Assessing critical incidents in the post-formation phase: a matter of entrepreneurial expertise?

Abstract

Purpose

Entrepreneurs can easily slide into severe economic crises (Fichman and Levinthal, 1991), in particular, in the first years after their founding. Additionally, research shows that entrepreneurs often lack a realistic evaluation of the entrepreneurial risks and barriers. Referring to research on cognitive and networked expertise (Ericsson et al., 2006; Hakkarainen et al., 2004), recognising and reflecting on potential failure may help to prevent or manage upcoming crises (Mitchell et al., 2008). Thus, this study aims to test whether assessing upcoming crises in a new venture varies along with the level of entrepreneurial expertise.

Design/methodology/approach

In a cross-sectional design with three subgroups (start-up consultants, entrepreneurs and students), this study evaluated critical incidents that have already been validated as likely to emerge in the post-formation phase (Heinrichs and Jäcklin, 2017). Entrepreneurial expertise was measured by seven indicators, chosen based on the approaches of cognitive and networked expertise.

Findings

By applying latent profile analyses, the participants were grouped along with these indicators of expertise in three levels. Analysis of variance showed significant differences amongst the profiles in perceiving critical incidents. Experts rated the incidents significantly higher than semi-experts and novices towards indicating financial risks (medium effect) and the probability that the entrepreneur could manage the upcoming crises (large effect).

Originality/value

The results call for developing and evaluating interventions, e.g. case-oriented entrepreneurship education courses (Heinrichs, 2016), that foster future entrepreneurs’ expertise in perceiving and managing entrepreneurial risks to prevent entrepreneurial failure.