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Overoptimism Among Founders: The Role of Information and Motivation

I. Verheul
Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE); Erasmus Research Institute of Management (ERIM) - Joint Research Institute of Rotterdam School of Management (RSM) and Erasmus School of Economics (ESE), EUR

Martin A. Carree
University of Maastricht - Department of Organization & Strategy

March 3, 2008

ERIM Report Series Reference No. ERS-2008-008-ORG

Abstract:
This study empirically investigates factors that influence overoptimism across nascent entrepreneurs. We distinguish between two main groups of determinants (information, motivation) and three types of overoptimism (income, psychological burden, leisure time). Findings indicate that entrepreneurs who have relevant business information are more realistic and that entrepreneurs with a high level of general knowledge, acquired through education or previous (unrelated) entrepreneurial experience, are more overoptimistic. External advice and business planning do not appear to limit subsequent overoptimism. Entrepreneurs are less overoptimistic about the pecuniary or non-pecuniary benefits of self-employment when these benefits are closely related to the initial motivation for starting up the business.

Keywords: overoptimism, nascent entrepreneurs, information, motivation

JEL Classifications: M13, O32, M

Working Paper Series

Date posted: April 09, 2008 ; Last revised: July 05, 2008

Suggested Citation

Verheul, I. and Carree, Martin A., Overoptimism Among Founders: The Role of Information and Motivation (March 3, 2008). ERIM Report Series Reference No. ERS-2008-008-ORG. Available at SSRN: http://ssrn.com/abstract=1117785

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Contact Information

Ingrid Verheul (Contact Author) Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE) ( email ) Burgemeester Oudlaan 50 3062 PA Rotterdam NL 3062 PA Netherlands +31 10 4081398 (Phone) +31 10 4089146 (Fax)
Erasmus Research Institute of Management (ERIM) - Joint Research Institute of Rotterdam School of Management (RSM) and Erasmus School of Economics (ESE), EUR P.O. Box 1738 3000 DR Rotterdam Netherlands
Martin A. Carree University of Maastricht - Department of Organization & Strategy ( email ) P.O. Box 616 6200 MD Maastricht Netherlands

Abstract

References (64)

Date posted: April 09, 2008 ; Last revised: July 05, 2008

Suggested Citation

Contact Information

Ingrid Verheul (Contact Author)

Martin A. Carree