In our forthcoming Journal of Finance paper, Are Overconfident CEOs Better Innovators?, we find that over the 1993 to 2003 period, CEO overconfidence is associated with riskier projects, greater investment in innovation, and greater innovation as measured by the number of patent applications and patent citations even after controlling for the amount of R&D expenditures. In other words, the R&D investments of overconfident CEOs are more productive in generating innovation. However, greater innovative output of overconfident managers is achieved only in innovative industries. We also find evidence that overconfident CEOs are more effective at exploiting growth opportunities and translating them into firm value, especially within innovative industries. We find that overconfidence remains a strong and significant predictor of innovation even when we remove managers with short tenures at their firms, which suggests that the endogenous hiring of overconfident managers by innovative firms is not the main driver of our findings.

The results of this study have a bearing on the usual presumption that overconfidence is undesirable. Business commentators often point to examples of headstrong, overconfident CEOs who made disastrous decisions. However, the chance of a big defeat may be a corollary to the chance of great victory, so the lesson to draw from examples is unclear. A more serious charge is provided by the evidence of Malmendier and Tate (2008) that the market reacts more negatively to acquisitions made by overconfident CEOs. This dark side to CEO overconfidence might seem to suggest that the CEO selection process should be designed to filter out oversized egos, or that compensation and governance should be designed to severely constrain such CEOs.

One of the biggest impediments to starting a new venture is the “terror barrier,” as popularized by Bob Proctor, a 75-year-old millionaire and world renowned entrepreneur. This is the imaginary barrier that always seems to appear at the critical point where we would step out ahead of peers or competitors, but fear causes us to stop short.

Everyone has a comfort zone, or level of risk, where they feel in control. The problem is that if you stay in that comfort zone too long, you don’t learn and achieve new objectives. According to Bob, all growth takes place outside that comfort zone, and the edge of that zone is called the terror barrier.

The crowdfunding feature in the recently passed JOBS Act will not only impact startups, it will affect investors, too. That’s because the law allows almost anyone to invest in a startup. There is one catch, however.

In the amended bill, the Senate gave the U.S. Securities and Exchange Commission 270 days to interpret and issue the rules for the public. That means potential investors may have to wait until 2013 before it’s legal to make an investment. In the meantime, there are a few things they should consider.

At the White House yesterday, I had the pleasure of watching one of the most forward-thinking pieces of pro-business bipartisan legislation to date signed into law by President Obama: the Jumpstart Our Business Startups (JOBS) Act.

The JOBS Act reduces many of the regulatory barriers that have, up to this point, made it nearly impossible for young startups to raise much-needed capital from investors. If hundreds of Members of Congress and thousands of young American entrepreneurs, myself included, are correct — and I believe we are — this historic moment is going to redefine business as we know it.

There’s more to your favorite morning stop than a great cup of joe. Doing your work in a coffee shop setting can actually improve your creativity, according to a new study in the Journal of Consumer Research.

A team of researchers from three North American universities asked students to complete a series of creativity tests while different levels of ambient noise, including voices, traffic, and other sounds common to a coffee shop, played in the background.

Jeff Jung had big ambitions. He planned to go places. He aspired to learn new skills -- snow skiing, for example, which always looked so beautiful and thrilling. He wanted to become fluent in Spanish.

Step one was quitting his job. The former marketing director, who had been toiling long hours for a medical manufacturing company in San Antonio, Texas, was nearing 40 when he wiped his calendar clean.

MOST of us accumulate huge amounts of data in our lives — including e-mails, telephone calls and spikes of writing activity, as measured by daily keystrokes.

Stephen Wolfram, a scientist and entrepreneur, wondered: Could all of that information be compiled into a personal database, then analyzed to tell us something meaningful about our lives? Maybe it could suggest when we tended to be the most creative or productive, along with the circumstances that led up to those moments.

MENLO PARK, CA – On a wind-swept chunk of land where Sun Microsystems experienced both the highest peaks and the lowest depths that the tech industry has to offer, Facebook is quietly working to define itself as an industry force in more than just social networking.

It has only been a few months since Facebook employees began occupying what used to be known as “Sun Quentin,” a self-contained cluster of office buildings on the shore of San Francisco Bay in the shadow of the Dumbarton Bridge, but the company is already starting to think of itself as an industry leader that can shift the debate within the computing revolution of our time: the transition to mobile. It invited reporters last week from several tech-oriented news organizations — Techcrunch, VentureBeat, PandoDaily, and yours truly, among others — down to its new headquarters to discuss the plans Facebook unveiled at Mobile World Congress in February to help advance HTML5 as a mobile development standard.

Are there elements of entrepreneurship that can’t be taught? Sure, just as there are elements of engineering, medicine and law that can’t be taught. And, as some critics point out, these unteachable elements involve people skills: for instance, how salespeople can figure out how to get to “yes” with potential customers after hearing “no” after “no.”

Here are four of the most popular stories from the Twitter #innovation community in the past few weeks.

How To Be Creative - Too often, people find creativity a challenge to be beat, a contest to win or a code to crack, because the expanse that the term creativity covers is so vast. But when people are not fighting against it, a moment of insight can occur. Author Jonah Lehrer reminds readers that creativity is not as intangible as it often seems to be, with these 10 Creativity Hacks:

• Surround yourself with the color blue- “it leads to more relaxed and associative thinking”.
• Get groggy – it can help you perform better on creative puzzles

The United States’ military and industrial complex is entering an age of gradual decline and needs to adapt to remain relevant, according to a new study on emerging global trends in science and technology.

In “Globalization of S&T: Key Challenges Facing DOD,” Timothy Coffey and Steven Ramburg argue that the demographic and industrial strengths that shaped the highly successful U.S. S&T strategy over the past 50 years is not likely to be sustainable in the 21st century.

From smart fridges that monitor your food to mind-reading computers, here are a few rather handy new ideas ©Dreamstime 1. Kaggle

The Silicon Valley start-up founded by 28-year-old Australian Anthony Goldbloom awards cash prizes for finding data patterns. It has been used by Nasa to improve the way the space agency measures the shape of galaxies. Companies that want problems solved post them on the site and data scientists submit solutions. Prizes run from $1,000 to $3m.

China’s rise as an economic power has been staggering. Its manufacturing prowess is well-established, having earned it the moniker, "the world’s factory." Roughly half of its population now lives in urban areas, up from less than one in five three decades ago. Over 100 of its cities have populations of one million or more.

More than half of Americans already believe China is the world’s most powerful economy, according to Gallup polls, and a growing chorus of commentators believes that it will overtake the U.S. as the world’s largest economy by 2030. Some are projecting this to happen as early as 2016.

The African Venture Capital Association (AVCA) is a not-for-profit entity founded to promote, develop and stimulate private equity and venture capital in Africa. At the 2011 Making Finance Work for Africa conference, VC4Africa had the chance to catch up with Tshepidi Moremong, the co-Chair of the AVCA board and a principal at 8 Miles, a pan-African private equity fund. VC4Africa also followed up with AVCA’s new director, Michelle Essomé, to talk about AVCA’s ambitions moving forward and this years conference, ‘Africa, the Rising Giant.’ The conference will be held on the 22nd and 24th of April in Accra. See our video report with Tshepidi and written interview with Michelle.

Reshma Sohoni, co-founder of startup incubator Seedcamp, the largest European startup incubator, spoke Monday at Stanford’s Entrepreneurship Week about Seedcamp and its role in the changing European startup and venture capital scene.

Seedcamp makes investments in startups from “Finland to Italy, Spain to Croatia, and Canada to Brazil” through the events it holds Europe. Seedcamp gives the 20 companies in which it invests annually access to its growing network of VC’s, lawyers, investors, consultants and other entrepreneurs. After the seed funding, the incubator provides mentoring to its companies, 200 so far.

The JOBS act is good news for entrepreneurs and venture investors in several ways. An easier the path to public markets for start-ups is a huge strategic win, as the venture community’s biggest problem has been a shortfall in exit proceeds. Kudos to those in Congress, NVCA, and the venture community who made this happen.

The most interesting feature of the JOBS act is legalization of “CrowdFunding”, which allows private companies to raise capital from any investor (not just deep-pocketed “accredited” investors) subject to simple rules: no more than $1 million per year, no more than $10,000 or 10% of an investor’s annual income or net worth. (However, the SEC will make more rules.) And, the JOBS act authorizes companies to solicit investments from the public via typical marketing channels. Previously advertising and other broadcast marketing was strictly prohibited; companies could only solicit investments from people with whom they had a relationship or an introduction. Let’s explore what this means for the venture community.

With President Barack Obama signing the Jumpstart Our Business Startups Bill into law today, the crowdfunding provision could mark a new era for startups, making it easier to raise money with more investment from new investors fueling early and later stage healthcare companies.

But some investors believe that with less rigorous regulatory checks and balances on company finances, the risk of investors getting burned by fraud will lead to new dynamics in the investment landscape, like novice investors partnering with individuals and groups with more experience. Three individuals from the investment landscape share their thoughts.

Let the proliferation of vertically-themed startup accelerators continue! Today, a new accelerator focusing on the enterprise sector is launching in Washington D.C. Called “Acceleprise,” the program’s goal is to invest in 60 enterprise software companies over the next three years. Participating startups should be trying to solve problems facing large organizations, whether the Fortune 5000, large nonprofits, or government.

Acceleprise’s founders include Sean Glass (Higher One, EmployInsight), Collin Gutman (EmployInsight, formerly of NEA), and Allen Gannett (formerly CEO of Splash Networks).

A Dutch company is launching a vehicle which can be driven on land, or flown in the air.

The Personal Air and Land Vehicle (PAL-V) can be configured as a gyrocopter, requiring a 165m (540 ft) runway to take-off, or as a three wheeled car.

Every dark cloud has a silver lining. Driven by the recent recession, smart entrepreneurs of all ages are jumping into the fray with new ideas, new recovery strategies, and discarding outmoded business models. I see it most in the newest generation of entrepreneurs (Gen-Y), who were shocked out of entitlement into action by the recession.

Donna Fenn, in her book from a while back, “Upstarts! How GenY Entrepreneurs are Rocking the World of Business,” seems certain that Gen-Y will lead the charge, bounce back from the recession, and be big winners. She describes a new generation of entrepreneurs that is highly collaborative, quick and alert when it comes to new technologies, and hell-bent on changing the world in general.