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Reference point formation and new venture creation

Author

Listed:
  • Andreas Hack

    (University of Bern
    Witten/Herdecke University)

  • Frauke Bieberstein

    (University of Bern)

  • Nils D. Kraiczy

    (University of Bern)

Abstract

In this study, we introduce reference point formation as an important antecedent of new venture creation. Based on considerations from prospect theory, we hypothesize that individuals who generally and consistently set more aspiring reference points have a higher intention to form a new venture. Testing our hypothesis with entrepreneurs and managers, results show that entrepreneurs indeed set more aspiring reference points. Therefore, they might find themselves more often in a perceived loss situation which in turn increases their risk-taking behavior, following the predictions of prospect theory. In testing entrepreneurial intention of business graduate students, results are shown to be robust. We discuss theoretical and managerial implications of the findings and develop avenues for future research.

Suggested Citation

  • Andreas Hack & Frauke Bieberstein & Nils D. Kraiczy, 2016. "Reference point formation and new venture creation," Small Business Economics, Springer, vol. 46(3), pages 447-465, March.
  • Handle: RePEc:kap:sbusec:v:46:y:2016:i:3:d:10.1007_s11187-015-9694-5
    DOI: 10.1007/s11187-015-9694-5
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    Cited by:

    1. Zhang, nan & Qin, Botao, 2020. "Reference point adaptation and air quality – Experimental evidence with anti-PM 2.5 facemasks from China," MPRA Paper 102935, University Library of Munich, Germany.

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