Opportunity evaluation under risky conditions: The cognitive processes of entrepreneurs

Keh, Hean Tat, Foo, Maw Der and Lim, Boon Chong (2002) Opportunity evaluation under risky conditions: The cognitive processes of entrepreneurs. Entrepreneurship Theory and Practice, 27 2: 125-148. doi:10.1111/1540-8520.00003


Author Keh, Hean Tat
Foo, Maw Der
Lim, Boon Chong
Title Opportunity evaluation under risky conditions: The cognitive processes of entrepreneurs
Journal name Entrepreneurship Theory and Practice   Check publisher's open access policy
ISSN 1042-2587
1540-6520
Publication date 2002-12
Sub-type Article (original research)
DOI 10.1111/1540-8520.00003
Volume 27
Issue 2
Start page 125
End page 148
Total pages 24
Place of publication Hoboken, NJ, United States
Publisher Wiley-Blackwell Publishing
Language eng
Abstract Even though the entrepreneurship literature places much emphasis on opportunity recognition, little is known about how entrepreneurs actually evaluate opportunities. This study uses a cognitive approach to examine opportunity evaluation, as the perception of opportunity is essentially a cognitive phenomenon. We present a model that consists of four independent variables (overconfidence, belief in the law of small numbers, planning fallacy, and illusion of control), a mediating variable (risk perception), two control variables (demographics and risk propensity), and the dependent variable (opportunity evaluation). We find that illusion of control and belief in the law of small numbers are related to how entrepreneurs evaluate opportunities. Our results also indicate that risk perception mediates opportunity evaluation.
Q-Index Code C1
Q-Index Status Provisional Code
Institutional Status Non-UQ
Additional Notes Article first published online: 21 February 2003.

Document type: Journal Article
Sub-type: Article (original research)
Collection: UQ Business School Publications
 
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Created: Tue, 29 Nov 2011, 16:00:52 EST by Karen Morgan on behalf of UQ Business School