Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/183447 
Year of Publication: 
2018
Series/Report no.: 
IFN Working Paper No. 1218
Publisher: 
Research Institute of Industrial Economics (IFN), Stockholm
Abstract: 
We provide empirical evidence that uncertainty (rather than risk) and optimism are distinctive characteristics of high-impact entrepreneurial firms (recently listed firms) relative to old, incumbent firms. Based on this evidence, we construct an entrepreneurial entry predation model with uncertainty. We show that entrepreneurial optimism can mitigate problems associated with strong incumbents' attempts to protect markets using predatory threats. Entrepreneurial optimism can also create a strategic advantage for entrepreneurs since incumbents may react by being less aggressive in product market interactions, which will benefit not only the profitability of the entrepreneur's venture but also consumers via lower prices.
Subjects: 
Uncertainty
Optimism
Entrepreneurial firms
Predation
Positive externalities
Automatic textual analysis
JEL: 
L20
L26
M20
O30
Document Type: 
Working Paper

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