Entrepreneurship, subjective risk intelligence and SMEs’ financial stability: evidence from Italy
International Journal of Entrepreneurial Behavior & Research
ISSN: 1355-2554
Article publication date: 16 May 2024
Abstract
Purpose
This paper applies an original construct of “subjective risk intelligence (SRI)” to the small business context. By leveraging on its multidimensionality, it aims to shed light on the existing ambiguities in the analysis of the relationship between the entrepreneurial attitude towards risk evaluation and firms’ financial stability.
Design/methodology/approach
The empirical investigation refers to the Italian context, where an ad hoc survey has been administered to a sample of small businesses. Based on both a linear and a semiparametric regression, results show a significant relationship between SRI and firm’s financial structure, and that such relationship is basically nonlinear.
Findings
Evidence shows that entrepreneurs with a high level of risk intelligence run highly leveraged firms. Moreover, in the light of the non-linearity of such relationship, higher levels of risk intelligence are associated with a greater capacity of the entrepreneur to govern the financial balance of the enterprise only up to a certain threshold. Over this threshold, risk intelligence generates overconfidence leading the entrepreneur to a reckless behaviour in taking financial risks.
Originality/value
From a theoretical point of view, the paper contributes to the literature by shedding lights on the complexity of the relationship between risk intelligence and small businesses. From a policy point of view, findings suggest that, to train new entrepreneurs, the educational system aims should focus on the development of two specific “soft skills”: the ability to manage emotions and the ability to glimpse opportunities even in uncertain situations.
Keywords
Acknowledgements
The authors gratefully acknowledge Giuseppe Craparo for having shared their construct of Subjective Risk Intelligence and the scale to measure this construct. The authors are indebted to Riccardo Leoncini, Guglielmo Faldettta, Deborah Gervasi and two anonymous referees for their useful comments and suggestions. The authors also thank the participants at the SIEPI XVIII Workshop held in Venice on 29-30 January 2020 and at the C.Met05 XVII Workshop held in Prato on 9-10 September 2020. Usual disclaimers apply.
Citation
Fasone, V., Pedrini, G. and Puglisi, M. (2024), "Entrepreneurship, subjective risk intelligence and SMEs’ financial stability: evidence from Italy", International Journal of Entrepreneurial Behavior & Research, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/IJEBR-05-2023-0535
Publisher
:Emerald Publishing Limited
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