Persist or Let It Go: Do Rational Entrepreneurs make Decisions Rationally?

58 Pages Posted: 8 Apr 2022

See all articles by Nidthida Lin

Nidthida Lin

Independent

Ralf Wilden

Macquarie University

Francesco Chirico

Jonkoping University - Jonkoping International Business School (JIBS); Macquarie University, Macquarie Business School

Elahe Ghasrodashti

Independent

Dawn R. DeTienne

Colorado State University, Fort Collins - College of Business; Utah State University

Date Written: March 4, 2022

Abstract

We theorize that both highly rational entrepreneurs and entrepreneurs with a high need for cognitive closure (NFCC) are likely to put more emphasis on retrospective factors (period and degree of underperformance, personal investments) and less on prospective factors (risk of going into default, potential for growth, personal options) when deciding whether to persist with an underperforming venture. Our findings from three discrete choice experiments with three independent samples of entrepreneurs (a sample of 176 Australian entrepreneurs; a narrow-replication with 128 Australian entrepreneurs; and a quasi-replication with 157 United Kingdom entrepreneurs) consistently show that entrepreneurs who perceive themselves as rational do not always demonstrate rational behavior and entrepreneurs with a high NFCC put more emphasis on retrospective factors in persistence decisions. Important theoretical and practical contributions flowing from our study are shared in the concluding section.

Suggested Citation

Lin, Nidthida and Wilden, Ralf and Chirico, Francesco and Chirico, Francesco and Ghasrodashti, Elahe and DeTienne, Dawn R., Persist or Let It Go: Do Rational Entrepreneurs make Decisions Rationally? (March 4, 2022). Journal of Business Venturing, Forthcoming, Available at SSRN: https://ssrn.com/abstract=4049328

Nidthida Lin

Independent ( email )

Ralf Wilden

Macquarie University ( email )

New South Wales 2109
Australia

Francesco Chirico (Contact Author)

Jonkoping University - Jonkoping International Business School (JIBS) ( email )

Jönköping, 55111
Sweden

Macquarie University, Macquarie Business School ( email )

New South Wales 2109
Australia

Elahe Ghasrodashti

Independent ( email )

Dawn R. DeTienne

Colorado State University, Fort Collins - College of Business ( email )

Fort Collins, CO 80523
United States

Utah State University

Logan, UT 84322
United States

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