Toward a Better Understanding of Entrepreneurial Self-efficacy Academic Essay

Introduction:

Even though there is a fairly large body of research exploring entrepreneurial potentiality, most scholars agree there is still much that can be learned from examining entrepreneurial intention models and social cognitive theory variables such as entrepreneurial self-efficacy (Baron, 2004; Krueger, 2007; Mitchell, Busenitz, Bird, Gaglio, McMullen, Morse, & Smith, 2007). Entrepreneurial Self-efficacy is defined as “the strength of an individual’s belief that he or she is capable of successfully performing the roles and tasks of an entrepreneur” (Chen, Greene & Crick, 1998: 301). Entrepreneurial self-efficacy is often cast as a measure of “perceived feasibility of venture creation” (Shapero, 1975) or “the degree to which one believes that she or he is personally capable of starting a business” (Krueger, 1993: 7). Krueger and Brazeal (1994) stress that feasibility is the most important variable in moving individuals toward entrepreneurial action. Indeed, research consistently supports the view that entrepreneurial self-efficacy is not only the most proximal predictor of entrepreneurial intentions (e.g., Boyd & Vozikis, 1994; DeNoble, Jung, & Erlich, 1999; Urban, 2006; Zhao et al., 2005), but also the key cognitive mechanism that underlies the relationship between individual level antecedents (e.g., personality) and entrepreneurial intentions (e.g., Chen, Greene, & Crick, 1998; Kickul, Gundry, Barbosa, & Whitcanack, 2009; Luthans & Ibrayeva, 2006; Sequeira et al., 2007).

However, some researchers believe our understanding of feasibility is woefully inadequate (e.g., Luthans & Ibrayeva, 2006). For example, if understanding the entrepreneurial process requires examining people with no entrepreneurial experience (i.e., the potential entrepreneur; Krueger & Brazeal, 1994), then what is the foundation of these individuals’ entrepreneurial self-efficacy beliefs? According to social cognitive theory (Bandura, 1997), it may be that other broader efficacy beliefs form the basis for entrepreneurial self-efficacy beliefs, because these broader self-efficacy beliefs are based upon actual prior mastery experiences,. Bandura (1997) describes this as a hierarchical or “generative” view of self-efficacy where broader less-specific self-efficacy beliefs form the basis for more-specific self-efficacy beliefs.

Another question that remains to be explored is the process by which entrepreneurial self-efficacy beliefs result in a strongly held intention to create a new venture (or acquire and grow an existing one). While intention theory literature holds that that self-efficacy is directly linked with intention, social cognitive theory suggests that this is an oversimplification of the process. Social cognitive theory suggests that people who believe they are capable of being an entrepreneur do not simply start believing that they are highly likely to start their own business. Social cognitive theory suggests that entrepreneurial self-efficacy beliefs stimulate cognitive simulations of what it would be like to create and run a new venture and that these cognitive simulations are the most proximal predictor of intentions to become an entrepreneur. That is, the relationship between entrepreneurial self-efficacy and entrepreneurial intentions is mediated by “anticipatory entrepreneurial cognitions.” The type of cognitive simulations and tests described by Social Cognitive theory has been largely ignored in the extant literature. Therefore, we introduce and measure this “anticipatory entrepreneurial cognitions” (AEC) construct to help explain the process by which entrepreneurial self-efficacy beliefs lead to the development of entrepreneurial intentions. Figure 1 illustrates the conceptual model.

Figure 1

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We believe that people tend to develop entrepreneurial self-efficacy beliefs, at least in part, because they tend to believe they are (1) capable of being creative and (2) capable of learning and adapting. This is based upon the view that the entrepreneurial process “is governed by experimentation and learning” (Bercherer & Maurer, 1999: 29) and Boyd and Vosikis’ (1994) suggestion that for a strong sense of entrepreneurial self-efficacy to develop, “it is necessary to have direct experience in overcoming obstacles through effort and perseverance” (p. 67). Accordingly, we hypothesize that more general efficacy beliefs, which should be grounded in prior experience, underlie entrepreneurial self-efficacy (which, for nonentrepreneurs, is not grounded in experience). That is, most individuals old enough to start a business will have developed beliefs about their creative self-efficacy and learning self-efficacy based upon actual experiences. In combination, these two self-efficacy beliefs should serve as the foundation for entrepreneurial self-efficacy because they promote one’s belief that they can overcome impediments and obstacles in general and thus influence whether or not one approaches an environment that is characterized by uncertainty and change. Krueger (2000) alludes to this in his discussion of ways to increase feasibility perceptions, stating that mastery experiences in one domain “can increase efficacy perceptions if the individuals perceive their mastery as generalizable” (p.13). Further, these two self-efficacy beliefs should mediate the relationships between the two adaptive personality variables in this study and entrepreneurial self-efficacy.

With regard to our model containing multiple self-efficacy components, we note that our model is consistent with the view that multiple types of self-efficacy can play a role in performance in a given domain (Bandura, 1997). Further, Bandura (1997) notes that efficacy beliefs fall along a continuum from very specific (i.e., a very narrow domain) to very general (i.e., global) and that one form of self-efficacy can “generate” another form (Bandura, 1997). Both creative self-efficacy and learning self-efficacy are more general in nature than Entrepreneurial Self-efficacy and therefore consistent with the view that self-efficacy measures can be “generative” as long as the tasks are interrelated. This is the same argument that has been used in research that has related general self-efficacy to many different forms of domain specific self-efficacy (e.g., Chen et al, 1998).

Creative self-efficacy is defined as “the belief that one has the ability to produce creative outcomes” (Tierney & Farmer, 2002: 1138). People with high creative self-efficacy tend to enjoy creativity-related activities and initiate creative action (Tierney & Farmer, 2002: 417). Creative self-efficacy is relatively broad in the sense that it is not domain specific with respect to any particular task or setting. Although the empirical research is extremely limited because of its newness, creative self-efficacy has been positively linked with generation of novel and useful ideas as well as other forms of creative behavior (Tierney & Farmer, 2002; Tierney & Farmer, 2004). Creativity is generally believed to be important to the entrepreneurial process because of its linkage with opportunity recognition and the development of new products and ventures (Ko & Butler, 2007). Because Entrepreneurial self-efficacy incorporates many creativity-related aspects specific to the entrepreneurial domain (e.g., start a new business, develop new products & services) we expect that creative self-efficacy will be positively related to capability may lead to the increase of entrepreneurial capability and the increase of creative self-efficacy may lead to the increase of entrepreneurial self-efficacy.

H1a: Creative Self-efficacy will be positively related to Entrepreneurial Self-efficacy.

Learning self-efficacy is defined as one’s belief that they have the ability to learn and adapt (Potosky & Ramakrishna, 2002). Learning self-efficacy tends to increase engagement in the learning task (Schunk, 1989). Research indicates that people who believe they have the capacity to learn and adapt tend to use cognitive processes that facilitate learning–rehearsing, reasoning, and mentally organizing information (Warr & Bruce, 1995). Further, research shows that learning self-efficacy is positively related to performance (Potosky & Ramakrishna, 2002) and skill acquisition in a variety of training activities such as negotiations (Gist, Stevens, & Bavetta, 1991). It seems likely that if one has not been an entrepreneur, then the belief that one can learn the tasks associated with venture creation and venture management would be essential to ESE beliefs. Further, it seems likely that most people would have at least a rudimentary understanding that a core entrepreneurial function is learning how to develop, nurture, and exploit competitive advantages (Hagen, Tootoonchi, & Hassan, 2005)—that is, learning is a critical skill for entrepreneurs. Therefore, we feel that the belief in one’s ability to learn and adapt will be a critical factor in the development of Entrepreneurial Self-efficacy.

H1b: Learning Self-efficacy will be positively related to Entrepreneurial Self-efficacy.

Outcomes of Entrepreneurial Self-efficacy

A review of the entrepreneurship literature reveals that entrepreneurial self-efficacy is most often studied as a critical determinant of an individual’s intention to become an entrepreneur (e.g., Carr & Sequeira, 2007; Sequeira, Mueller & McGee, 2007; Wilson, Kickul, & Marlino, 2007; Zhao et al., 2005). According to Bird (1988), “entrepreneurial intentions are aimed at either creating a new venture or creating new values in an existing venture” (p. 443). From a social cognitive theory perspective, the more one believes in his or her capability to successfully undertake the tasks and role responsibilities of an entrepreneur, the more likely they are to pursue that course of action. Research consistently supports this contention (e.g., Chen et al., 1998; Zhao et al., 2005).

However, if entrepreneurship is indeed “a process of becoming” (Bygrave, 1989; 21), then it seems likely that the relationship between entrepreneurial self-efficacy and entrepreneurial intentions will be mediated by what we call “anticipatory entrepreneurial cognitions.” Social cognitive theory suggests that self-efficacy beliefs influence a variety of thought patterns including anticipatory analytic thinking. According to Woods and Bandura (1989), self-efficacy beliefs cause individuals to construct anticipatory scenarios related to task performance. Individuals who believe themselves to be efficacious tend to become more task diagnostic and tend to visualize “cognitive constructions of effective action” (Wood & Bandura, 1989: 366). That is, self-efficacy beliefs stimulate cognitive simulations of what it would be like to perform the task in question (Wood & Bandura, 1989). This occurs, in part, because self-efficacy beliefs increase interest in that particular domain. Cognitive simulations provide tests of one’s perceived self-efficacy and help to build mental models of effective performance. Therefore, entrepreneurial self-efficacy should increase cognitive exploration of the entrepreneurship domain. Accordingly, anticipatory entrepreneurial cognitions encompass a broad spectrum of thoughts centered upon discovering, exploring, and testing one’s potential to become an entrepreneur. Individuals are likely to cognitively explore what it would be like to be an entrepreneur in a wide variety of ways such as testing assumptions, simulating different aspects of running a business, and trying to discover potential impediments to starting a business. Cognitive exploration of the realm of entrepreneurship is also likely to include searching for, assessing, and cognitively constructing entrepreneurial opportunities. As Krueger (2000) notes, entrepreneurial opportunities are “constructed” rather than simply “found.” This process is similar to what Harper (1996) describes as entrepreneurial theory building or what Endres and Woods (2007) describe as “entrepreneurial conjecturing”—testing ideas about how things work. As Bird (1988) puts it, entrepreneurs “envision what is to come” (p. 446). Therefore, based upon social cognitive theory, we forward the following hypotheses:

H2: Entrepreneurial self-efficacy will be positively related to Anticipatory

Entrepreneurial Cognitions,

H3: Entrepreneurial self-efficacy will be positively related to Entrepreneurial

Intentions,

H4: Anticipatory Entrepreneurial Cognitions will be positively related to

Entrepreneurial intentions,

H5: The relationship between Entrepreneurial self-efficacy and entrepreneurial

intentions will be mediated by Anticipatory Entrepreneurial Cognitions.

Gender Issues in Entrepreneurship

One area of interest in the venture creation area of entrepreneurship is the extent to which women participate in entrepreneurial pursuits at lower levels than men. Some have suggested that this disparity may be related to lower levels of entrepreneurial self-efficacy (e.g., Wilson, Kickul, & Marlino, 2007). Indeed, research has tended to support the view that women in the USA tend to feel less efficacious than men when responding to entrepreneurial self-efficacy surveys (e.g., Zhao et al., 2005). Research also tends to support a similar gender difference with regard to entrepreneurial intentions (e.g., Zhao et al., 2005). The reason forwarded for this gender difference is that the job of being an entrepreneur is perceived to be “masculine” in nature due to sex-role stereotyping and cultural socialization (Mueller & Dato-On, 2008). However, given that the anticipatory entrepreneurial cognitions construct is new, there has been no research examining the extent to which there is a gender difference in anticipatory entrepreneurial cognitions. It seems likely that if men tend to hold higher entrepreneurial self-efficacy beliefs than women, the same would be true for anticipatory entrepreneurial cognitions. Therefore, we forward the following hypothesis:

H6: Men will exhibit higher anticipatory entrepreneurial cognitions than women.

METHODS

Data collection was designed to provide a sample of potential entrepreneurs (i.e., people who had not started their own business). Accordingly, we collected data from students in a university in the southern part of the United States of America. Because the purpose of present study is to examine potential entrepreneurs, using undergraduate students is appropriate for this study. Students who finished the survey were given extra points for the class they were taking when the survey was distributed. A total 986 surveys were collected. Because research shows that gender and business ownership by a parent is positively related to many types of entrepreneurial cognitions including entrepreneurial self-efficacy and entrepreneurial intentions, we collected data on these two demographics.

Measurement

Except where noted, the response format for all of the measurement scales used a 5-point response format ranging from 1 (strongly disagree) to 5 (strongly agree). All items for the following scales appear in the Appendix.

Creative Self-efficacy. Based on Tierney and Farmer’s (2002) conceptual definition and measure, we developed a five-item measure of creative self-efficacy.

Learning self-efficacy. Learning self-efficacy was adapted from the five-item measure developed by Potoshy and Ramakrishna (2002).

Entrepreneurial Self-efficacy. We used Zhao et al.’s (2005) four-item measure to assess entrepreneurial self-efficacy beliefs. Participants were asked to respond according to how confident they believed they would be performing the indicated tasks/roles. These items using a five-point scale ranging from “Not Confident at All” (1) to “Completely Confident” (5).

Anticipatory Entrepreneurial Cognitions. Our measure is comprised of six items, including “I think about potential business ideas a lot,” “I often see opportunities to develop a new product or service,” “I often think about running my own business,” “When I think about getting a job, I consider how that job might prepare me to run my own business at a later point in time,” “I often have creative ideas that could make me money,” and “I think about how to turn my talent(s) or hobby into a way to make me a living.”

Entrepreneurial intention. This construct was measured with Zhao et al.’s (2005) 4 item scale. Respondents indicate how interested they are in: “starting a business,” “acquiring a small business,” starting and building a high growth business” and “acquiring and building a high-growth business,” over the next 5-10 years. This scale uses a 5 point response format ranging from “no interest at all” (1) to “a great deal of interest” (5).

Appendix: Measures

Reverse-scored items are indicated by (R).

Creative Self-Efficacy (SPSS variable names cse1, cse2, cse3, cse4, cse5)

Directions: Please indicate the extent to which you agree or disagree with the following statements.

Strongly Disagree

Disagree

Neutral

Agree

Strongly Agree

1. I have confidence in my ability to solve problems creatively.	1	2	3	4	5
2. I am confident in my ability to discover new ways of doing things.	1	2	3	4	5
3. Compared to other people, I can be more creative when solving problems.	1	2	3	4	5
4. In general, I am more creative than the average person.	1	2	3	4	5
5. When facing a difficult situation, I am certain that I can come up with a creative solution to the problem.	1	2	3	4	5

Learning Self-Efficacy (SPSS variable names lse1, lse2, lse3, lse4, lse5)

Directions: Please indicate the extent to which you agree or disagree with the following statements.

Strongly Disagree

Disagree

Neutral

Agree

Strongly Agree

1. I have mastered new tasks on a regular basis.	1	2	3	4	5
2. I do not perform new tasks as well as I would like. (R)	1	2	3	4	5
3. I am certain I can perform new tasks well.	1	2	3	4	5
4. I am able to learn new tasks quickly.	1	2	3	4	5
5. I believe that learning new tasks is something I do well.	1	2	3	4	5

Entrepreneurial Self-Efficacy (SPSS variable names ese1, ese2, ese3, ese4)

Directions: The following items relate to your perceived capability to perform certain roles/tasks required of an entrepreneur. Keep in mind, this does not depend upon your having done any of these things previously—only your belief that you could successfully perform the tasks if required. Please circle the extent to which you are confident in your ability to successfully handle each of the following roles/tasks.

Please indicate the extent to which you believe you can do the following things:	Not Confident at All	A Little Confident	Somewhat Confident	Very Confident	Completely Confident
1. Identify new business opportunities	1	2	3	4	5
2. Create new products or services.	1	2	3	4	5
3. Think creatively.	1	2	3	4	5
4. Commercialize a new idea or new development.	1	2	3	4	5

Anticipatory Entrepreneurial Cognitions (SPSS variable names ecog1, ecog2, ecog3, ecog4,

ecog5, ecog6)

Directions: Please indicate your agreement or disagreement with the following items

Use the following scale when responding to items:	Strongly Disagree	Disagree	Neutral	Agree	Strongly Agree
1. I think about potential business ideas a lot	1	2	3	4	5
2. I often see opportunities to develop a new product or service	1	2	3	4	5
3. I often think about running my own business.	1	2	3	4	5
4. When I think about getting a job, I consider how that job might prepare me to run my own business at a later point in time.	1	2	3	4	5
5. I often have creative ideas that could make me money.	1	2	3	4	5
6. I think about how to turn my talent(s) or hobby into a way to make me a living.	1	2	3	4	5

Entrepreneurial Intentions (SPSS variable names eint1, eint2, eint3, eint4)

*How interested are you in doing the following over the* *next 5-10 years?*	No Interest at all.		Somewhat Interested		A Great Deal Interested
1. Starting a business	1	2	3	4	5
2. Acquiring a small business	1	2	3	4	5
3. Starting and building a high-growth business	1	2	3	4	5
4. Acquiring and building a company into a high-growth business.	1	2	3	4	5