The self-serving bias can hurt an entrepreneur’s success
Dec 11 2012
Randy White, CEO, White Hutchinson Leisure & Learning group, says that with self-serving bias, people reach conclusions that favour their own interests and this bias distorts how we interpret information. As per White, when you make a decision, it may be tentative at first, but soon you’ll come up with reasons confirming your brilliant move, and you’ll ignore all factors that suggest otherwise.
Some recent research done by W B Gartner and N M Shaver reported evidence of a self-serving bias among the US nascent entrepreneurs in the Panel Study of Entrepreneurial Dynamics, a University of Michigan research program designed to enhance the scientific understanding of how people start businesses. The evidence showed that nascent entrepreneurs described opportunities as internal and stable while problems were described as external and variable. This research suggests that nascent entrepreneurs would have a tendency to perceive starting a business positively and would be more likely to offer internal (and stable) attributions in describing their reasons for starting a business. On the other hand, problems or setbacks would be perceived negatively, and would be afforded attributions that are external (and variable).
According to R A Baron in his research article, Cognitive mechanisms in entrepreneurship: why and when entrepreneurs think differently than other people, one factor that might differentiate those who are successful from those who are not is that ‘successful’ entrepreneurs are less susceptible to the self-serving bias. According to Gartner and colleagues, that is because the thinking of successful entrepreneurs is influenced less by the self-serving bias, these individuals are better able to establish positive relationships necessary to the survival or growth of their business (such as with investors or suppliers).
For example, Baron in his article cites an extensive body of literature indicating the self-serving bias can be a major source of interpersonal conflict. This conflict arises when individuals who work together become aware of each other's tendency to take credit for positive outcomes and blame the other person for negative results. Baron goes on to argue that successful entrepreneurs have been shown to be more adept than unsuccessful ones at forging positive relationships with their stakeholders. Using this reasoning in a start-up context, as per Gartner, one could argue that nascent entrepreneurs who are successful in starting (and sustaining) a business would be less susceptible to the self-serving bias and, therefore, better able to establish the key interpersonal relationships necessary to bring their venture to fruition.
Thus, in starting up a new business the self-serving bias is likely to have a twofold impact. First, if failures in former occupations were likely due to other or external causes and then trying a business on one’s own is a likely consequence. Second, if successes have been mostly attributed to oneself, then chances of surviving as an entrepreneur will be judged to be higher than they really are. In the latter case, the self-serving bias will make the entrepreneur overconfident in his job – a problematic bias that would eventually lead to the business’s doom.
It is a fact that today successful entrepreneurs attribute their success to effort and skill, while unsuccessful entrepreneurs feel that they were unlucky. However, whatever an entrepreneur’s explanation for success or failure, those who succeed believe that they are the source of their success, and that success is “controllable.” This reasoning is the self-serving bias. In future, researchers should be wary of the explanations of entrepreneurs themselves when they describe their success or failure, since their assessments are likely to be biased. Thus, more objective evaluations should be included in future research in this area. In addition, future research should seek to establish the nature of the link between self-attributions and actual success or failure. For entrepreneurs, it is best advised to watch out for the self-serving trap.