Overconfidence could be the reason more men start businesses than women

I was listening to a really interesting radio interview yesterday with Wharton management professor, Ethan Mollick, who has published some new research on why men still outnumber women in becoming entrepreneurs. His findings make for fascinating reading. When it comes to thinking up new ideas upon which to found a business, and having the skills to turn a startup into a success, men and women begin on a level playing field. But in practice, it doesn’t stay that way. Mollick reckons that if you look overall at the chance of someone starting a company, it turns out that gender is a really strong predictor of whether or not they will become an entrepreneur. He says women are less likely to be entrepreneurs than men, and this has been a big puzzle, because women are just as innovative as men and companies run by women are as successful. So why aren’t women launching companies at the same rate? Apparently, it comes down to being overconfident. You have to believe that you’re better than everyone around you. In fact, overconfidence is the biggest psychological predictor of whether or not you’re going to become an entrepreneur. Having misplaced confidence in yourself and thinking you can win when other people always lose is a strong predictor of entrepreneurship. It would appear that men are simply hardwired to being more overconfident out there!