The Egocentrism of Entrepreneurs: Bias in Comparative Judgments

Abstract

AbstractResearch in entrepreneurship decision making assumes that entrepreneurs use a relatively distinct decision-making process when it comes to market entry. Building on a biased comparative-judgment-formation framework and egocentrism theory, this article theorizes a model of entrepreneurs’ egocentric market entry decisions. Specifically, we illustrate how entrepreneurs may be vulnerable to cognitive biases in the three stages of decision making: information acquisition, evaluation, and comparative judgment formation. This article contributes to understanding the high failure rate of new ventures by suggesting that egocentric and myopic decision-making processes on the part of entrepreneurs may impede rational decision making.