Entrepreneurial Overconfidence as a Decision-Enabled Resource: Evidence on Decision Quality and Subjective Performance
Adisthy Shabrina Nurqamarani, Adisthy Shabrina Nurqamarani, Rahmat Budiman, Abdurrahman Rahim Thaha, Sarah Anistia, Syafiqoh Nurhayati, Dedy Juniadi, Irma Mega Putri

Universitas Terbuka

Abstract

This study investigates the influence of Entrepreneurial Overconfidence on subjective performance measures through the mediating role of Decision Quality in the Micro, Small, and Medium Enterprises (MSMEs) sector. Furthermore, this study also examines the potential non-linear (quadratic) effects of entrepreneurial overconfidence and decision quality on subjective business performance. This study employed a quantitative research design involving 65 MSMEs as the research sample. Data analysis was conducted using the Partial Least Squares Structural Equation Modeling (PLS-SEM) method using SmartPLS software. The model fit evaluation demonstrated valid and good model fit criteria, evidenced by the standardized root mean square residual and the exact fit test d_uls. The results show that all direct linear relationships are positive and statistically significant. Additionally, decision quality acts as a significant partial mediator in the model. Besides, the result also shows that the hypothesis of non-linear (quadratic) effects of Entrepreneurial Overconfidence and Decision Quality on subjective performance is proven to be statistically insignificant and is therefore rejected. This study concludes that the relationship between Entrepreneurial Overconfidence and business performance in MSMEs is purely linear. In the context of the 65 MSMEs studied, entrepreneurs^ overconfidence did not reach a point of saturation (diminishing returns) or decline in performance- instead, overconfidence consistently functioned as a psychological asset that drove better decision-making quality and subjective business success.

Keywords: Decision Quality, Entrepreneurial Overconfidence, Subjective Performance Measures

Topic: Responsible Digital Entrepreneurship: Fostering Sustainable Business Ecosystems through Innovation and Ethical Governance (Digital Entrepreneurship- Sustainable Ecosystems- Business Innovation)