Missing the boat or sinking the boat Flashcards
an abundance of prior research has shown that propensity to take risk is…
situation specific
What three parts risk consists of?
- Potential losses
- The significance of these losses
- The uncertainty of these loses
What is to sink the boat?
To act too fast
What is to miss the boat?
To act too slow
What is the magnitude element of risk?
If things go wrong how much we lose? A risky choice is one that contains the threat of a very poor outcome.
Entrepreneurial risk?
Likelihood of loss and magnitude of loss capture the essence of entrepreneurial risk
What is the difference between entrepreneurs investing their own money and the money of investors?
They are willing to take on more risk with investor’s money
How managers who have higher levels of skills see risk-taking?
They see risk-taking as part of their job
When making a choice between new venture opportunities how will the more and less skilled entrepreneurs act?
The more skilled entrepreneurs will select the one with greater risk/reward ratio and newer entrepreneurs the safer one
Risk propensity
Taking or leaving risk in certain situations. Tied closely to personality rather than a factor like risk perception
Risk perception
Some individuals with lower risk perception are more likely to pursue higher stakes ventures with more to gain or lose
Why do entrepreneurs choose the ventures they choose?
The nature of the risk inherent in a new venture opportunity, as much as its level, influences entrepreneurs’ choice behaviors. Also 2/3 of entrepreneurs chose other than the “least risky” option, suggesting they are risk-seeking.
