Seeing through the fog of ambiguity: Entrepreneurial judgments under decision settings of complexity

Issue title: Complexity Studies and Human Organisations

Guest editors: Thow Yick Liang

Article type: Research Article

Authors: Ng, Desmond^{; *}

Affiliations: Texas A&M University, College Station, TX, USA

Correspondence: [*] Corresponding author: Assoc. Prof. Desmond Ng, Texas A&M University, College Station, 377 AGLS Building, TX 77843, USA. Tel.: +1 979 845 1192; Fax: +1 979 862 1563; E-mail: [email protected]

Abstract: A most elemental concern of entrepreneurship pertains to how they make judgments under uncertainty. Empirical evidence has found that most new ventures result in failure, yet entrepreneurs tend to form judgments about their venture's success in highly optimistic terms. As entrepreneurs operate in a context of ambiguity, the concepts of “ambiguity” and “ambiguity aversion” from the decision sciences are drawn upon to develop a theoretical model of entrepreneurial overconfidence. In this proposed theoretical model, the entrepreneur operates under uncertain settings characterized by complexity. Complexity is argued to yield a distinct overconfidence bias in an entrepreneur's judgments of future events. This study concludes with its contributions and implications to entrepreneurial research.

Keywords: Entrepreneurial decision making, ambiguity aversion, overconfidence

DOI: 10.3233/HSM-130784

Journal: Human Systems Management, vol. 32, no. 1, pp. 57-66, 2013