The Relationship among Biases, Misperceptions, and the Introduction of Pioneering Products: Examining Differences in Venture Decision Contexts

Abstract

Although biases influence the decision to take entrepreneurial actions, studies have not differentiated among entrepreneurial decision environments. These environments vary greatly and affect which biases arise and their context–specific consequences. Focusing on the role of firm size, age, and type of product introduction, we propose that entrepreneurs in smaller, younger, firms, who are considering pioneering, are more likely to exhibit illusion of control, law of small numbers, and reasoning by analogy. These biases contribute to underestimating competition, overestimating demand, and overlooking requisite assets. We hope to spur researchers to examine information processing across different types of entrepreneurial firms and actions.