Entrepreneurs and newsvendors: do entrepreneurs follow the newsvendor logic when making inventory decisions?

摘要

This work empirically assesses the degree to which inventory decisions made by entrepreneurs are informed by the logic underlying the newsvendor model and influenced by the decision-maker’s risk profile. We employed a web- and email-based survey of some 50 entrepreneurs, combined with telephone follow-up to elicit risk profiles. Our findings suggest that entrepreneurs do follow the newsvendor logic, but more so for high- margin than for best-selling products. We find that entrepreneurs’ risk profiles are consistent with predictions from prospect theory. We also find that risk aversion for profits tends to be associated with higher safety stocks, in contradiction to existing theory.