To Start or Not to Start: Outcome and Ability Expectations in the Decision To Start a New Venture

11 Pages Posted: 12 Dec 2008

See all articles by David M. Townsend

David M. Townsend

North Carolina State University - Poole College of Management

Lowell W. Busenitz

University of Oklahoma - Michael F. Price College of Business

Jonathan D. Arthurs

Washington State University

Date Written: December 9, 2008

Abstract

This study seeks to better understand why some individuals decide to start new businesses and others do not, particularly in light of high base rates of failure. In addressing the question of "Why do some individuals choose to start new ventures?" a common perspective is that potential entrepreneurs with high levels of confidence in potential outcomes are likely to start new ventures. Alternatively, it also may be that firm creation decisions are based largely on individual expectations of one's ability. Hypotheses examining these perspectives are tested using a sample of 316 nascent entrepreneurs with the start-up decision tracked longitudinally. The results indicate that confidence in one's ability to perform tasks relevant to entrepreneurship is a robust predictor of start-up while outcome expectancies appear to play a marginal role. Theoretical and practical implications stemming from these results are discussed.

Keywords: Outcome expectancies, ability expectancies, entrepreneur decision-making, new venture creation

Suggested Citation

Townsend, David M. and Busenitz, Lowell W. and Arthurs, Jonathan D., To Start or Not to Start: Outcome and Ability Expectations in the Decision To Start a New Venture (December 9, 2008). Journal of Business Venturing, Forthcoming. Available at SSRN: https://ssrn.com/abstract=1313836

David M. Townsend (Contact Author)

North Carolina State University - Poole College of Management ( email )

Hillsborough Street
Raleigh, NC 27695-8614
United States

Lowell W. Busenitz

University of Oklahoma - Michael F. Price College of Business ( email )

307 West Brooks
Norman, OK 73019-4004
United States

Jonathan D. Arthurs

Washington State University ( email )

Wilson Rd.
College of Business
Pullman, WA 99164
United States

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