Risk Assessment in Entrepreneurship

Abstract

This PhD dissertation applies the science of decision making to management, specifically entrepreneurship. The purpose of this research is to better understand entrepreneurial behaviour under condition of Knightian uncertainty, or subjective ambiguity, a condition that characterizes entrepreneurship. Specifically, this dissertation focuses on people's attitude to ambiguity. I explain how attitude to ambiguity can be considered a subjective assessment of an event's likelihood under condition of ambiguity, or, in more generalized terminology, a subjective risk assessment for a context representative of entrepreneurship. The dissertation achieves its stated purpose in three ways. First, it translates and adapts theory from human decision making, and specifically behavioural economics, for entrepreneurship. Second, it contributes to empirical research by presenting my findings from two experimental studies I performed to measure subjective assessment in numerical and non-numerical ways. Third, it draws on this adapted theory to propose practical strategies to help entrepreneurs cope with ambiguity. The contributions of this work are primarily in the entrepreneurship discipline, broadly defined. With continued research, researchers might better understand entrepreneurial behaviour under condition of Knightian uncertainty, or risk assessment in entrepreneurship—a ubiquitous and yet incompletely researched topic.