TOO MANY BOLD MOVES? LEARNING HOW TO OVERCOME OVERCONFIDENCE
Type
conference paper
Date Issued
2025-06-05
Author(s)
Abstract
Entrepreneurs operate in an environment with limited information, which makes them prone to cognitive biases such as overconfidence (Busenitz & Barney, 1997). One form of overconfidence, known as overprecision, describes an exaggerated belief in knowing the truth (Moore & Healy, 2008). Overprecision has been identified as particularly detrimental to firm performance in the post-launch venture phase (Kraft et al., 2022), potentially leading to firm failure (Gudmundsson & Lechner, 2013). In the early venture stages, overprecision can have positive effects as it fosters venture creation decisions (Kraft et al., 2022). However, overprecision distorts information processing, which poses a challenge for entrepreneurs who are frequently confronted with unfamiliar situations that require the acquisition and analysis of new information (Zhang et al., 2020). For example, overprecision can be detrimental when entrepreneurs ignore or misinterpret new information from negative market reactions and fail to adjust their business models accordingly (Kraft et al., 2022).
While the consequences of overprecision have been extensively investigated by entrepreneurship scholars (e.g., Thomas, 2018), there remains a conundrum about how to mitigate these negative effects. Recent theoretical advances have highlighted the capacity of self-regulated entrepreneurial learning (SREL) to improve information processing and to identify knowledge gaps in novel situations (Fust et al., 2018; Winkler et al., 2023). SREL is defined as “self-generated thoughts, feelings, and actions that are proactively planned and cyclically adapted to the attainment of personal entrepreneurial goals” (Winkler et al., 2023, p. 2). SREL emphasizes that entrepreneurs can actively control their learning processes, providing a systematic and cyclical process to enhance learning capacities and better manage novel situations (Winkler et al., 2023). It comprises three phases: forethought, performance and reflection, with each phase containing a cognitive, metacognitive and motivational dimension (Fust et al., 2018). There is theoretical evidence that SREL has the potential to reduce overprecision by fostering accurate information processing (Fust et al., 2021), however, these theoretical findings lack empirical support. I address this gap by empirically investigating the relationship between SREL and overprecision, leading to the following research question: What is the relationship between SREL and overprecision among entrepreneurs?
While the consequences of overprecision have been extensively investigated by entrepreneurship scholars (e.g., Thomas, 2018), there remains a conundrum about how to mitigate these negative effects. Recent theoretical advances have highlighted the capacity of self-regulated entrepreneurial learning (SREL) to improve information processing and to identify knowledge gaps in novel situations (Fust et al., 2018; Winkler et al., 2023). SREL is defined as “self-generated thoughts, feelings, and actions that are proactively planned and cyclically adapted to the attainment of personal entrepreneurial goals” (Winkler et al., 2023, p. 2). SREL emphasizes that entrepreneurs can actively control their learning processes, providing a systematic and cyclical process to enhance learning capacities and better manage novel situations (Winkler et al., 2023). It comprises three phases: forethought, performance and reflection, with each phase containing a cognitive, metacognitive and motivational dimension (Fust et al., 2018). There is theoretical evidence that SREL has the potential to reduce overprecision by fostering accurate information processing (Fust et al., 2021), however, these theoretical findings lack empirical support. I address this gap by empirically investigating the relationship between SREL and overprecision, leading to the following research question: What is the relationship between SREL and overprecision among entrepreneurs?
Language
English
Event Title
2025 BCERC Babson College
Event Location
Babson College, USA
Event Date
June, 4th-7th, 2025
Contact Email Address
Julian.Kolbe@unisg.ch