Risky decision-making key to being a successful entrepreneurNovember 13th, 2008 - 3:08 pm ICT by ANI
London, Nov 13 (ANI): Risk taking is an important aspect of being a successful businessman, says a new study.
To be someone like the Richard Branson, Steve Jobs or Henry Ford, an individual has to take risky business decisions, which can result in positive outcomes during stressful economic circumstances.
The new study led by University of Cambridge scientists has found that riskier decision-makers are much more likely to become entrepreneurs than their managerial counterparts.
Risk-taking has, previously, been considered as an abnormal behaviour tied to substance abuse or bipolar disorder, however, the new study suggests that risky decision-making may have an ”evolutionary” value for grabbing opportunities in a rapidly-changing environment and could in future be taught or enhanced by pharmaceuticals.
Entrepreneurs choose to start their own business ventures rather than working within an existing company and also accept the accompanying risks (to finances, reputation, family stability and even self-esteem).
The researchers suggest that ”functional impulsivity”, or the ability to make quick decisions under stress is something that makes entrepreneurs different from others.
For the study, the researchers recruited 16 entrepreneurs from ”Silicon Fen” (the cluster of high-tech companies in and around Cambridge) and 17 managers.
The participants were asked to complete a computerised neurocognitive assessment measuring various aspects of their decision-making abilities.
On a decision-making task that required ”cold” processes such as planning the opening of a consulting company or hiring staff, both the groups performed alike.
But when it came to taking hot” or risky decisions that involved evaluating rewarding or punishing outcomes, entrepreneurs showed superior cognitive flexibility.
“This study has shown that not all risk-taking is disadvantageous, particularly when combined with enhanced flexible problem solving,” Nature quoted Professor Barbara Sahakian, lead author of the study, as saying.
“In fact, risky or ”hot” decision-making is an essential part of the entrepreneurial process and may be possible to teach, particularly in young adults where higher risk taking is likely and age-appropriate,” she added.
The cognitive flexibility has been linked to brain’’s neurotransmitter dopamine.
“From previous studies we know that drugs can be used to manipulate dopamine levels, leading to changes in risky decision-making,” said Sahakian
“Therefore, our findings also raise the question of whether one could enhance entrepreneurship pharmacologically,” she added.
The study appears in journal Nature. (ANI)
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