The effects of perceptions of risk, environmental uncertainty, and growth aspirations on new venture creation success William Gartner • Jianwen Liao Accepted: 1 December 2010 / Published online: 3 August 2011 Ó Springer Science+Business Media, LLC. 2011 Abstract This study extends Xu and Reuf (Strateg Organ 2:331–355, 2004) by exploring the strategic and non-strategic risk-taking propensity perceptions of nascent entrepreneurs as it relates to the subse- quent likelihood of venture formation success. In addition, the moderating influences of perceptions of environmental uncertainty and venture growth aspi- rations are also examined. Findings from an analysis of data from the Panel Study of Entrepreneurial Dynamics (PSED) I indicate that an entrepreneur’s risk-taking propensity has no relationship to the likelihood of successfully starting a business. Per- ceptions of environmental uncertainty and venture growth aspirations were positively related to non- strategic risk-taking propensity, yet none of these variables (strategic and non-strategic risk-taking propensity, environmental uncertainty and growth aspirations) had a significant effect on venture creation success. We suggest that risk-taking propen- sity, as measured in this study, does not play a significant role in differentiating between nascent entrepreneurs or others, or between those that are successful or unsuccessful at starting businesses. Keywords Risk-taking propensity Á Nascent entrepreneur Á PSED Á Start-up JEL Classifications D81 Á J24 Á L26 Á M13 1 Introduction This article is an extension of a study by Xu and Reuf (2004). They theorized two forms of risk tolerance that might influence individuals to take entrepreneur- ial action: strategic and non-strategic. Strategic risks focus on the perceptions of specific risks associated with the development of a new business while non- strategic risks focus on the perceptions of risks associated with business situations endemic to all individuals (e.g., perceptions of the likelihood that a new business, in general, will succeed; estimates of the size that new businesses, in general, might grow to in 5 years). Risk-taking is defined as the willingness to take action based on the perception of possible future gains or losses (Jackson 1994). An individual with a propensity for high levels of risk would be willing to accept high levels of variability in the gains or losses of future choices. A low risk-taking propensity would W. Gartner (&) Spiro Institute of Entrepreneurial Leadership, College of Business and Behavioral Science, Clemson University, 346 Sirrine Hall, Clemson, SC 29634-1305, USA e-mail: gartner@clemson.edu J. Liao Stuart School of Business, Illinois Institute of Technology, 3424 S. State Street, IGT-Central Rm. 4A8-2, Chicago, IL 60616, USA e-mail: liao@iit.edu 123 Small Bus Econ (2012) 39:703–712 DOI 10.1007/s11187-011-9356-1