Do Rational Entrepreneurs Exit Rationally?

Abstract

While theory suggests that highly rational entrepreneurs and with high need for cognitive closure (NFCC) are likely to put stronger emphasis on retrospective performance and personal factors when deciding whether to persist with an underperforming venture, our findings from a discrete choice experiment with 177 entrepreneurs show mixed evidence, thereby challenging existing research. Overall, we find that entrepreneurs who perceive themselves as rational do not always demonstrate rational behavior in persistence decisions and entrepreneurs with high NFCC pay significantly more attention to retrospective performance, but not to prospective performance and personal options.