Opportunity abandonment: Why are entrepreneurs vulnerable to type I and II errors?

Opportunity actualization is a critical competency attributed to entrepreneurs, which has received widespread attention in the entrepreneurship literature. However, the knowledge of Entrepreneurial Opportunity Abandonment (EOA) decisions is limited. We, therefore, explore the relatively under-studied EOA, analyzing why entrepreneurs commit decision errors, abandon potentially viable opportunities (type I error) or pursue non-opportunity spaces (type II error), and ultimately forsake them later. Through a scoping literature review, we highlight more profound psychological variables that shape entrepreneurial opportunity behavior triggering EOA decisions. We discuss entrepreneurial cognitive limitations in articulating, concretizing, and communicating the opportunity. We argue that varying construal mindsets cause reification fallacies and create perceptual blocks in enunciating an opportunity idea. Further, subjective stakeholder feedback and biased information exchange largely shape EOA decisions, which are mediated through the information processing capacity of entrepreneurs. Finally, we propose four entrepreneurial decision-limiting hypotheses which require an empirical investigation.

Risk sensitivity mediates the relationship between construal level and ethical decision making

Although researchers have proposed that construal level has a substantive impact on decision making in ethical scenarios, the internal mechanism underlying this relationship is yet to be fully explored. Drawing on construal level theory and risk sensitivity theory, we conducted two ethical dilemma experiments to test the mediating role of risk sensitivity in the relationship between construal level and ethical decision making. In Study 1 we found that individuals with a high (vs. low) construal level were more likely to intend to behave ethically. In Study 2 we tested the mediating effect of risk sensitivity in this relationship. Individuals with a high (vs. low) construal level demonstrated lower risk preference and were sensitive to the change in level of risk, which resulted in decisions for behaviors that were more ethical. Conversely, individuals with a low construal level focused more on short-term interests and showed insensitivity to risk level, resulting in self-interested and unethical decisions. The practical and theoretical implications of the findings are discussed.