Successful Entrepreneurs are Not Risk Takers: Toward a Theory of Entrepreneurial Decision Making

43 Pages Posted: 31 Dec 2010

See all articles by Johann Peter Murmann

Johann Peter Murmann

UNSW Australia Business School - AGSM

Deepak Sardana

University of South Australia Business School

Abstract

Many scholars see entrepreneurs as action-oriented individuals who use rules of thumb and other mental heuristics to make decisions, but who do little systematic planning and analysis. We argue that what distinguishes successful from unsuccessful entrepreneurs is precisely that they vary their decision-making styles, sometimes relying on heuristics and sometimes relying on systematic analysis. In our proposed framework, successful entrepreneurs assess their level of expertise and the level of ambiguity in a particular decision context and then tailor their decision-making process to reduce risk.

Keywords: entrepreneurial decision making, entrepreneurial risk-taking, performance, new ventures, theory

JEL Classification: M13, D80

Suggested Citation

Murmann, Johann Peter and Sardana, Deepak, Successful Entrepreneurs are Not Risk Takers: Toward a Theory of Entrepreneurial Decision Making. UNSW Australian School of Business Research Paper No. 2010 STRE 05. Available at SSRN: https://ssrn.com/abstract=1732878 or http://dx.doi.org/10.2139/ssrn.1732878

Johann Peter Murmann (Contact Author)

UNSW Australia Business School - AGSM ( email )

UNSW Sydney, NSW 2052
Australia
+61-2-9385-9733 (Phone)

HOME PAGE: http://professor-murmann.net

Deepak Sardana

University of South Australia Business School ( email )

Adelaide, SA 5000
Australia

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