Forecasting Errors of New Venture Survival

Hyytinen AriLahtonen JukkaPajarinen Mika

Strategic Entrepreneurship Journal (2014) . Vol. 8:4, pp. 283–302 ,  DOI: 10.1002/sej.1187

This article studies entrepreneurs’ forecast errors around market entry. Using data on nascent entrepreneurs in the U.S. and start-ups in Finland, we find that besides being overoptimistic on average in both countries, entrepreneurs’ survival expectations can barely distinguish survival from exits. Moreover, about one fourth of the entrepreneurs do not provide an estimate for the survival of a typical venture. However, among those that do provide it, the estimates are less overoptimistic. We also compare the forecast accuracy of entrepreneurs to those of macroeconomic forecasters. Our findings provide guidance for the development of positive theories of entrepreneurial belief formation and overoptimism.

Publication info

Series
Other articles 695
Date
30.12.2014
Keywords
entrepreneurship , survival, expectations, overoptimism, forecast error
Pages
20
Availability of print version
Available
Language
English
Publication on other services
onlinelibrary.wiley.com