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What Competition? Myopic Self-Focus in Market-Entry Decisions

Author

Listed:
  • Don A. Moore

    (David Tepper School of Business, Carnegie Mellon University, 5000 Forbes Avenue, Pittsburgh, Pennsylvania 15213)

  • John M. Oesch

    (J. L. Rotman School of Management, University of Toronto, 105 St. George Street, Toronto, Ontario M5S 3E6, Canada)

  • Charlene Zietsma

    (Richard Ivey School of Business, University of Western Ontario, 1151 Richmond Street North, Ontario N6A 3K7, Canada)

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.

Suggested Citation

  • Don A. Moore & John M. Oesch & Charlene Zietsma, 2007. "What Competition? Myopic Self-Focus in Market-Entry Decisions," Organization Science, INFORMS, vol. 18(3), pages 440-454, June.
    • Handle: RePEc:inm:ororsc:v:18:y:2007:i:3:p:440-454
    DOI: 10.1287/orsc.1060.0243
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