A hubris theory of entrepreneurship

Mathew L A Hayward, Dean A. Shepherd, Dale Griffin

Research output: Chapter in Book/Report/Conference proceedingChapter (Book)Otherpeer-review

Abstract

This paper develops a hubris theory of entrepreneurship to explain why so many new ventures are created in the shadow of high venture failure rates: More confident actors are moved to start ventures, and then act on such confidence when deciding how to allocate resources in their ventures. Building on theory and evidence from the behavioral decision-making literature, we describe how founders' socially constructed confidence affects the manner in which they interpret information about their prior and current ventures. We then link founders' propensity to be overconfident to their decisions to allocate, use, and attain resources. In our model, founders with greater socially constructed confidence tend to deprive their ventures of resources and resourcefulness and, therefore, increase the likelihood that their ventures will fail.

Original languageEnglish
Title of host publicationA Psychological Approach to Entrepreneurship: Selected Essays of Dean A. Shepherd
EditorsDean A. Shepherd
Place of PublicationCheltenham UK
PublisherEdward Elgar Publishing
Chapter12
Pages248-260
Number of pages13
ISBN (Electronic)9781783479801
ISBN (Print)9781783479795
DOIs
Publication statusPublished - 26 Dec 2014
Externally publishedYes

Keywords

  • Confidence
  • Entrepreneurship
  • Hubris
  • Resources

Cite this

Hayward, M. L. A., Shepherd, D. A., & Griffin, D. (2014). A hubris theory of entrepreneurship. In D. A. Shepherd (Ed.), A Psychological Approach to Entrepreneurship: Selected Essays of Dean A. Shepherd (pp. 248-260). Edward Elgar Publishing. https://doi.org/10.4337/9781783479801.00020