Evaluation of Entrepreneurial Risk-Taking using Magnitude of Loss Scale

Abstract

The importance of risk-taking in business ventures has been emphasised by many. Attempts to distinguish entrepreneurs on their risk-taking propensity have produced conflicting results. Data on two measures of risk-taking propensity were collected from entrepreneurs, prospective entrepreneurs and non-entrepreneur others. While the groups did not differ significantly on risk-taking propensity as measured by the Choice Dilemma Questionnaire, entrepreneurs and prospective entrepreneurs differed significantly from others on the Magnitude of Loss Questionnaire. Similarly, entrepreneurial aspirants differed significantly from the non entrepreneur group. These results highlight the significance of loss, an important aspect in risk-taking, which is often ignored in entrepreneurial and managerial studies. The riskiness in business ventures which has been the main stumbling block for many is not the low probability of success but the high stakes involved in entrepreneurship.