The Role of Managerial Optimism in Excess Entry: A Simulation of Market Entry Decisions

Q: How can I download an article?

To download an article from SID, first log in to the site, search for the article title, and click on the 'Download Article' option.

Q: How can I download an ISI article?

To download an ISI article on SID, enter the keyword or article title in the search bar, view the relevant results, click on the desired article, and select the 'Download Article' option.

Q: How can I access the SID database?

To access the SID database, visit SID.ir, create an account, and log in to access scientific resources.

Q: Is downloading articles from SID free?

Some articles on SID are available for free, while others require payment. Details are specified on the article's page.

Soleymanzadeh Omid; Hajipour Bahman; Dadgar Yadollah

مرکز اطلاعات علمی Scientific Information Database (SID) - Trusted Source for Research and Academic Resources

Journal Paper

Paper Information

Journal: Journal of Business Management Year:2024 | Volume:17 | Issue:3 Page(s): 1-30

Download Full-Text

Persian Verion

View:

Download:

Cites:

Information Journal Paper

Title

The Role of Managerial Optimism in Excess Entry: A Simulation of Market Entry Decisions

Author(s)

Soleymanzadeh Omid | Hajipour Bahman | Dadgar Yadollah | Issue Writer Certificate

Keywords

Behavioral strategy

decision-making

Excess market entry

Optimism

simulation

Abstract

Objective Some strategic decisions made by firms and individual decision-makers can lead to Excess market entry, situations in which an excessive number of businesses enter a market, resulting in a high rate of failure. Behavioral strategy, particularly through the lens of cognitive biases, offers a useful framework for understanding this phenomenon. In this context, managerial Optimism has been identified as a potential contributing factor to excess entry. Accordingly, this study aims to examine the role of managerial Optimism in driving excessive market entry. Methodology To investigate the role of Optimism in Excess market entry, the simulation model of market entry decisions was used. The model relies on the assumption that entrants were boundedly rational decision-makers whose assessments of market opportunities did not fully align with the actual realization of those opportunities. Errors in these assessments, including Optimism, led to various market entry outcomes. In this model, by manipulating the assessment error, different market entry outcomes (including no entry, missed opportunity, successful entry, and excess entry) were examined. The simulation model of market entry decisions was implemented using the Anaconda platform and developed in Python 3. Findings The findings of this research showed that different degrees of Optimism among entrants led to various outcomes in their market entry decisions. The results also revealed that low levels of Optimism were essential for market entry and often resulted in successful entries. However, increased Optimism led to unrealistic assessments of market opportunities and created conditions conducive to Excess market entry. Moreover, the Optimism of entrants under different market conditions resulted in varying percentages of excess entry. As the findings indicated, Optimism under difficult market entry conditions led to higher levels of excess entry compared to easier entry conditions. Conclusion This research contributed to the market entry literature in two ways. First, in the extant literature, there was a contradiction regarding whether the Optimism of entrants was desirable or not. The findings of this research showed that a small amount of Optimism in different market conditions led to more successful entries. Second, decision-makers’ Optimism in difficult-to-enter markets resulted in excessive additional entry. When entrants were concerned about the difficulty of entering the market, Optimism helped them reduce this worry. Hence, as the difficulty of entering the market increased, their Optimism subsequently increased, and they entered more markets. From a practical perspective, market entrants and business managers needed to have a realistic assessment of market opportunities, and they could also use structured tools such as the inside view to reduce Optimism bias. Additionally, the limitations of this research were related to the market entry simulation model. Finally, suggestions for future research in this field were considered.

Multimedia

No record.

Cites

No record.

References

No record.

Cite

Related Journal Papers

No record.

Related Seminar Papers

No record.

Related Plans