Ali Murad Syed, Adel Alaraifi, Shabir Ahmad
The success and survival of startup companies depend on the decision making of entrepreneurs. Entrepreneurs are individuals who are considered as risk takers. Recent academic literature supports a positive relationship between the decision to become an entrepreneur and their attitude towards risk taking. In the literature, entrepreneurs are also considered as a homogeneous group having a similar risk attitude. In this paper, we investigate the important characteristics of Saudi entrepreneurs with respect to risk perception and financial risk tolerance. We collected data from 132 entrepreneurs and analyzed it using Partial Least Square approach of Structural Equation Modeling. We found that entrepreneurs’ perception towards risk has a positive significant influence on financial risk tolerance, risk propensity, and entrepreneurial openness. In addition, findings of this study have shown that the relationship between entrepreneurs’ perception and financial risk tolerance is partially mediated by entrepreneurial openness and risk-taking propensity. The study contributes to the body of knowledge by being a pioneer in examining the relationship between risk perception and financial risk tolerance in the specific context of Saudi Arabia.