Overoptimism among entrepreneurs in new ventures: the role of information and motivation

Ingrid Verheul () and Martin Carree

No H200723, Scales Research Reports from EIM Business and Policy Research

Abstract: There are various reasons why some entrepreneurs may be more overoptimistic at the start of their ventures than others. We distinguish between four broad categories of determining factors and three areas of overoptimism (income, psychological burden and leisure time) and empirically investigate those for a sample of Dutch start-ups. The first category is information. We find that more specifically informed entrepreneurs are less likely to be overoptimistic while (general) educationincreases overoptimism. The second category is motivation. Entrepreneurs motivated by pull factors are found to be less overoptimistic than those who are ‘pushed’ to start a venture. The third category encompasses personal characteristics such as gender, age, having a life partner and access to other income. The fourth category of firm characteristics includes factors such as sector, take-over versus newly started business, and home-based versus separate business premises. We find little additional explanatory power of these personal and firm characteristics.

Pages: 25 pages
Date: 2007-12-21
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Persistent link: https://EconPapers.repec.org/RePEc:eim:papers:h200723

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