Measuring and testing general fundamental attribution error in entrepreneurship effecting public policy

The purpose of this paper is to empirically test for fundamental attribution error (FAE) – the naturally occurring bias of humans to over-attribute business success to celebrity-entrepreneur disposition.

Employing a five-step process, this paper measures and tests for FAE bias in entrepreneurial situations. The methodology includes anecdotal historical evidence; developing a FAE survey instrument; having 101 respondents classify variables; statistically testing and validating the instrument; and then statistically identifying the importance of each factor with a sample 105.

Significant statistical evidence for an active FAE bias was found. People do tend to attribute business success to entrepreneurial dispositions, rather than team behavior and circumstantial outcome factors which can reduce the effectiveness of public policy.

There is minimal research on FAE in entrepreneurship effecting public policy, thus there is a need for research to better understand factors of business outcomes actually based on entrepreneurial dispositions vs team behavior and circumstantial-situational factors.

FAE bias may lead the general public, entrepreneurs, and public policy makers to overemphasize the impact of the entrepreneur’s behavior and especially the dispositional factors of the celebrity-based entrepreneur when assessing causation of firm performance. This would under-emphasize the value of other organizational factors. Misidentification of true cause-effect factors may lead to inappropriate managerial conclusions and introduction of error in public policy decisions.

Although FAE is primarily a psychological literature concept, this is the first study to contribute empirical evidence of the FAE of professionals employed in business as it applies to entrepreneurship and economic outcomes.