Interesting Statistic RE: Overconfidence and Entrepreneurs

In my experience, heightened confidence or overconfidence has typically been viewed as a mostly positive attribute of an entrepreneur with the theory being that they are more inclined to take an initial risk.  I read an interesting statistic in my ADR book that has a different perspective. The passage points out that “overconfidence leads us to discount small probabilities, assume luck runs in our favor, and distort unattractive consequences…. Over 80% of interviewed entrepreneurs described their chances of success as 70% or better, and 33% described them as ‘certain.’ This compares to a five-year survival rate for new firms around 33%.” The book goes on to highlight the fact that this type of confidence prevents us from seeing the “range of potential outcomes.” The moral of the story is that while entrepreneurs exuding confidence may help them take the initial leap, it can impede actual success,  because one is not prepared to handle/adapt to different hurdles and outcomes.

Menkel-Meadow, Love, Schneider, and Sternlight. Dispute Resolution, Beyond the Adversarial Model. 2nd. New York: Aspen Publishers, 2011. 178. Print.

How Entrepreneurs Take Advantage of Access to Information

This article is an interesting example of Schoenberger’s assertion that entrepreneurs may be better at evaluating the risks and rewards of available information.

http://online.wsj.com/news/articles/SB10001424052702304887104579307000606208592?mod=WSJ_SmallBusiness_LEFTTopStories&mg=reno64-wsj&url=http%3A%2F%2Fonline.wsj.com%2Farticle%2FSB10001424052702304887104579307000606208592.html%3Fmod%3DWSJ_SmallBusiness_LEFTTopStories

Article – The Rise of Social Entrepreneurs and the Future of Global Capitalism

Interesting article highlighting a growing trend among social entrepreneurs; the use of corporate forms focused on generating profit in order to fund a larger social purpose. Although still relatively rare, social entrepreneurs have begun forming “benefit corporations” or “B corps”, which operate primarily as a profit seeking business. Many social entrepreneurs who have shifted to these business models did so in order to reduce their organizations reliance upon subsidies to fund their goals. These “blended purpose” entities offer critical example of how producing profit and promoting social value are not mutually exclusive goals.

Interesting Social Entrepreneur Piece

http://blogs.hbr.org/2013/01/social-impact-investing-will-b/

This is an older article but it was interesting to me from a variety of standpoints. I think for social entrepreneurs who often have a hard time finding adequate capital to fund their organizations, the system this article discusses is particularly promising. If I were a potential investor, I would think that investing in a company that can produce a modest return, promote sustainability, and deliver social impact is a fantastic idea. A system like this seems very attractive for both investors and social entrepreneurs and in that it fulfills both parties’ expectations.