Abstract
Entrepreneurial judgment is crucial for entrepreneurial success. Extant literature argues that prior experience influences entrepreneurial decisions and the identification of attractive decision spaces for entrepreneurial activity is impacted by subjective risk perception and response to this risk. We posit that entrepreneurs develop different preferences for risk and prediction and their decisions reflect these preferences. To understand the strategic orientations of nascent entrepreneurs, using a sample of 262 nascent entrepreneurs, we study the impact of prior experience and the environmental context on the development of two strategic orientations of nascent entrepreneurs: risk orientation, i.e., the extent to which an individual perceives risk as downside loss or an upside opportunity and the prediction orientation, i.e., the extent to which an individual focuses on prediction. In doing so, our study contributes to a better understanding of the strategy formation process among nascent entrepreneurs.
Highlights
Entrepreneurial judgment impacts entrepreneurial performance and success (Uygur and Kim 2014)
To fill the theoretical void and to understand how strategic orientations are influenced, we study the impact of prior experience and the environmental context on the development of two strategic orientations of nascent entrepreneurs: the extent to which an individual perceives risk as downside loss or an upside opportunity (Janney and Dess 2006; Sarasvathy 2001) and the extent to which an individual focuses on prediction versus non-prediction (Sarasvathy 2001; Wiltbank et al 2006)
Building on the notion that individuals pursue different strategic orientations simultaneously (e.g., Baron and Ensley 2006; Chandler et al 2011), we find that risk orientation has its antecedents in personal characteristics, while prediction orientation appears to be influenced by external variables
Summary
Entrepreneurial judgment impacts entrepreneurial performance and success (Uygur and Kim 2014). While the prediction orientation reflects the entrepreneurs’ preferred level of focus on forecasts and expectations vs a more action and control-oriented approach as a way to manage perceived risks, the risk orientation reflects the attitude towards seeing risk either as downside loss or upside opportunity We examine their antecedents using a sample of nascent entrepreneurs who are in the process of establishing their ventures. Building on the notion that individuals pursue different strategic orientations simultaneously (e.g., Baron and Ensley 2006; Chandler et al 2011), we find that risk orientation has its antecedents in personal characteristics (experience), while prediction orientation appears to be influenced by external variables (environmental dynamism) This is important because it highlights specific cognitive judgments regarding perceived decision space which in turn contributes to explaining subsequently pursued strategies. Our findings contribute to a better understanding of the strategy formation of nascent entrepreneurs and introduce strategic orientations as individual-level constructs
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