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Evaluation of Entrepreneurial Risk-Taking using Magnitude of Loss Scale

Author

Listed:
  • T.J. Kamalanabhan

    (T.J. Kamalanabhan is Associate Professor in the Department of Humanities and Social Sciences, Indian Institute of Technology Madras, Chennai, India.)

  • D.L. Sunder

    (D. L. Sunder is Research Associate in the Department of Humanities and Social Sciences, Indian Institute of Technology Chennai, India.)

  • Amat Taap Manshor

    (Amat Taap Manshor is Professor of Management at the University College of Technology and Management, Malaysia.)

Abstract

The importance of risk-taking in business ventures has been emphasised by many. Attempts to distinguish entrepreneurs on their risk-taking propensity have produced conflicting results. Data on two measures of risk-taking propensity were collected from entrepreneurs, prospective entrepreneurs and non-entrepreneur others. While the groups did not differ significantly on risk-taking propensity as measured by the Choice Dilemma Questionnaire, entrepreneurs and prospective entrepreneurs differed significantly from others on the Magnitude of Loss Questionnaire. Similarly, entrepreneurial aspirants differed significantly from the nonentrepreneur group. These results highlight the significance of loss, an important aspect in risk-taking, which is often ignored in entrepreneurial and managerial studies. The riskiness in business ventures which has been the main stumbling block for many is not the low probability of success but the high stakes involved in entrepreneurship.

Suggested Citation

  • T.J. Kamalanabhan & D.L. Sunder & Amat Taap Manshor, 2006. "Evaluation of Entrepreneurial Risk-Taking using Magnitude of Loss Scale," Journal of Entrepreneurship and Innovation in Emerging Economies, Entrepreneurship Development Institute of India, vol. 15(1), pages 37-46, January.
    • Handle: RePEc:sae:jouent:v:15:y:2006:i:1:p:37-46
    DOI: 10.1177/097135570501500103
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    References listed on IDEAS

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    1. Faragó, Klára & Kiss, Orhidea & Boros, János, 2008. "Risk-taking in entrepreneurs, compared to criminals and students: The role of uncertainty and stakes," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 37(6), pages 2231-2241, December.
    2. Jasna Auer Antoncic & Bostjan Antoncic & Matjaz Gantar & Robert D. Hisrich & Lawrence J. Marks & Alexandre A. Bachkirov & Zhaoyang Li & Pierre Polzin & Jose L. Borges & Antonio Coelho & Marja-Liisa Ka, 2018. "Risk-Taking Propensity and Entrepreneurship: The Role of Power Distance," Journal of Enterprising Culture (JEC), World Scientific Publishing Co. Pte. Ltd., vol. 26(01), pages 1-26, March.

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