I came across an interesting article recently that discussed the findings of a new report on entrepreneurship. Researchers from the United States, Germany and the Netherlands looked at entrepreneurs who were starting a business and asked them how confident they were about having the necessary skills to succeed.
Both American and Canadian entrepreneurs were found to be the most confident but were also found to have some of the lowest success rates in the world. Confidence was determined to be a key ingredient for new entrepreneurs in the decision to start a business despite not having any proof that their skills would be adequate enough to succeed.
One of the researchers commented “We think it’s just part of this overconfidence story that drives the decision to become an entrepreneur. As long as you don’t know what you’re getting yourself into, you can be confident. Overall, our evidence suggests that potential entrepreneurs may be overconfident in their own skills and abilities.”
Only entrepreneurs from New Zealand, Hungary and Argentina were found to be more confident than Americans and Canadians where over 50% of us believe we have the skills necessary to succeed. On the other end is Japan where only 11% believe they have the necessary set of skills and 24% for Sweden.
The study, ‘I Think I Can, I Think I Can’: Overconfidence and Entrepreneurial Behaviour, is set to be published in the Journal of Economic Psychology.
Are we too cocky when we are starting our businesses? Is this why we have the highest failure rates in the world? I would love to hear your thoughts.
Evan Carmichael
