Over-optimism among Filipino serial entrepreneurs
Serials entrepreneurs are those who start multiple successive businesses. They move on to another business as soon as the profitably of a venture is over or when they set up another business for just to experience the thrill of starting all over again.
An example of the latter is the successful serial entrepreneur Edgar “Injap” J. Sia II. Who would not know this man who started Mang Inasal as a small chicken barbeque restaurant in a mall park which has become one of the top-earning food chains in the country. He later sold the majority stake of Mang Inasal to Jollibee Foods Corporation and currently is now into property development.
Unfortunately, not many entrepreneurs are successful in their first few ventures, and so most of them fall into the former category. But the most interesting characteristic of serial entrepreneurs is that they fail many more times than twice. However, instead of going to the labor force, they persist as entrepreneurs. Business failure is a painful event, but their ‘I-will-rise-from-the-ashes’ attitude keeps them going.
All successful entrepreneurs would agree that failure is natural and is always part of the success. However, does it automatically imply that entrepreneurs who experienced more failure are closer to success? Not necessarily. For a failure to count as a driver to success, it should provide valuable learnings that entrepreneurs can carry over to their next venture.
A study led by Dr. Deniz Ucbasaran, Professor at Warwick Business School, in the United Kingdom,show that many serial entrepreneurs don’t learn from their past mistakes. Their research showed that instead of learning from mistakes, serial entrepreneurs, after failure, are just as apt to be overoptimistic as before. One compelling reason for such phenomena is because serial entrepreneurs tend to blame others or external events rather than themselves for maintaining their sense of control and self-esteem after a grave failure.
High level of optimism fuels motivation to continue forward but usually, it downplays some brutal facts of the business, which leads to poor decision making such as overlooking risky projectsand over-committing or overinvesting in low-quality businesses. Over-optimism among budding serial entrepreneurs sure does backfire.
This case brought out my interest to study Filipino serial entrepreneurs. Initially, I gathered data from the Global Entrepreneurship Monitor (GEM) Database 2016, and found out that Filipinos have high entrepreneurial intentions and aspirations, but they also have a high business discontinuance rate. A signal that Filipinos have an optimistic attitude and serial entrepreneurial tendencies.
On December 2017, I conducted my own study among Filipino serial entrepreneurs in the country, and examined their tendency to be over-optimistic based on their personality traits and their previous entrepreneurial experience. In summary, the statistical model of my study predicted that people with higher conscientious (organized, mindful to the details and goal-directed) and higher risk attitude, have lesser odds of reporting over-optimism. People with higher emotional stability and agreeableness (kindness, empathy, and concern for other people) have higher odds of reporting over-optimism. Personality types play a role in whether we entrepreneurs will become over-optimistic in their ventures and in how they run their businesses.
There is a little attention given to our budding serial entrepreneurs in the country, and I hope that my research will result in a vibrant discussion among scholars and practitioners.
We should always remember that those who do not learn from the past are doomed to repeat it. Walter Wriston,an influential commercial banker in his time said, “Failure is not a crime. Failure to learn from failure is”.
Ringgold P. Atienza isan Assistant Professor of the College of Business and Management, Misamis University, and is pursuing, as a scholar, his Doctor of Philosophy in Business at De la Salle University - Ramon V. del Rosario College of Business. He is also a serial entrepreneur and had ventured on agriculture and technology. As a scholar, his research interests include personalfinance, entrepreneurship, management and sustainability. You can reach him at [email protected]