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Effectuation Publications Library
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Perceiving and Managing Business Risks: Differences Between Entrepreneurs and Bankers
1998
Saras Sarasvathy Herbert A Simon Lester Lave
We compared entrepreneurs with bankers in their perception and management of a variety of risks. Problems included financial risk, risk to human life and health, and risk of a natural disaster. Cluster analysis and content analysis of think-aloud protocols revealed surprising details. Entrepreneurs accept risk as a given and focus on controlling outcomes at any given level of risk; they also frame their problem spaces with personal values and assume greater personal responsibility for outcomes. Bankers focus on target outcomes — attempting to control risk within structured problem spaces and avoiding situations where they risk higher levels of personal responsibility.