Advanced Search

Journal Navigation

Journal Home

Subscriptions

Archive

Contact Us

Table of Contents

Sign In to gain access to subscriptions and/or personal tools.
Strategic Organization
This Article
Right arrow Full Text (PDF)
Right arrow References
Right arrow Alert me when this article is cited
Right arrow Alert me if a correction is posted
Services
Right arrow Email this article to a friend
Right arrow Similar articles in this journal
Right arrow Alert me to new issues of the journal
Right arrow Add to Saved Citations
Right arrow Download to citation manager
Right arrowRequest Permissions
Right arrow Request Reprints
Right arrow Add to My Marked Citations
Citing Articles
Right arrow Citing Articles via HighWire
Right arrow Citing Articles via Google Scholar
Right arrow Citing Articles via Scopus
Google Scholar
Right arrow Articles by Xu, H.
Right arrow Articles by Ruef, M.
Right arrow Search for Related Content
Social Bookmarking
Add to CiteULike   Add to Complore   Add to Connotea   Add to Del.icio.us   Add to Digg   Add to Reddit   Add to Technorati   Add to Twitter  
What's this?

The myth of the risk-tolerant entrepreneur

Hongwei Xu

Stanford University, USA, xu_hongwei{at}gsb.stanford.edu

Martin Ruef

Princeton University, USA, mruef{at}princeton.edu

Entrepreneurs have long been assumed to be more risk-tolerant than the general population. In this article, we analyze the financial risk propensity of business founders using a unique, representative dataset of nascent entrepreneurs in the United States. We deploy two models of entrepreneurial behavior: a strategic model of risk tolerance, based on investment choices; and a non-strategic model of risk tolerance, based on information bias about business success. For both models, our empirical results consistently show that nascent entrepreneurs are more risk-averse than non-entrepreneurs. To reconcile the financial risk aversion of entrepreneurs with the high risk of financial loss among startups, we suggest that many of the motivations that individuals have for founding business ventures are non-pecuniary in nature.

Key Words: entrepreneurs • risk propensity • pecuniary and non-pecuniary motivation

Strategic Organization, Vol. 2, No. 4, 331-355 (2004)
DOI: 10.1177/1476127004047617
Add to CiteULike CiteULike   Add to Complore Complore   Add to Connotea Connotea   Add to Del.icio.us Del.icio.us   Add to Digg Digg   Add to Reddit Reddit   Add to Technorati Technorati   Add to Twitter Twitter    What's this?


This article has been cited by other articles:


Home page
 Strategic OrganizationHome page
N. Phillips and P. Tracey
Opportunity recognition, entrepreneurial capabilities and bricolage: connecting institutional theory and entrepreneurship in strategic organization
Strategic Organization, August 1, 2007; 5(3): 313 - 320.
[PDF]