Capital-constrained entrepreneurs cannot afford to do much prior analysis and research because
A) the affordability of properly conducted research is beyond the means at their disposal.
B) the costs of any mistakes are lower than the risks of missing out on opportunistic actions.
C) the limited profit potential and high uncertainty of the opportunity they usually pursue may make the benefits low compared to the costs.
D) potential competitors could quickly discern the entrepreneurs' intentions and motives from their research.

Question

Quizplus · Accepted Answer

Capital-constrained entrepreneurs have limited financial resources, so they cannot afford to spend much money on market research and analysis before launching a venture. They often need to act quickly to seize opportunities, and the potential profit from the venture may not justify the costs of extensive research. Therefore, they may rely on their intuition and experience to make decisions, even though this increases the risk of failure. Option A is not a correct answer because it only talks about the affordability of research, but not the reason why it is not conducted. Option B is not a correct answer because it implies that entrepreneurs intentionally make mistakes, which is not true. Option D is not a correct answer because it talks about the fear of competitors' reactions, but not the main reason why entrepreneurs are not able to do extensive research.

Capital-Constrained Entrepreneurs Cannot Afford to Do Much Prior Analysis and Research