Hubris, rapid capacity expansions and the competition in de novo ventures

• Main Authors: FAN, Terence Ping Ching, Hayward, Mathew
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2010
• Subjects: Overconfidence; hubris; capacity expansion; de novo ventures; Corporate Finance; Portfolio and Security Analysis
• Online Access: https://ink.library.smu.edu.sg/lkcsb_research_smu/58; https://ink.library.smu.edu.sg/cgi/viewcontent.cgi?article=1057&context=lkcsb_research_smu
• Institution: Singapore Management University

This study develops and tests the hubris theory of entrepreneurship as a means to explain the variation in failure rates amongst de novo ventures, complementing escalation and other behavioral explanations. It uses rapid increases in production capacity as a proxy for overconfidence, and firm failur...