Financial Statements Part One

Competitive Research Article

Hedia Fourati* and Habib Affes

Risk as a Threat, Risk as a Missing Opportunity, the Owner Finance and Entrepreneurship

Abstract: The purpose of this paper is to investigate the extent towhich the attitude toward the risk predicts a new venture creation. Using a sample of 1,214 novice entrepreneur and a multidimensional scale of the entrepreneurial risk perception, we study if the perception of the personal and the financial risk of failure and the global risk as a missing opportunity may predict decision making. More precisely, we expect that the entrepreneurs playing with other people’s money or their external debts (vs. their own or personal saving) will be high-risk taking (low- risk taking). Thus, they aremore likely to choose new venture opportunity and they downplay potential loss financially and personally (focus more on potential loss financially and personally). Our empirical investigation reveals three dimensions of risk attitude regarding the multidimensional risk perception and the source of funding. We also found that the source of new venture funding ‘the entrepreneur’s own money’ versus that of the investors influenced our subjects attitude toward risk. Perhaps, the “housemoney effect”was not convenient for some entrepreneur in spite of the risk as an opportunity and the external funds, the entrepreneur didn’t create a new venture. We explain this result by the similarity in themanager and the entrepreneur’s decisions, as they would sometimes choose to be pioneer- ing risk takers; even though the funds they would risk are typically not their own.

Keywords: entrepreneurial risk, new venture creation, financial risk, personal risk, personal saving, external debts

*Corresponding author: Hedia Fourati, Is a doctor in finance at Faculty of Economics and Management, University of Sfax Tunisia, Sfax, Tunisia, E-mail: [email protected] Habib Affes, Assistant professor and director of accounting department at the Faculty of Economics and Management, University of Sfax Tunisia, Sfax, Tunisia, E-mail: [email protected]

1 Introduction

Entrepreneurship is a multidimensional phenomenon as the risk perception (Fayolle et al. 2008). In fact entrepreneurship is historically associated with

doi 10.1515/erj-2013-0069 Entrep. Res. J. 2014; 4(4): 351–365

the risk bearing. Previous studies focus on the entrepreneurial risk and try to incorporate the risk attitude of a person as a crucial variable in the choice between self-employment and salaried job (Sykes and Dunham 1995). Many researchers focused on studying the impact of the perception of the entrepre- neurial risk on nascent entrepreneurial activities (Fayolle et al. 2008; Barbosa, Kickul, and Liao-Troth 2007). But considering a multidimensional perception of the entrepreneurial risk decision and the entrepreneur source of funds, decision making is an original concept that defines the other entrepreneurial risk atti- tudes. In this study, we adopt a cognitive perspective of the entrepreneurial decision-making (Block, Philipp, and Frank 2013). Under this theoretical back- ground, individuals differ in their cognitive processes of risk perception that leads to the venturing decision.

In fact, conventional wisdom asserts that the entrepreneur requires making risky decisions in uncertain environments and, hence, the highly risk-adverse individuals are less likely to become entrepreneurs (Caliendo, Fossen, and Kroticos 2006). Nevertheless, some persons have a more positive, possibly biased evaluation of being entrepreneur and therefore start new ventures (Heinrichs and Walter 2013).

Nevertheless, a contemporary line of research suggests that other factors other than the perceived risks are associated with the decision of becoming a nascent entrepreneur and may significantly affect the risky choices (Krueger and Dickson 1994; Manimala 1992; Sitkin and Pablo 1992; Mulins and Forlani 2005). From this vintage point, there are contextual and individual differences’ factors, which are recognized as important to a successful entrepreneurial practice (Forlani and Mullins 2000; Palich and Bagby 1995). In fact, these contextual variables may influence the risky decisions in other ways (Block, Philipp, and Frank 2013) and are associated with the entrepreneurs’ risk attitudes such as high-risk taker or low-risk taker. Thaler and Johnson (1990) for example studied the behavioral decision theory and conclude about “the house money effect”. In fact, the individuals are more willing to take risk when the funds exposed to loss are perceived as belonging to someone else.

We adopt this perspective in the present analysis. Indeed, our study expects that entrepreneurs who are playing with other people’s money (vs. their own) will be more likely to choose ventures having a higher (vs. lower) likelihood of loss and gain (holding magnitude of loss constant). More precisely we focus on, when making choices among the new venture opportunities, the entrepreneurs risking external finance (money) will select riskier ventures than those risking their own money who must consider the financial and the personal

352 H. Fourati and H. Affes

entrepreneurial risk. On the one hand, we predict that high-risk takers are those who focus more on the opportunity and they downplay the potential loss financially or personally. On the other hand, we predict that low-risk takers are those who focus more on potential loss financially and personally than on the opportunity.

Thus we report the results of two experimental studies that address the following research questions: (a) what is the different effect of different dimen- sions of the risk perception as a threat and as a missing opportunity in new venture decision? (b) What roles done by entrepreneurs to take more or less risk when deciding to enter a new venture?

Our research examines the extent to which entrepreneurs’ new venture decision making reflects: first, the risk’s elements, the likelihood of a potential loss, and the likelihood missing opportunity; second, the entrepreneur’s degree of the personal financial exposure.

We choose then to study these particular contextual and individual differ- ences’ factors for several reasons. First, the theories that predict the effects of the entrepreneur’s risk perception and the financial exposure have not previously been examined in an entrepreneurship setting (Thaler and Johnson 1990; Mullins and Forlani 2005). In fact, the study of Mullins and Forlani (2005) does not consider the dimensional risk perception as a missing opportunity in studying the entrepreneurial decision making. Second, both these contextual and individual differences in risk perception and finance are recognized as important to a successful entrepreneurial practice (Mullins and Forlani 2005; Palich and Bagby 1995). Finally, none of these factors have been investigated in an entrepreneurial setting that explicitly considers the nature of the risk involved.

To address our research questions, we first define the entrepreneurial risk using two conceptualizations of risk: Dickson and Giglierano’s (1986) risk as the likelihood of loss or as a threat and the risk as a missing opportunity. Then, using a sample of American’s novice entrepreneurs, we experimentally examine whether different new venture decisions are attributable to the sources of funds of business start-up (Thaler and Johnson 1990) and to the entrepreneur’s percep- tions of risk (Sitkin and Pablo 1992; Palich and Bagby 1995; Barbosa, Kickul, and Liao-Troth 2007).

The outline of this paper is organized as follows. Section 2 develops our hypotheses regarding the effects of risk attitude and the sources of funds in the entrepreneurial decision. Section 3 introduces the multidimen- sional scale of the entrepreneurial risk. Section 4 develops our data and

Risk, Owner Finance and Entrepreneurship 353

variables and Section 5 shows the results of our empirical study. Section 6 concludes.

2 Risk as a threat, risk as a missing opportunity, sources of funds and entrepreneurial decision

“Risk can be defined as the likelihood that a new venture will fail to reach satisfactory the sales profit or ROI target” (Dickson and Giglierano 1986). We call this the Sinking-the-Boat Risk (risk as a threat). We also recognize a second distinct type of risk which is the missing boat’ risk that is overlooked. It is the risk of missing out on a good opportunity” (Mullins and Forlani 2005). According to Knight (1921), the potential entrepreneur, is the individual, who given his judg- ments, is willing to take the uncertainty in the production of goods and services. In general, the perception of risk is designed as a determinant of the risk behavior and the entrepreneurial decision making. These decisions relate especially to the creation of new business (Timmons 1994). Given the increase in the failure rate for the new entrepreneurs, understanding the role of risk in the entrepreneurial decision amplifies the quality of the decision (Phillips and Kirchoff 1989).

The risk perception has a direct impact on the decision of a new business creation (Keh, Foo, and Lim 2002; Simon, Houghton, and Aquino 2000; Stikin and Weingart 1995). Indeed, other empirical researches have shown a negative relationship between the perceived risk and the decision of business start-up (Keh, Foo, and Lim 2002).

Risk as a threat finally corresponds to the concept of risk of failure in the approach of Dickson and Giglierano (1986). Risk as a missing opportunity is the opposite of the perceived risk through the potential gains against their impor- tance and uncertainty. The potential gains are the driving force pushing the entrepreneurs to act. The conceptualization of risk as an opportunity allows a better understanding of the factors that motivate the entrepreneurs, incorporat- ing the feeling of regret at not getting a good opportunity (Markman, Balkin, and Baron 2002).

In this study, we focus on the one hand on how to respond to the question of whether the decision of starting a business is positively influenced by the willingness to bear a likelihood of risk perception as a threat and as a missing opportunity. More precisely, we use a multidimensional distinction of the entre- preneurial risk attitude as a threat, and as missing opportunity. Thus, we limit to define the risk perception as a threat in its financial and personal dimension and

354 H. Fourati and H. Affes

as an opportunity in its global dimension. Our restriction is attributed to the analysis in the financial theme of entrepreneurship and taking into account the importance of the individual who is at the heart of the process of entrepreneur- ship (Gartner 1985). We rely on many conceptual models that consider the individual as the key factor in the heart of the entrepreneurial process (Bruyat 1993; Bruyat and Julien 2001; Sarason, Dean, and Dillard 2006).

High-risk takers are those who focus more on the opportunity and they downplay potential loss financially or personally. The more we perceive the possibility of missing a good opportunity, the more we move toward an action (opportunity chaser seems to indicate high-risk taking behavior) (Venkataraman 2000). Nevertheless, others empirical studies, that retain the idea of risk percep- tion as a threat, show a negative correlation between the perceived risk and the decision of a new business creation (threat avoidance indicates low-risk beha- vior) (Keh, Foo, and Lim 2002). For instance, Ray (1994) doubts that individuals have a generalized risk propensity. Instead, he argues that risk taking is highly contextual. Thus our researches focus on the source of funds as a contextual factor that affects the risk attitude. The “house money effect” is introduced by Thaler and Johnson (1990). They simply suggest that individuals are more will- ing to take risk when the funds they expose to loss are perceived as belonging to someone else. It seems reasonable that to pursue an opportunity with other people’s money, the risk taking will increase along the risk’s likelihood element. Therefore, we expect that the entrepreneurs playing with other people’s money (vs. their own) are high-risk taker (low-risk taker), they make choice of a new venture opportunity and they downplay the potential loss financially and per- sonally (they focus more on potential loss financially and personally). In addi- tion, the study of Mullins and Forlani (2005) reveals that where the new venture funding comes from other people’s money or the entrepreneur’s money; it is one factor that drives the riskiness of such choices, but only along the likelihood of the loss elements of risk. Using “other people’s money” can make entrepreneurs more likely to choose ventures where outcomes are uncertain. The originality of our study is the risk perception as an opportunity and as a threat from different dimensions. Thus:

H1: Entrepreneurs risking outside investors’ money are high-risk takers, they make choice of a new venture opportunity and they downplay potential loss financially and personally; H2: Entrepreneurs risking their own money are low-risk takers, they focus more on the potential loss financially and personally (personal and financial risk as a threat) than on opportunity.

Risk, Owner Finance and Entrepreneurship 355

3 The multidimensional measure of the entrepreneurial risk perception

Fayolle et al. (2008) established a multidimensional measure of the entrepre- neurial risk by referring to risk as a threat and risk as an opportunity in its global, financial, personal and social risk. We limit our study to measure the perception of the global risk as an opportunity and the personal and financial dimension of risk as an opportunity. Tables 1 and 2 define the different items for defining these two dimensions following the scale established by Barbosa, Kickul, and Liao-Troth (2007):

Table 1: The global risk perception as a missing opportunity

Items: Barbosa (2008) Meta-dimension Dimension Correspondent item (PSED)

I see the possibility of starting a business as a potential opportunity to pursue.

Overall I would label the option of starting a business as something positive.

Risk as a missing opportunity

Global I enjoy the uncertainty of going into a new situation without knowing what might happen.a

If I don’t start my own business, I may be missing a great opportunity.

Notes: aThe question was: What are the one or two main opportunities that prompted you to start this new business? Business Opportunities: 40. Good business idea; 41. Take advantage of opportunity; 42. High demand for products/business; satisfy need; 43. Market opportunity; 44. New technology/product/service; 45. Good product; faith in product; like Product; 46. Expansion of old/current business; 47. Vast resources or material; 48. Opportunity to buy building, property or business; 49. Other business opportunity references.

Table 2: The financial risk perception as a threat

Items: Barbosa (2008) Meta-dimension Dimension Correspondent item (PSED)a

F1 – the financial amount one could lose by launching a new venture is substantial.

− There are insufficient funds to initiate the activity;

− Difficulties to access to credits; − Other financial considerations;

(continued )

356 H. Fourati and H. Affes

Then, many researchers give the individual a central role and he is a key factor in the heart of the process of business creation (Bouchikhi 1993; Bruyat and Julien 2001; Fayolle et al. 2008); the other area of the risk perception which we are interested in is the personal risk. Items that correspond to the perception of personal risk as a threat are presented in Table 3 following the scale of Barbosa, Kickul, and Liao-Troth (2007):

Table 2: (Continued )

Items: Barbosa (2008) Meta-dimension Dimension Correspondent item (PSED)a

F2 – when launching a new business, the chances of going bankrupt are very high.

Risk as a threat Financial

− Competition is important − Low income and profit; − Weak demand; − A lack of access to potential

customers; F3 – by launching a new

business, I would forgo other monetary opportunities.

− Unable to return to the old job; − A new occupation; − Undertaking a new activity pre-

vents other activities; − Other opportunities to lose; − Difficulty to receive ongoing

payments;

Notes: aThe question was: What are the one or two main problems involved in starting this new business? Costs: 11. Cost of location, rent, lease, mortgage, etc; 12. Costs of equipment; 13. Costs of services; 14. Supplies; 15. Transportation; 16. Taxes; insurance; 17. Start-up costs; 19. Other cost references; Capital/Financing: 20. Acquiring information on financing/financial issues; 21. Acquiring new owner capital; 22. Acquiring new bank loan; 23. Acquiring other capital/money; financing; 24. Interest rates; 29. Other capital/financing references.

Table 3: The personal risk perception as a threat

Items: Barbosa (2008) Meta-dimension Dimension Correspondent item (PSED)a

P1 – Launching a new venture may have negative ramifications for my future career.

− This requires a move. − Inability and unwillingness

waste of time/unwilling- ness to lose an old job.

P2 – Starting a new venture may have negative consequences for my professional life.

Risk as a threat Personal − A new personal commitment. − A new activity creating pre-

vents continuing an ancient activity.

(continued )

Risk, Owner Finance and Entrepreneurship 357

4 Data

Our analysis uses the detailed data in the Panel Study of Entrepreneurial Dynamics (PSED). Reynolds (2008) fully describes the background and the sampling metho- dology. The PSED is a longitudinal database selecting the period between 2005 and 2010. PSED was started in 2005 with the selection of a cohort of 1,214 nascent entrepreneurs chosen from a representative sample of 31,845 adults. In the first year, a follow-up interview was completed with 1,214 entrepreneurs (80% of the original cohort): 87%of the interviewed persons are “novice” entrepreneurs; 60%of them have accepted to participate in a second interview after one year.

4.1 Model and measure of the variables

Our model is based on an equation where the dependent variable is dichoto- mous (i.e., whether or not an individual is a nascent entrepreneur). Accordingly, we utilize a logistic regression methodology to estimate the coefficients of the following general equation:

nouventrepi ¼ α1 þ α2riski þ α3Fundsþ " where nouventrep is the dependent variable, risk is the vector of the risk percep- tion (personal risk, financial risk and global risk), and Funds is the value of the financial resources in personal saving and external debts. We aim then to study the following equations:

½1�nouventrep ¼ cð1Þ þ cð2Þriskþ cð3Þsaving;

½2�nouventrep ¼ cð1Þ þ cð2Þriskþ cð3Þexterndebts;

Table 3: (Continued )

Items: Barbosa (2008) Meta-dimension Dimension Correspondent item (PSED)a

P3 – If I failed launching a business, I would lose my self-esteem.

− This will have implications on family relationships and health.

− No interest and desire continuation.

Notes: aThe question was: What are the one or two main problems involved in starting this new business?: Personal:*. Acquiring experience/education;*. Lack of motivation; disability; discri- mination; race, age, gender; family obligations; other personal references.

358 H. Fourati and H. Affes

½3�nouventrep ¼ cð1Þ þ cð2Þrisqfinþ cð3Þrisqpersoþ cð4Þexterndebts;

½4�nouventrep ¼ cð1Þ þ cð2Þrisqfinþ cð3Þrisqpersoþ cð4Þsaving; Table 4 clarifies the measure of the different variables of the model:

4.2 Definition of “novice” entrepreneur

Novice entrepreneurs are viewed as individuals with no prior experience of minority or majority business ownership either as a business founders, inheri- tors or purchasers of independent business, but who currently own a minority or majority equity stake in an independent business that is new, purchased or inherited (Ucbasaran et al. 2003).

In order to be classified as a nascent entrepreneur, a respondent must have answered “yes” to either or both of the following questions (Reynolds 2008): – Are you, alone or with others, now trying to start a new business? – Are you, alone or with others, now starting a new business or new venture

for your employer?

Furthermore, those individuals who replied “yes” to these two questions must also have met three additional qualifications:

Table 4: Measure of variables

Dependent variable

Nouventrep Dichotomous variable, coded “1” if novice entrepreneur and “0” otherwise; Next we define the novice entrepreneur

Independent variables Risqperso Dichotomous variable, coded “1” if the entrepreneur applies to one of

the item defining perception of personal risk as a threat and “0” otherwise.

Risqfin Dichotomous variable, coded “1” if the entrepreneur applies to one of the item defining perception of financial risk as a threat and “0” otherwise.

Risk Dichotomous variable, coded “1” if the entrepreneur applies to one of the item defining perception of risk as an opportunity and “0” otherwise.

Variable of control Externdebt The natural logarithm of total external debta

Saving The natural logarithm of personal saving

Note: aOur study is limited to business start-up; external debts that come from informal sources (family, friends, colleagues, suppliers…).

Risk, Owner Finance and Entrepreneurship 359

– They expect to be owners or part owners of the new firm. – They have been active in trying to start the new firm in the past 12 months. – The effort is still in the start-up or gestation phase and is not an infant firm.

In the final sample, 1,046 respondents were identified as nascent entrepre- neurs out of a total of 1,214 cases.

5 Logistic regression and results

The econometric estimation of coefficients of the logistic regression is presented in Table 5.

H1 predicts that entrepreneurs risking outside investors’ money are high-risk taker, they make choice of a new venture opportunity and downplay the poten- tial loss financially and personally. This hypothesis is supported only when considering the risk as a threat (personal and financial risk). In fact, following model 2 and model 3, the risk perception as an opportunity is negatively associated with the decision of business start-up (the entrepreneur is a low- risk taker in spite of the external investor contribution and risk perception as an opportunity). Only, personal and financial risk perception as a threat is posi- tively associated with the decision of business entry and external investors in all cases may not limit the amount invested (the entrepreneur is a high-risk taker). Following another scale 50% of entrepreneurs in our sample are risk adverse.1

Table 5: Logistic regression for the four models (dependent variable nouventrep)

Model 1 Model 2 Model 3 Model 4

Risk 0.002 −0.003 Risqfin 0.562 0.548 Risqperso 0.719* 0.717** Saving −0.099** −0.089 Externdebt 0.227 0.172 C 2,102 1,704* 1,649* 1,995* −2 Log Likelihood 971,946 973,755 967,071 965,387 Chi-square 3,865 1,161 7,849** 10,422* Number of observations 1,213 1,210 1,210 1,210

Note: *Significant at 10%; ** Significant at 5%.

1 The entrepreneurs are asked to respond to the following question: “I enjoy the uncertainty of going into a new situation without knowing what might happen”. Respondent: strongly agree or agree: 1 ¼ risk lover; elsewhere: 0 ¼ risk averse.

360 H. Fourati and H. Affes

H2 predicts that entrepreneurs risking their own money are low-risk takers, they focus more on the potential loss financially and personally (personal and financial risk as a threat) than on opportunity. Results of correlations as pre- sented in Table 6 show on the one hand that a negative association risk as a threat and personal saving and on another hand a positive correlation with risk as a missing opportunity.

This hypothesis was supported as regarding model 1 and model 4. Risk percep- tions as a threat and as a missing opportunity is positively and significantly associated with the decision of business start-up. Nevertheless, the entrepreneur regarding this attitude toward personal and financial risk as a threat, he limits the amount of his personal funding. The entrepreneur is a risk taker who limits the amount of personal funding.

Table 7 analyses the frequency of the entrepreneurial decision under risk attitude. The majority of entrepreneurs, in our sample, decide about business creation when they perceive the entrepreneurial risk as an opportunity or they didn’t perceive the financial and personal risk as a threat.

Table 6: A new venture risk perception and the correlation with the source of funds manipulation

Source of funds

Personal saving External debts

Likelihood of risk perception as a threat (financial risk) −0.104* 0.358 Likelihood of risk perception as a threat (personal risk) −0.026 0.980* Likelihood of risk perception as a missing opportunity 0.069* −0.535*

Note: *The relationship between these factors is significant (p ¼ 5%).

Table 7: Scale of new venture risk (frequency)

New venture Nouventrep¼ 1 Nouventrep¼0 Global risk perception as opportunity¼ 1 608 85 Personal risk perception as a threat¼ 1 95 7 Financial risk perception as a threat¼ 1 106 9 Global risk perception as an opportunity¼0 523 83 Personal risk perception as a threat¼0 957 161 Financial risk perception as a threat¼0 948 159

Risk, Owner Finance and Entrepreneurship 361

Table 8 present descriptive stastics of control variables. In fact, 73% of entrepre- neurs contribute to financing the activity by their personal savings and its average value is about 20,427$.

The mean value of external debt (bank loans, leasing, line of credit, external investor and credit card of the entrepreneur) is about: 59,549$. 32% of novice entrepreneurial activity use this modality of financing.

6 Conclusion

The results of this research suggest that entrepreneurs might find it worthwhile to examine three types of risk that characterize the prospective new venture opportunities. These types of risk attitude are presented in Table 9. Thus, we distinguish between high-risk taker (despite that the entrepreneur perceives personal and financial risk as a threat, he decides about venture creation when he attracts external investors), low-risk taker (here the entrepreneur who perceives risk as a threat and as a missing opportunity decides about business start-up) and the risk taker (especially the entrepreneur limits the amount of personal funding).

Table 9: The risk attitude typology following the sources of funds and the different dimensions of risk

Dimensions of risk

Decision

Creation/no creation with external funds

Creation/no creation with personal funding

Personal and financial risk as a threat

High-risk taker Risk taker (limited personal funding)

Global risk as a missing opportunity

Risk aversiona Risk taker (limited personal funding)

Note: aIn spite of the external debt financing, the entrepreneur doesn’t exploit the entrepre- neurial opportunity.

Table 8: New venture choice descriptive stastics for source of funds manipulation

N ¼ 1214 Personal saving External debts Mean 20,427 59,549 Min 0 0 Max 5,000,000 500,000

362 H. Fourati and H. Affes

Bhidé (1992) argues that the entrepreneurs operating in a creation context may actually damage their ability to grow and prosper, if they obtain external funding. This is because external funding tends to force these entrepreneurs to exploit an identified opportunity. The entrepreneur in our case perceives the opportunity of business creation and in spite of the external finance, he doesn’t create. Indeed, we can justify this result by the fact that the opportunity is not as valuable as anticipated, and even if it should have been abandoned in favor of an alternative opportunity. A low-risk taker entrepreneur may be also justified by the sample of Shapira’s (1995) interviews managers who have shown risky opportunities with highly variable outcomes. The study of Mullins and Forlanni (2005) concludes about the difference between entrepreneur and manager. It seems unlikely that Shapira’s managers would ever choose to be pioneering risk takers, even though the funds they would risk are typically not their own. In our study, we found in some way, in the decisions of managers and entrepreneurs some similarities about when and how to enter new markets, as well as differ- ences in the motives that underlie these decisions especially when they are risk adverse. In another case, the use of “other people’s money” can make the entrepreneurs more likely to choose ventures where outcomes and entrepre- neur’s stability are uncertain (personal and financial entrepreneurial risk). This contrast implies possibly the differences in the decisions of managers and entrepreneurs.

In conclusion, by integrating both the entrepreneurial (Dickson and Giglierano 1986) and the multidimensional perspectives of risk (Fayolle et al. 2008; Barbosa, Kickul, and Liao-Troth 2007), our study revealed new insights into the entrepreneurial risk and its behavioral consequences. By considering the source of a new venture’s funds (Thaler and Johnson 1990), we identified a condition under which entrepreneurs are more likely to take greater risks. And by examining the effects of their risk-based dimension, we found another explanation of the entrepreneurial decision.

The typology and the results of our study raise several interesting questions for further researches.

What are the contextual factors, other than sources of funds and the suit- ability of their skills that can influence the new venture choices of entrepre- neurs? Future developments of the present research may study new firm creation by subdividing entrepreneurs into wealth classes. In fact, results from other studies conducted on the same sample demonstrated that wealthy households are prone to risky activities (Fourati and Affes 2011). But from a multidimen- sional measure of risk perception (personal, financial, social) what about the nature of attitude toward risk dimension on the decision of the wealthy entrepreneur?

Risk, Owner Finance and Entrepreneurship 363

References

Barbosa, S. D., J.Kickul, and M. Liao-Troth. 2007. “Development and Validation of a Multidimensional Scale of Entrepreneurial Risk Perception.” Academy of Management Journal. Doi: 10.5465/AMBPP.2007.26508257.

Barbosa. D. 2008. “La perception du risque dans la décision de création d’entreprise,” Thèse de Doctorat.

Bhidé, A. 1992. “Bootstrap Finance: The Art of Start-Ups.” Harvard Business Review 70(6):109–17.

Block, J., S. Philipp, and S. Frank. 2013. “How Do Risk Attitude Differ Within a Group of Entrepreneur? The Role of Motivation and Procedural Utility.” Journal of Small Business Management. Published online: 16 SEP 2013. doi: 10.1111/jsbm.12060.

Bouchikhi, H. 1993. “A Constructivist Framework for Understanding Entrepreneurship Performance.” Organization Studies 14(4):49–570.

Bruyat, C. 1993. “Création d’Entreprise: Contributions Épistémologiques Et Modélisation.” Thèse pour le doctorat en Sciences de Gestion, Université Pierre Mendès France (Grenoble II), ESA.

Bruyat, C., and P. A. Julien. 2001. “Defining the Field of Research in Entrepreneurship.” Journal of Business Venturing 16(2):165–80.

Caliendo, M., M. Fossen, and S. A. Kroticos. 2006. “Risk Attitudes of Nascent Entrepreneurs: New Evidence from an Experimentally-Validated Survey.” Working Paper No. 2168.

Dickson, P. R., and J. J. Giglierano. 1986. “Missing the Boat and Sinking the Boat: A Conceptual Model of Entrepreneurial Risk.” Journal of Marketing 50:43–51.

Fayolle, A., S. D. Barbosa, and J. Kickul, 2008. “Une Nouvelle Approche Du Risque En Création D’entreprise.” Revue Française De Gestion 185:141–59.

Forlani, D., and J. W. Mullins. 2000. “Perceived Risk and Choices in Entrepreneur’s New Venture Decision.” Journal of Business Venturing 15:305–22.

Fourati, H., and H. Affes. 2011. “Financial Constraints, Human and Social Capital, and Risk-Taking Attitude in the Foundation of New Firms.” Strategic Change Briefing in Entrepreneurial Finance 20:219–32.

Gartner, W. B. 1985. “A Conceptual Framework for Describing the Phenomenon of New Venture Creation,” Academy of Management Review 10(4):696–706.

Heinrichs, S., and S. Walter. 2013. “Who Becomes an Entrepreneur? A 30-Years-Review of Individual-Level Research and an Agenda for Future Research.” Econstor Preprints, German National Library of Economics.

Keh, H.T., M. D. Foo, and B. Lim. 2002. “Opportunity evaluation under risky conditions: The cognitive processes of entrepreneurs.” Entrepreneurship Theory and Practice 27(2):125–148.

Knight, F. H 1921. Risk, Uncertainty, and Profit. New York: August M. Kelley. Krueger, N. F., and P. R. Dickson. 1994. “How Believed Ourselves Increases Risk Taking:

Perceived Self Efficacy and Opportunity Recognition.” Decision Science 25(3):385–400. Manimala, M. J. 1992. “Entrepreneurial Innovation: Beyond Schumpeter.” Creativity and

Innovation Management 1(1):46–55. Markman, G., D. Balkin, and R. Baron. 2002. “Inventors and New Venture Formation: The Effects

of General Self-Efficacy and Regretful Thinking.” Entrepreneurship Theory & Practice Winter:149–65.

364 H. Fourati and H. Affes

Mullins, J. W., and D. Forlani. 2005. “Missing the Boat or Sinking the Boat: A Study of New Venture Decision Making.” Journal of Business Venturing 20:47–69.

Palich, L. E., and D. R. Bagby. 1995. “Using Cognitive Theory to Explain Entrepreneurial Risk-Taking: Challenging Conventional Wisdom.” Journal of Business Venturing 10(6):405–17.

Phillips, B. D., and B. A. Kirchhoff. 1989. “Formation, Growth and Survival: Small Firm Dynamics in the U.S. Economy.” Small Business Economics 1:65–74.

Ray, D. M.. 1994. “The Role of Risk-Taking in Singapore.” Journal of Business Venturing 9(2):157–177.

Reynolds, P., and R. Curtin. 2008. “Business Creation in the United States: Panel Study of Entrepreneurial Dynamics II Initial Assessment.” Foundations and Trends in Entrepreneurship 4(3):155–307.

Sarason, Y., T. Dean, and J. Dillard. 2006. “Entrepreneurship as the Nexus of Individual and Opportunity.” Journal of Business Venturing 25(2):238–43.

Shapira, Z. 1995. Risk Taking. New York: Russell Sage. Simon, M., S. M. Houghton, and K. Aquino. 2000. “Cognitive Biases, Risk Perception, and

Venture Formation: How Individuals Decide to Start Companies.” Journal of Business Venturing 14(5):113–34.

Sitikin, S. B., and L. R. Weingart. 1995. “Determinants of Risky Decision-Making Behavior: A Test of the Mediating Role of Risk Perceptions and Propensity.” Academy of Management Journal 38(6):1573–92.

Sitkin, S. B., and A. L. Pablo. 1992. “Reconceptualizing the Determinants of Risk Behavior.” Academy of Management Review 17(1):9–38.

Sykes, H. B., and D. Dunham. 1995. “Critical Assumption Planning: A Practical Tool for Managing Business Development Risk.” Journal of Business Venturing 10(6):413–24.

Thaler, R. H., and E. J. Johnson. 1990. “Gambling with the House Money and Trying to Break Even: The Effects of Prior Outcomes on Risky Choice.” Management Science 36(6):643–60.

Timmons, J. A. 1994. New Venture Creation: Entrepreneurship for the 21st Century. Chicago: Irwin.

Ucbasaran, D., M. Wright, P. Westhead, and L. W. Busenitz. 2003. “The Impact of Entrepreneurial Experience on Opportunity Identification and Exploitation: Habitual and Novice Entrepreneur.” In Advances in Entrepreneurship, Firm Emergence, and Growth, edited by J. A. Katz and D. A. Shepherd, 6:231–64. Oxford, UK: Elsevier/JAI Press.

Venkataraman, S. 2000. “The Promise of Entrepreneurship as a Field of Research.” Academy of Management Review 25(1):217–26.

Risk, Owner Finance and Entrepreneurship 365

Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.