Risky choices in new venture decisions—experimental evidence from Germany and the United States

Abstract

This article presents a model of entrepreneurial risk-taking behavior in different cultural settings. Young entrepreneurs and entrepreneurship students in Germany and the United States were tested by means of an experimental design to evaluate the underlying model and to identify cultural differences in the decision to start a company. The central research question states: How does the cultural context influence the decision-making and risk-taking behavior of entrepreneurs? The overall result of the international sample indicates that the significant differences between entrepreneurs and nonentrepreneurs in risk-taking behavior are culturally driven. Thus, this study extends earlier US studies that distinguish between risk propensity and risk perception in respect of entrepreneurs’ risk behavior within an international, intercultural sample. Furthermore, the survey researches the influence of the personal traits overconfidence and worry. From a managerial perspective, “would-be entrepreneurs” can use the conducted experiment as an individual diagnostic instrument, making it possible to identify individual anomalies in risk and decision-making behavior and, consequently, contribute to a better understanding of suitable entrepreneurial behavior as well as to reveal discrepancies between self-assessment and actual behavior.