR, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam.
    7. Jörn Block & Philipp Sandner, 2009. "Necessity and Opportunity Entrepreneurs and Their Duration in Self-employment: Evidence from German Micro Data," Journal of Industry, Competition and Trade, Springer, vol. 9(2), pages 117-137, June.
    8. Gordon K. Adomdza & Thomas Åstebro & Kevyn Yong, 2016. "Decision biases and entrepreneurial finance," Small Business Economics, Springer, vol. 47(4), pages 819-834, December.
    9. Robin M. Hogarth & Natalia Karelaia, 2012. "Entrepreneurial Success and Failure: Confidence and Fallible Judgment," Organization Science, INFORMS, vol. 23(6), pages 1733-1747, December.
    10. Michailova, Julija, 2010. "Development of the overconfidence measurement instrument for the economic experiment," MPRA Paper 26384, University Library of Munich, Germany.
    11. Simon, Mark & Shrader, Rodney C., 2012. "Entrepreneurial actions and optimistic overconfidence: The role of motivated reasoning in new product introductions," Journal of Business Venturing, Elsevier, vol. 27(3), pages 291-309.
    12. Herz, Holger & Schunk, Daniel & Zehnder, Christian, 2014. "How do judgmental overconfidence and overoptimism shape innovative activity?," Games and Economic Behavior, Elsevier, vol. 83(C), pages 1-23.
    13. Pavlo Blavatskyy, 2009. "Betting on own knowledge: Experimental test of overconfidence," Journal of Risk and Uncertainty, Springer, vol. 38(1), pages 39-49, February.
    14. Mathew L. A. Hayward & Dean A. Shepherd & Dale Griffin, 2006. "A Hubris Theory of Entrepreneurship," Management Science, INFORMS, vol. 52(2), pages 160-172, February.
    15. Daylian M. Cain & Don A. Moore & Uriel Haran, 2015. "Making sense of overconfidence in market entry," Strategic Management Journal, Wiley Blackwell, vol. 36(1), pages 1-18, January.
    16. Bruno Biais & Denis Hilton & Karine Mazurier & Sébastien Pouget, 2005. "Judgemental Overconfidence, Self-Monitoring, and Trading Performance in an Experimental Financial Market," Review of Economic Studies, Oxford University Press, vol. 72(2), pages 287-312.
    17. Stephen X. Zhang & Javier Cueto, 2017. "The Study of Bias in Entrepreneurship," Entrepreneurship Theory and Practice, , vol. 41(3), pages 419-454, May.
    18. Forbes, Daniel P., 2005. "Are some entrepreneurs more overconfident than others?," Journal of Business Venturing, Elsevier, vol. 20(5), pages 623-640, September.
    19. Michailova, Julija, 2010. "Development of the overconfidence measurement instrument for the economic experiment," MPRA Paper 26384, University Library of Munich, Germany.
    20. Busenitz, Lowell W. & Barney, Jay B., 1997. "Differences between entrepreneurs and managers in large organizations: Biases and heuristics in strategic decision-making," Journal of Business Venturing, Elsevier, vol. 12(1), pages 9-30, January.
    21. Levesque, Moren & Minniti, Maria, 2006. "The effect of aging on entrepreneurial behavior," Journal of Business Venturing, Elsevier, vol. 21(2), pages 177-194, March.
    22. Baron, Robert A., 1998. "Cognitive mechanisms in entrepreneurship: why and when enterpreneurs think differently than other people," Journal of Business Venturing, Elsevier, vol. 13(4), pages 275-294, July.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Cucchiarini, Veronica & Scicchitano, Sergio & Viale, Riccardo, 2024. "The Entrepreneur's Cognitive and Behavioral Journey: Understanding Heuristics and Bias under Risk and Uncertainty," GLO Discussion Paper Series 1390, Global Labor Organization (GLO).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Kraft, Priscilla S. & Günther, Christina & Kammerlander, Nadine H. & Lampe, Jan, 2022. "Overconfidence and entrepreneurship: A meta-analysis of different types of overconfidence in the entrepreneurial process," Journal of Business Venturing, Elsevier, vol. 37(4).
    2. László Szerb & Zsófia Vörös, 2021. "The changing form of overconfidence and its effect on growth expectations at the early stages of startups," Small Business Economics, Springer, vol. 57(1), pages 151-165, June.
    3. Indy Bernoster & Cornelius A. Rietveld & A. Roy Thurik & Olivier Torrès, 2018. "Overconfidence, Optimism and Entrepreneurship," Sustainability, MDPI, vol. 10(7), pages 1-14, June.
    4. Dubard Barbosa, Saulo & Fayolle, Alain & Smith, Brett R., 2019. "Biased and overconfident, unbiased but going for it: How framing and anchoring affect the decision to start a new venture," Journal of Business Venturing, Elsevier, vol. 34(3), pages 528-557.
    5. Saulo Dubard Barbosa & Alain Fayolle & Brett Smith, 2019. "Biased and overconfident, unbiased but going for it: How framing and anchoring affect the decision to start a new venture," Post-Print hal-01988083, HAL.
    6. Oliver Thomas, 2018. "Two decades of cognitive bias research in entrepreneurship: What do we know and where do we go from here?," Management Review Quarterly, Springer, vol. 68(2), pages 107-143, April.
    7. Cédric Gutierrez & Thomas Åstebro & Tomasz Obloj, 2020. "The Impact of Overconfidence and Ambiguity Attitude on Market Entry," Organization Science, INFORMS, vol. 31(2), pages 308-329, March.
    8. Stephen X. Zhang & Javier Cueto, 2017. "The Study of Bias in Entrepreneurship," Entrepreneurship Theory and Practice, , vol. 41(3), pages 419-454, May.
    9. Laurent Vilanova & Ivana Vitanova, 2020. "Unwrapping opportunity confidence: how do different types of feasibility beliefs affect venture emergence?," Small Business Economics, Springer, vol. 55(1), pages 215-236, June.
    10. Zhang, Stephen X. & Foo, Maw-Der & Vassolo, Roberto S., 2021. "The ramifications of effectuation on biases in entrepreneurship – Evidence from a mixed-method approach," Journal of Business Venturing Insights, Elsevier, vol. 15(C).
    11. Martin Koudstaal & Randolph Sloof & Mirjam van Praag, 2015. "Are Entrepreneurs more Optimistic and Overconfident than Managers and Employees?," Tinbergen Institute Discussion Papers 15-124/VII, Tinbergen Institute.
    12. Anne Chwolka & Matthias G. Raith, 2023. "Overconfidence as a driver of entrepreneurial market entry decisions: a critical appraisal," Review of Managerial Science, Springer, vol. 17(3), pages 985-1016, April.
    13. Jaeyeob Jeong & Myeonggil Choi, 2017. "The Expected Job Satisfaction Affecting Entrepreneurial Intention as Career Choice in the Cultural and Artistic Industry," Sustainability, MDPI, vol. 9(10), pages 1-16, September.
    14. Mingfeng Tang & Hao Huang & Grace Walsh & Maribel Guerrero, 2023. "The impact of entrepreneurial overconfidence on incubator effectiveness," The Journal of Technology Transfer, Springer, vol. 48(1), pages 416-440, February.
    15. John S. Chen & David C. Croson & Daniel W. Elfenbein & Hart E. Posen, 2018. "The Impact of Learning and Overconfidence on Entrepreneurial Entry and Exit," Organization Science, INFORMS, vol. 29(6), pages 989-1009, December.
    16. Lucio Fuentelsaz & Consuelo González & Juan P. Maícas, 2021. "High-growth aspiration entrepreneurship and exit: the contingent role of market-supporting institutions," Small Business Economics, Springer, vol. 57(1), pages 473-492, June.
    17. Kambiz Talebi & Pouria Nouri & Abdolah Ahmadi Kafeshani, 2014. "Identifying the main Individual Factors Influencing Entrepreneurial Decision making Biases: A Qualitative Content Analysis Approach," International Journal of Academic Research in Business and Social Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Business and Social Sciences, vol. 4(8), pages 1-11, August.
    18. Bi, Qingqing & Boh, Wai Fong & Christopoulos, Georgios, 2021. "Trust, fast and slow: A comparison study of the trust behaviors of entrepreneurs and non-entrepreneurs," Journal of Business Venturing, Elsevier, vol. 36(6).
    19. Jahangir Yadollahi Farsi & Pouria Nouri & Abdolah Ahmadi Kafeshani & Mohamad Taghi Toghraee, 2014. "Identifying the Main Factors Influencing the Formation of Overconfidence Bias in Entrepreneurs: A Qualitative Content Analysis Approach," International Journal of Academic Research in Business and Social Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Business and Social Sciences, vol. 4(4), pages 456-469, April.
    20. Ucbasaran, Deniz & Westhead, Paul & Wright, Mike & Flores, Manuel, 2010. "The nature of entrepreneurial experience, business failure and comparative optimism," Journal of Business Venturing, Elsevier, vol. 25(6), pages 541-555, November.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:plo:pone00:0197085. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: plosone (email available below). General contact details of provider: https://journals.plos.org/plosone/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.