The Self-Efficacy and Risk-Propensity of Entrepreneurs

This research explores the relationship between entrepreneurs' self-efficacy and risk-propensity. By considering these concepts together, this paper hopes to clarify that relationship as well as somewhat contradictory findings regarding risk-propensity in the existing literature. Specifically, the review of existing literature and data presented herein suggest that any particular propensity for risk that may be exhibited by entrepreneurs is a side-effect of their relatively high self-efficacy. This paper analyzes data from semi-structured, in-person interviews with 49 entrepreneurs in three American cities. Results indicate that high levels of self-efficacy allow entrepreneurs to be comfortable taking risks. Furthermore, it may be that the mixed results of previous investigations into entrepreneurs' propensity for risk may be due in part to the heterogeneity of the samples. That self-efficacy plays a role in entrepreneurship is important because this characteristic can be developed through education and experience and could be targeted through policy initiatives.