Working Paper No. 1218

Entrepreneurial Optimism and Creative Destruction

Published: May 28, 2018Pages: 43Keywords: Uncertainty; Optimism; Entrepreneurial firms; Predation; Positive externalities; Automatic textual analysisJEL-codes: L20; L26; M20; O30

Entrepreneurial Optimism and Creative Destruction Lars Persson and Thomas Seiler


We provide empirical evidence that uncertainty (rather than risk) and optimism are distinctive characteristics of high-impact entrepreneurial firms (recently listed firms) relative to old, incumbent firms. Based on this evidence, we construct an entrepreneurial entry predation model with uncertainty.

We show that entrepreneurial optimism can mitigate problems associated with strong incumbents' attempts to protect markets using predatory threats. Entrepreneurial optimism can also create a strategic advantage for entrepreneurs since incumbents may react by being less aggressive in product market interactions, which will benefit not only the profitability of the entrepreneur's venture but also consumers via lower prices.

Lars Persson

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Interdisciplinary European Studies

Trust in the European Union in Challenging Times

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This is the first book in the Interdisciplinary European Studies collection. This volume provides an interdisciplinary perspective on trust in the EU from the vantage point of political science, law and economics. Lars Oxelheim, Lund University and affiliated to IFN, is one of the authors.

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