Curb your enthusiasm… What makes SME’s over- or under-optimistic about expected growth in turnover?

Do, Hang; Hand, Chris

Abstract

Entrepreneurial optimism has generated academic interest in the last two decades, drawing on research on biases in human cognition. Such studies though have tended to focus on nascent entrepreneurs. Our study extends this by examining optimism amongst small and medium sized enterprises (SMEs), rather than entrepreneurs, and encompasses a wide range of firm ages, allowing for the effects of prior experience to be captured. Drawing on a final sample of 1193 UK (SMEs) obtained from the UK Longitudinal Small Business Survey, we found that firm characteristics and behaviour are associated with both over- and under-optimism. Our findings also suggest that younger firms are more likely to be over-optimistic than older firms. We also find some evidence to suggest that the effect of new opportunities are overestimated (such as launching a product new to the firm or intention to begin exporting).

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Entrepreneurship

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Entrepreneurship Theories

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Curb your enthusiasm… What makes SME’s over- or under-optimistic about expected growth in turnover?

Abstract

Please choose your submission type

Primary Track

Keywords