•  
  •  
 

Abstract

Some entrepreneurs engage in activities, make decisions, and make statements that significantly harm the companies they founded. This gives rise to a perplexing question: why do people who worked so hard to build a business sometimes act in ways that deeply harm all they worked for? This brief conceptual paper theorizes that entrepreneurs' decision errors may be rooted in perceptual errors that arise from the fact that some entrepreneurs live in separate, hyperlocalized realities. While all people are subject to making errors in perception, I theorize that entrepreneurs are particularly susceptible because of their exceptional power and influence in the ventures they found. Drawing on prior research about the sources of social power and influence, this brief conceptual paper conceptualizes an entrepreneurial microenvironment: a perceptually-filtered bubble characterized by positively biased and bias-confirming feedback, such that the logic that governs the local, organizational reality surrounding the entrepreneur is at odds with larger reality which affects the firm. Consequently, entrepreneurs make diminished decisions which lead to poorer organizational and career outcomes. These perceptually-filtered bubbles are created and maintained by entrepreneurial entourages, organizational structures, power dynamics, and the entrepreneurs themselves. Consequences, future directions, and potential remedies are discussed.

Download
COinS