Students' assumptions of Entrepreneurs’ performance: The paradox of excess entry and missed opportunity

• Published in: Journal of Business Venturing Insights Vol. 20; p. e00425
• Main Authors: Gala, Kaushik, Valladares, Carlos D., Mueller, Brandon A.
• Format: Journal Article
• Language: English
• Published: Elsevier Inc 01.11.2023
• Subjects: Elicitation of subjective probability distributions; Entrepreneurial performance; Entrepreneurship education; Heavy-tailed distributions in entrepreneurship; Performance distributions; Entrepreneurial performance; Elicitation of subjective probability distributions; Performance distributions; Heavy-tailed distributions in entrepreneurship; Entrepreneurship education
• ISSN: 2352-6734; 2352-6734
• DOI: 10.1016/j.jbvi.2023.e00425

Most variables in entrepreneurship are not distributed normally. Instead, they are characterized by positive skew and heavy tails featuring influential outliers. Yet, this fundamental asymmetry in entrepreneurial endeavors is rarely discussed in entrepreneurship education, which often oscillates between highlighting everyday entrepreneurs and high-growth ‘unicorn’ startups while overlooking the distributional context for these extremes. Therefore, this paper explores whether students accurately comprehend the non-normality that pervades entrepreneurship. We conducted two studies wherein undergraduate business students at a large, public university in the Midwest US estimated entrepreneurial performance. We elicited students' estimates of the range of performance exhibited by entrepreneurs using a real-world vignette and performance data for an online learning platform. By providing empirical evidence that students may carry largely inaccurate assumptions of performance distributions, this paper highlights the paradoxical risks of excess entrepreneurial entry on the one hand and missed opportunity on the other. [Display omitted] •Entrepreneurship students may carry inaccurate assumptions of performance.•Students may underestimate the extremity of successes in entrepreneurship.•Students may underestimate the likelihood of sub-par entrepreneurial outcomes.•Performance distributions should be an integral part of entrepreneurship education.•Educators can induce an ‘outside view’ using distributional information.