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Entrepreneurial optimism and survival

Author

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  • Hyytinen, Ari
  • Lahtonen, Jukka
  • Pajarinen, Mika

Abstract

This paper uses entrepreneurs´ survival expectations around the time of market entry and subsequent venture exits to study entrepreneurial optimism. Using data on a large number of nascent entrepreneurs in the US and start-ups in Finland, we find that new entrepreneurs´ survival beliefs are on average optimistic but heterogeneous: Some are excessively optimistic, whereas a small subset holds unbiased beliefs. Entrepreneurial optimism is increasing in the relative (interpersonal) optimism and de- creasing in entrepreneurs´ level of education and industry experience in both countries. At least in Finland, those holding optimistic views are more likely to transit into entrepreneurship.

Suggested Citation

  • Hyytinen, Ari & Lahtonen, Jukka & Pajarinen, Mika, 2012. "Entrepreneurial optimism and survival," Bank of Finland Research Discussion Papers 20/2012, Bank of Finland.
    • Handle: RePEc:zbw:bofrdp:rdp2012_020
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    More about this item

    Keywords

    entrepreneurship; survival; optimism; overestimation;
    All these keywords.

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General

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