The influence of entrepreneur personality and self-efficacy on … · 2017. 5. 10. · entrepreneurial self-efficacy, but the internal locus of control was related positively only

The Influence of Entrepreneur Personality and Self-Efficacy on Behavioural Activities in

the Presence of Information Overload

Manisha Karia

Thesis submitted in fulfilment of the requirements for the degree of Doctor of Philosophy

Faculty of Business and Enterprise

Swinburne University of Technology

2015

i

ABSTRACT

Entrepreneurship is the bedrock of creating new businesses and wealth. Undoubtedly,

the entrepreneur lies at the core of the entrepreneurial process and venture performance.

Prior research has focused on investigating the characteristics of entrepreneurs, the

antecedents of venture creation, and the stages of entrepreneurship. However, the

relationship between entrepreneurs’ characteristics and their behaviours was not given

much attention. Further, recent advances in information and communication technology

have created new challenges for entrepreneurs’ ability and behaviour but this has not

been examined empirically. My research attempts to address these critical issues.

The purpose of the thesis was to examine the impact of the entrepreneur’s personality

characteristics and entrepreneurial self-efficacy on entrepreneurial behavioural activities

in the presence of information overload. Based on a review of extant literature and

discussions with academics and practicing entrepreneurs, I have developed a conceptual

model that incorporates entrepreneurial personality factors, dimensions of

entrepreneurial self-efficacy and various entrepreneurial behavioural activities. Further,

I have included the concept of information overload in my model. In personality

characteristics, I have included three dimensions: the need for achievement, internal

locus of control, and risk-taking propensity. Entrepreneurial self-efficacy has six

dimensions: searching, planning, marshalling, implementing people-related tasks,

implementing finance-related tasks and coping with unexpected challenges. The newly

operationalised construct of entrepreneurial behaviours has eight activities: planning,

controlling, internal communication, human resources management, work-related tasks,

customer service, socialising and politicking. All the variables were hypothesised to

have a positive relationship, excepting information overload, which was posited to have

a negative impact.

The sample was drawn from India, which is a large emerging economy. Data were

collected through a survey covering 1,100 practicing entrepreneurs spread throughout

India. A final usable sample of 403 was obtained. The tests for reliability and validity

ii

of the measurement scale used in this study established the psychometric rigour of the

conceptual model. Each path identified in the conceptual model was tested using

regression-based path analysis.

The results revealed a positive relationship between the personality dimensions of the

need for achievement and risk-taking propensity with all the six dimensions of

entrepreneurial self-efficacy, but the internal locus of control was related positively only

to three dimensions, namely implementing people-related tasks, implementing finance-

related tasks, and coping with unexpected challenges. Similarly, the three entrepreneur

personality characteristics were related to only a few entrepreneurial behavioural

activities, not all. The relationship between entrepreneurial self-efficacy and

entrepreneurial behavioural activities also indicated that only some of these were

related. As expected, information overload has a negative impact on most of the self-

efficacy variables but only on some behavioural activities.

My study provides a significant contribution to the body of literature by confirming that

entrepreneurial self-efficacy has many dimensions that need to be treated differently.

This is the first time information overload has been included in entrepreneurship

studies. I also created a platform for empirically testing entrepreneurial self-efficacy and

entrepreneurial behavioural activities for future research. Overall, the results from my

study have strong implications for scholars, entrepreneurs and policymakers,

particularly those in emerging economies.

Nonetheless, a major limitation of the study is the generalisability of the findings. The

sample is from owner-managers from different cities and industries in India, which may

include inter-regional and inter-industry differences. Therefore, care should also be

taken before these results can be applied to other emerging economies due to their

differences. Future studies could, therefore, undertake an in-depth examination of

regional and industry differences among entrepreneurs in India, as well as replicate the

study in other emerging economies. The concept of entrepreneurial information

overload can be explored further to find how the information-seeking behaviour of

entrepreneurs is impacted by information overload.

iii

ACKNOWLEDGEMENTS

Blessed are those who find wisdom, those who gain understanding (Proverbs 3: 13).

First and foremost, I would like to thank God, without whose abundant grace this thesis

would have not become a reality. I am truly grateful for God’s provision and guidance

in undertaking this research successfully. Through this research experience, I have

learnt how to face challenges and grow through God’s grace.

I wish to express my sincere thanks to my supervisory team consisting of Dr Malcolm

Abbott and Dr Alexis Espesto of the Swinburne University of Technology, and

Dr Hanoku Bathula of the University of Auckland. Dr Malcolm Abbott was kind

enough to accept me as his research student and also provide guidance and support

during the entire period of the study. I am particularly grateful for his encouragement to

apply for scholarship for my doctoral research. I also wish to thank Dr Alexis Espesto

for his periodic support and feedback on my progress. I also express my deep

appreciation to Dr Hanoku Bathula, who has encouraged and helped me at every stage

in completing this research thesis. I will never be able to thank him enough for his

invaluable support.

I would like to express my sincere gratitude to Dr Sanjaya Gaur of Auckland University

of Technology who was generous in giving his valuable time and expert advice,

particularly in designing the survey and data analysis. I also wish to acknowledge the

support I received from the management and other colleagues of Auckland Institute of

Studies. I want to mention Dr Mike Roberts, Dr Ershad Ali and Sawsan Al-Shamaa for

their timely support and encouragement over the period of my study. Very special

thanks are due to Tony Ó Braonáin for patiently reading my manuscripts and making

suggestions.

As my data were collected from India, I had to seek help from several people in

finalising the survey instrument and also with the collection of data. In this regard, I

wish to acknowledge the support of senior academics from various Indian universities,

Dr. Karuppasamy Ramanathan (Director, Management Studies, Nehru Institute of

iv

Technology, Coimbatore), Dr. Githa Heggde (Professor of Marketing, WeSchool,

Bengaluru), Dr. Sandip Kar (Chairman, IIMS, Kolkata), and Dr Ramanujam Krishnaraj

(Assistant Professor, Management Studies, SRM University, Chennai). I want to also

thank Mr Ganapathi Batthini, Librarian, Entrepreneurship Development Institute of

India, for his timely help in providing information about the status of entrepreneurship

in India. It is not out of place to thank all the 650 respondents from India who have

spent their valuable time in filling in the surveys and making this study happen. A big

thank you to all the research and administrative staff, Ms Anne Cain, Ms Nadine White

and others at Swinburne University of Technology for their support throughout the last

four years. I especially want to acknowledge the fee scholarship awarded to me by

Swinburne University of Technology.

My special gratitude is to my dearest daughter, Khyaati Narayani, for her undying love,

understanding and support even during the times of frustration. She gave up so many

evenings and weekends so that I could complete my study. During stressful times, she

has been my biggest supporter and has always believed in my ability to complete this

thesis. My special thanks are due to my beloved parents, Rajnikant and Latha Karia,

who have provided me with unconditional love and endless support. They have not

only helped me with their contacts for data collection, but also looked after my daughter

when I was focusing on the thesis. My thanks also go to my loving sister and her

husband, Vaidehi and Tejal Shah, for their encouragement, and to my nieces, Kavya and

Nitya, who have also cheered me up through my doctoral journey.

There are several others that I wish to thank personally, but I am not able to mention all

of them due to limitations of space. I will always remember them with gratitude.

Manisha Karia

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DECLARATION

I, Manisha Karia, declare that: This thesis contains no material which has been accepted for the award to the candidate of any other degree or diploma, except where due reference is made in the text of the examinable outcome; To the best of the candidate’s knowledge, it contains no material previously published or written by another person except where due reference is made in the text of the examinable outcome; and Where the work is based on joint research or publications, it discloses the relative contributions of the respective workers or authors.

Manisha Karia 10 April 2015

vi

TABLE OF CONTENTS ABSTRACT ...................................................................................................................... i ACKNOWLEDGEMENTS.......................................................................................... iii DECLARATION ............................................................................................................. v LIST OF TABLES ......................................................................................................... xi LIST OF FIGURES ..................................................................................................... xiv LIST OF ABBREVIATIONS ...................................................................................... xv CHAPTER 1 INTRODUCTION ............................................................................. 1

1.1 Factors impacting on the entrepreneur’s performance ........................................................ 1

1.1.1 Personality characteristics affecting entrepreneurs ....................................................... 2

1.1.2 Entrepreneurial self-efficacy ......................................................................................... 3

1.1.3 Entrepreneurial behavioural activities........................................................................... 4

1.1.4 Entrepreneurial information overload ........................................................................... 5

1.2 Purpose of the study ............................................................................................................ 5

1.3 Motivation for this research ................................................................................................ 6

1.4 Contributions of the study ................................................................................................... 8

1.6 Outline of the thesis .......................................................................................................... 10

CHAPTER 2 LITERATURE REVIEW ............................................................... 12

2.1 Concept and definition of entrepreneurship ...................................................................... 13

2.1.1 Plurality of definitions ................................................................................................ 16

2.2 Entrepreneur’s background ............................................................................................... 18

2.2.1 Demographic characteristics ....................................................................................... 19

2.2.2 Personality characteristics ........................................................................................... 21

2.3 Entrepreneurial self-efficacy ............................................................................................. 50

2.3.1 The concept of self-efficacy ........................................................................................ 51

2.3.2 Concept of entrepreneurial self-efficacy (ESE) .......................................................... 52

2.4 Entrepreneurial behaviour activities ................................................................................. 62

2.4.1 Concept of entrepreneurial behaviour ......................................................................... 63

2.4.2 Research on entrepreneurial behaviour ....................................................................... 63

2.4.3 Identifying entrepreneurial behaviours ....................................................................... 69

2.5 Entrepreneurial information overload (EIO) ..................................................................... 71

vii

2.5.1 Concept of information overload ................................................................................ 72

2.5.2 Information-seeking behaviour in entrepreneurship ................................................... 74

2.5.3 Entrepreneurial information overload and its impact .................................................. 78

2.6 Chapter summary .............................................................................................................. 81

CHAPTER 3 ENTREPRENEURSHIP ISSUES IN INDIA ................................ 83

3.1 Emerging economies and their characteristics .................................................................. 83

3.2 Importance of emerging markets ...................................................................................... 85

3.3 Overview of India ............................................................................................................. 86

3.4 Entrepreneurship in India .................................................................................................. 88

3.4.1 Socio-cultural context of entrepreneurship in India ................................................... 88

3.4.2 Economic development and entrepreneurship in India ............................................... 91

3.4.3 Education and entrepreneurship in India..................................................................... 96

3.5 Entrepreneurship research in India ................................................................................... 98

3.6 Chapter summary ............................................................................................................ 102

CHAPTER 4 CONCEPTUAL FRAMEWORK AND HYPOTHESES ........... 103

4.1 Conceptual framework and theoretical model ................................................................ 103

4.2 Personality characteristics and entrepreneurial self-efficacy .......................................... 104

4.2.1 Personality characteristic of need for achievement and dimensions of entrepreneurial self-efficacy.............................................................................................................. 106

4.2.2 Personality characteristic of internal locus of control and dimensions of entrepreneurial self-efficacy .................................................................................... 108

4.2.3 Personality characteristic of risk-taking propensity and dimensions of entrepreneurial self-efficacy.............................................................................................................. 110

4.3 Entrepreneurial information overload and entrepreneurial self-efficacy ........................ 112

4.4 Entrepreneurial information overload and entrepreneurial behavioural activities .......... 113

4.5 Personality characteristics and entrepreneurial behavioural activities ............................ 115

4.5.1 Personality characteristic of need for achievement and entrepreneurial behavioural activities ................................................................................................................... 116

4.5.2 Personality characteristic of internal locus of control and entrepreneurial behavioural activities ................................................................................................................... 118

4.5.3 Personality characteristic of risk-taking propensity and entrepreneurial behavioural activities ................................................................................................................... 119

4.6 Entrepreneurial self-efficacy and entrepreneurial behavioural activities ........................ 121

4.6.1 Dimensions of entrepreneurial self-efficacy and the planning dimension of entrepreneurial behavioural activities ...................................................................... 122

viii

4.6.2 Dimensions of entrepreneurial self-efficacy and the controlling dimension of entrepreneurial behavioural activities ...................................................................... 123

4.6.3 Dimensions of entrepreneurial self-efficacy and the internal communication dimension of entrepreneurial behavioural activities ................................................ 124

4.6.4 Dimensions of entrepreneurial self-efficacy and the human resources dimension of entrepreneurial behavioural activities ...................................................................... 125

4.6.5 Dimensions of entrepreneurial self-efficacy and the work-related task dimension of entrepreneurial behavioural activities ...................................................................... 127

4.6.6 Dimensions of entrepreneurial self-efficacy and the customer service dimension of entrepreneurial behavioural activities ...................................................................... 128

4.6.7 Dimensions of entrepreneurial self-efficacy and the socialising dimension of entrepreneurial behavioural activities ...................................................................... 129

4.6.8 Dimensions of entrepreneurial self-efficacy and the politicking dimension of entrepreneurial behavioural activities ...................................................................... 130

4.7 Chapter summary ............................................................................................................ 131

CHAPTER 5 RESEARCH METHODOLOGY ................................................. 132

5.1 Research approach and strategy ...................................................................................... 132

5.2 Measurement / operationalisation of variables ............................................................... 132

5.2.1 Personality characteristics ......................................................................................... 133

5.2.2 Entrepreneurial self-efficacy (ESE) .......................................................................... 136

5.2.3 Entrepreneurial behavioural activities....................................................................... 140

5.2.4 Entrepreneurial information overload (EIO) ............................................................. 144

5.2.5 Firm and entrepreneur related questions ................................................................... 145

5.3 Developing and validating the survey instrument ........................................................... 146

5.3.1 Time allocated to answer for each question .............................................................. 147

5.4 Sample selection ............................................................................................................. 147

5.5 Statistical analyses .......................................................................................................... 151

5.5.1 Review of sample size based on validity and reliability ........................................... 153

5.5.2 Data analysis ............................................................................................................. 155

5.6 Chapter summary ............................................................................................................ 156

CHAPTER 6 RESULTS AND DISCUSSION ................................................. 157

6.1 Sample characteristics ..................................................................................................... 157

6.1.1 Firm characteristics ................................................................................................... 158

6.2 Measurement properties .................................................................................................. 159

6.2.1 Reliability analysis .................................................................................................... 160

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6.2.2 Exploratory factor analysis (EFA) ............................................................................ 167

6.3 Composite variables ........................................................................................................ 176

6.3.1 Correlation matrix for composite variables .............................................................. 177

6.4 Common method bias ..................................................................................................... 179

6.5 Hypothesis testing ........................................................................................................... 179

6.5.1 Effects of personality characteristics and entrepreneurial information overload on the searching capability dimension of entrepreneurial self-efficacy.............................. 180

6.5.2 Effects of personality characteristics and entrepreneurial information overload on the planning capability dimension of entrepreneurial self-efficacy ............................... 181

6.5.3 Effects of personality characteristics and entrepreneurial information overload on the marshalling capability dimension of entrepreneurial self-efficacy .......................... 182

6.5.4 Effects of personality characteristics and entrepreneurial information overload on the implementing people-related capability dimension of entrepreneurial self-efficacy184

6.5.5 Effects of personality characteristics and entrepreneurial information overload on the implementing finance capability dimension of entrepreneurial self-efficacy .......... 185

6.5.6 Effects of personality characteristics and entrepreneurial information overload on the coping with unexpected challenges capability dimension of entrepreneurial self-efficacy ..................................................................................................................... 186

6.5.7 Effects of entrepreneurial self-efficacy, entrepreneurial information overload and personality characteristics on the planning dimension of entrepreneurial behavioural activities. .................................................................................................................. 188

6.5.8 Effects of entrepreneurial self-efficacy, entrepreneurial information overload and personality characteristics on the controlling dimension of entrepreneurial behavioural activities. .............................................................................................. 190

6.5.9 Effects of entrepreneurial self-efficacy, entrepreneurial information overload and personality characteristics on the internal communication dimension of entrepreneurial behavioural activities. ..................................................................... 193

6.5.10 Effects of entrepreneurial self-efficacy, entrepreneurial information overload and personality characteristics on the human resources management dimension of entrepreneurial behavioural activities. ..................................................................... 195

6.5.11 Effects of entrepreneurial self-efficacy, entrepreneurial information overload and personality characteristics on the work-related tasks dimension of entrepreneurial behavioural activities. .............................................................................................. 198

6.5.12 Testing the effects of entrepreneurial self-efficacy, entrepreneurial information overload and personality characteristics on the customer service dimension of entrepreneurial behavioural activities. ..................................................................... 200

6.5.13 Testing the effects of entrepreneurial self-efficacy, entrepreneurial information overload and personality characteristics on the socialising dimension of entrepreneurial behavioural activities. ..................................................................... 203

x

6.5.14 Testing the effects of entrepreneurial self-efficacy, entrepreneurial information overload and personality characteristics on the politicking dimension of entrepreneurial behavioural activities. ..................................................................... 205

6.5.15 Summary of findings for hypotheses tested ............................................................ 208

6.6 Discussion ....................................................................................................................... 212

6.6.1 Relationship between personality characteristics and entrepreneurial self-efficacy . 212

6.6.2 Relationship between entrepreneurial self-efficacy and entrepreneurial behavioural activities ................................................................................................................... 216

6.6.3 Relationship between personality characteristics and entrepreneurial behavioural activities ................................................................................................................... 217

6.6.4 Impact of entrepreneurial overload on entrepreneurial self-efficacy ........................ 222

6.6.5 Impact of entrepreneurial information overload on entrepreneurial behavioural activities ................................................................................................................... 223

6.7 Chapter summary ............................................................................................................ 225

CHAPTER 7 CONCLUSION .............................................................................. 226

7.1 Summary of the study ..................................................................................................... 226

7.1.1 Purpose of the study .................................................................................................. 226

7.1.2 Research context ....................................................................................................... 228

7.1.3 Research methods and results ................................................................................... 229

7.2 Contribution to theory..................................................................................................... 230

7.3 Practical implication of the results ........................................................................... 232

7.3.1 Implications for educators of entrepreneurship ......................................................... 232

7.3.2 Implications for entrepreneurship practitioners ........................................................ 233

7.3.3 Implications for policy makers ................................................................................. 234

7.4 Limitations of the study .................................................................................................. 235

7.5 Directions for future research ......................................................................................... 235

7.6 Concluding remarks ........................................................................................................ 237

REFERENCES ............................................................................................................ 239 APPENDICES………………………………………………………………………..276 A.1. SUHREC Project 2012/005 Ethics Clearance ................................................... 275

A.2.SUHREC Project 2012/005 Final Report Acknowledgment….…………..….278

A.3 QUESTIONNAIRE…………………...………………………….…………….279

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LIST OF TABLES

Table 2.1 Sample of definitions of entrepreneurship/entrepreneur……….…………..17

Table 2.2 Personality characteristics examined in entrepreneurship studies………….24

Table 2.3 Summary of the Big Five characteristics and their corresponding traits ….27

Table 2.4 Specific personality characteristics………………………………….…......33

Table 3.1 BRICS countries details…….………………………………………….......85

Table 3.2 India at a glance……………………………………………………….........87

Table 3.3 Contribution of small scale industry to the Indian economy…… ……….....93

Table 3.4 Indian micro, small and medium enterprise sector (MSME) at a glance ….95

Table 3.5 Research in entrepreneurship in India....……………………………………99

Table 5.1 Operationalisation of entrepreneurs’ personality characteristics.....………..136

Table 5.2 Operationalisation of entrepreneurial self-efficacy….…………………......139

Table 5.3 Operationalisation of entrepreneurial behavioural activities.……………..143

Table 5.4 Operationalisation of entrepreneurial information overload……...………145

Table 5.5 Time allocated to answer for each section…...............................................147

Table 5.6 Final response number.................................................................................149

Table 5.7 Geographical distribution of responses of the sample................................151

Table 5.8 Abbreviation used in coding........................................................................152

Table 6.1 Sample demographics………………………………………..….………..158

Table 6.2 Characteristics of the respondent firms….………………..…....................159

Table 6.3 Correlation matrix for entrepreneurial self-efficacy…………….……….161

Table 6.4 Reliability analysis results for measurement scales –Entrepreneurial self-efficacy……………………………………………………………...…......162

Table 6.5 Correlation matrix for entrepreneurial behavioural activities…………….164

Table 6.6 Reliability analysis results for measurement scales-Entrepreneurial behavioural activities………………………………………………….….165

xii

Table 6.7 Correlation matrix for personality characteristics……..…………………166

Table 6.8 Reliability analysis results for measurement scales-Personality Characteristics…………………………………………………………….166

Table 6.9 Correlation matrix for entrepreneurial information overload……………..167

Table 6.10 Reliability analysis results for measurement scales-Entrepreneurial Information overload……………………..……………..…….…….........167

Table 6.11 Factor analysis for ESE construct - searching ......…………….………...168

Table 6.12 Factor analysis for ESE construct - planning…….………………………168

Table 6.13 Factor analysis for ESE construct - marshalling………………………...169

Table 6.14 Factor analysis for ESE construct - implementing people………………169

Table 6.15 Factor analysis for ESE construct - implementing finance…..……….…170

Table 6.16 Factor analysis for ESE construct - coping with unexpected challenges..170

Table 6.17 Factor analysis for EBA construct - planning…………………………...171

Table 6.18 Factor analysis for EBA construct - controlling………………..…….….171

Table 6.19 Factor analysis for EBA construct - internal communication….……….172

Table 6.20 Factor analysis for EBA construct - HR management…………….…….172

Table 6.21 Factor analysis for EBA construct - work-related tasks…………………173

Table 6.22 Factor analysis for EBA construct - customer service…………………..173

Table 6.23 Factor analysis for EBA construct - socialisation………………………174

Table 6.24 Factor analysis for EBA construct - politicking………………………...174

Table 6.25 Factor analysis for personality characteristic - need for achievement…...175

Table 6.26 Factor analysis for personality characteristic - internal locus of control..175

Table 6.27 Factor analysis for personality characteristic - risk-taking propensity….176

Table 6.28 Factor analysis for entrepreneurial information overload……………….176

Table 6.29 Correlation matrix for the composite variables………………………….178

Table 6.30 Testing PC and EIO association with the searching capability dimension of ESE ………………………………………………………180

xiii

Table 6.31 Testing PC and EIO association with the planning capability dimension of ESE……………………………………………………….181

Table 6.32 Testing PC and EIO association with the marshalling capability dimension of ESE……………………………………………………….182

Table 6.33 Testing PC and EIO association with the implementing people- related capability dimension of ESE…………………………………...184

Table 6.34 Testing PC and EIO association with the implementing finance- related capability dimension of ESE……………..……………………185

Table 6.35 Testing PC and EIO association with the coping with unexpected challenges capability dimension of ESE………………………..……...186

Table 6.36 Testing ESE, EIO and PC association with the planning dimension of EBA……………………………….…………………….188

Table 6.37 Testing ESE, EIO and PC association with the controlling dimension of EBA……………………………………………………..190

Table 6.38 Testing ESE, EIO and PC association with the internal communication dimension of EBA …………………………………...193

Table 6.39 Testing ESE, EIO and PC association with the human resources management dimension of EBA………………….……………………195

Table 6.40 Testing ESE, EIO and PC association with the work-related tasks dimension of EBA……………………………………………….198

Table 6.41 Testing ESE, EIO and PC association with the customer service dimension of EBA……………………………………………………..200

Table 6.42 Testing ESE, EIO and PC association with the socialising dimension of EBA……………………………………………………..203

Table 6.43 Testing ESE, EIO and PC association with the politicking dimension of EBA…………………………………………………….205

Table 6.44 Summary findings for dependent variable – ESE…………………….208

Table 6.45 Summary findings for dependent variable – EBA...………………….209

xiv

LIST OF FIGURES

Figure 4.1 Conceptual Framework………………………………………………..104

xv

LIST OF ABBREVIATIONS ____________________________________________________

CIIE : Centre for Innovation, incubation and entrepreneurship

CII : Confederation of Indian Industry

ESE : Entrepreneurial self-efficacy

ESE dimensions

Search : Entrepreneurial self-efficacy dimension of searching

Plg : Entrepreneurial self-efficacy dimension of planning

Mrsh : Entrepreneurial self-efficacy dimension of marshalling

Impple : Entrepreneurial self-efficacy dimension of implementing people

Impfin : Entrepreneurial self-efficacy dimension of implementing finance

Copch : Entrepreneurial self-efficacy dimension of coping with challenges

EBA : Entrepreneurial behavioural activities

EBA dimensions

BhvPlg : Entrepreneurial behavioural activity of planning

BhvCon : Entrepreneurial behavioural activity of controlling

BhvCom : Entrepreneurial behavioural activity of internal communication

BhvHRM : Entrepreneurial behavioural activity of human resources management

BhvTas : Entrepreneurial behavioural activity of work-related tasks

BhvSer : Entrepreneurial behavioural activity of customer service

BhvSoc : Entrepreneurial behavioural activity of socialising

BhvPol : Entrepreneurial behavioural activity of politicking

EDII : Entrepreneurship Development Institute of India

EFA : Exploratory factor analysis

EIO : Entrepreneurial information overload

FDI : Foreign direct investment

GDP : Gross domestic product

GEM : Global entrepreneurship monitor

GSE : General self-efficacy

IIE : Indian Institute of Entrepreneurship

IIM : Indian Institute of Management

xvi

PC : Personality characteristic

Personality characteristics

PCLoC : Personality characteristic of internal locus of control

PCnAch : Personality characteristic of need for achievement

PCRisk : Personality characteristic of internal locus of control

UNCTAD : United Nations Conference on Trade and Development

BRICS : Brazil, Russia, India, China and South Africa

MBA : Master of Business Administration

MSME : Micro, small and medium enterprise

NI-MSME : National Institute for micro, small and medium enterprises

NIESBUD : National Institute for Entrepreneurship and Small Business

Development

NSTEDB : National Science and Technology Entrepreneurial Development

SINE : Society for innovation and entrepreneurship

1

CHAPTER 1

INTRODUCTION

Entrepreneurship is the bedrock of creating new businesses and wealth. In addition, it

acts as an important driver in economic development by promoting innovation and

creativity, introducing new products and services, and providing employment. In

general, entrepreneurship is found to significantly contribute to economic development

(Carree & Thurik 2010; Wennekers & Thurik 1999). Recognising the importance of

entrepreneurship, research relating to this domain is undertaken across various

disciplines such as economics, sociology and management. Noted scholars such as

Cantillon (1755), Knight (1921), Schumpeter (1934) and McClelland (1961), amongst

others, have significantly contributed to this domain.

Undoubtedly, the entrepreneur lies at the core of the process of entrepreneurship and

firm performance (Kuratko & Hodgetts 2007; van Praag 2005; Fastré & Van Gils

2007). The entrepreneur’s perception of opportunities and their capacity (i.e., skills and

motivation) to exploit those opportunities are important drivers for entrepreneurial

activity (Reynolds et al. 2000). Therefore, the establishment of a new business implies

that the entrepreneur has acted effectively to identify the entrepreneurial opportunities

and converted them into commercially viable products or services. Given this critical

role that the entrepreneur plays in venture creation and maintenance, understanding the

role of the entrepreneur is important for the further development of entrepreneurship.

1.1 Factors impacting on the entrepreneur’s performance

To be an effective entrepreneur, one should have the knowledge, skills and abilities to

successfully exploit opportunities, new ideas and create new business ventures. Early

research has focussed attention on two major areas, demographic and personality

characteristics, amongst others. For example, demographic characteristics were

examined by a number of studies and covered various factors such as age, gender, and

educational aspects (e.g., Kourilsky & Walsad, 1998; Kim, Aldrich & Keister 2006).

2

Likewise, research in the domain of personality included personality traits (Rauch &

Frese 2007a; Collins, Hanges & Locke 2004), entrepreneurial skills and competencies

(Man, Lau & Chan 2002; Ahmad et al. 2009), entrepreneurial behaviour (Collins,

Hanges & Locke 2004; Endres & Woods 2006), and entrepreneurial self-efficacy

(Chen, Greene & Crick 1998; DeNoble, Jung & Ehrlich 1999).

Therefore, there are a number of factors that influence an entrepreneur’s performance.

However, I examine four important issues that are covered in this study: personality

factors, entrepreneurial self-efficacy, entrepreneurial behavioural activities and

information overload that entrepreneurs’ face. All of them are interrelated and are

expected to have a significant impact and relationship with each other. To understand

these linkages, I now briefly discuss these important constructs.

1.1.1 Personality characteristics affecting entrepreneurs

A significant amount of research has been undertaken on demographic characteristics of

entrepreneurs (Kourilsky & Walsad 1998; Kim, Aldrich & Keister 2006), but it is

personality characteristics that have attracted wider attention (Lee & Tsang 2001; Zhao

& Seibert 2006; Rauch & Frese 2007a). While some studies (e.g., Brockhaus &

Horwitz 1986) did not find any relationship between personality traits and business

creation, other studies (Zhao & Seibert 2006; Rauch & Frese 2007a) indicate a positive

relationship between personality traits and business creation and success. Some

personality traits linked to entrepreneurship are: innovativeness, need for achievement,

proactive personality, self-reliance, extroversion, need for autonomy, risk-taking

propensity, generalised self-efficacy and internal locus of control (Rauch & Frese

2007a; Lee & Tsang 2001).

To gain an overall view of the influence of personality factors on entrepreneurs, Rauch

and Frese (2007a) conducted a meta-analysis and found that specific personality traits

can help predict entrepreneurial behaviour. While the entrepreneurship literature covers

a long list of personality traits of individuals’ forays into venture creation and

maintenance, three specific personality characteristics, namely the need for

achievement, internal locus of control and risk-taking propensity, are considered to be

the most important (Sahin, Nijkamp & Rietdijik 2009; Tang & Tang 2007), and are

3

referred to as the ‘Big Three’ (Chell 2008). Further, Schaper et al. (2011) also stated

that these three characteristics have received and achieved a high level of attention and

validity. My study considers these variables to examine the effect of personality factors

on entrepreneurs’ self-efficacy and entrepreneurial behavioural activities.

1.1.2 Entrepreneurial self-efficacy

Another important dimension that is related to entrepreneurial success is entrepreneurial

self-efficacy. As a concept, self-efficacy was first proposed by Albert Bandura (1977,

p.3) as “an individual’s belief in one’s capacity to organize and execute the courses of

action required to produce given attainments”. Other research (Chen, Greene & Crick

1998; DeNoble, Jung & Ehrlich 1999; Krueger, Reilly & Casrud 2000; Wilson, Kickul

& Marlino 2007; McGee et al. 2009) adapted this to an entrepreneurial field in the form

of entrepreneurial self-efficacy. Chen, Greene and Crick (1998, p.295) refer to the

concept of entrepreneurial self-efficacy “as the strength of a person’s belief that he or

she is capable of successfully performing the various roles and tasks of

entrepreneurship”. The main tasks of an entrepreneur are in the form of developing new

product and market opportunities, building an innovative environment, initiating

investor relationships, financial control, management, marketing, risk-taking, and

coping with unexpected challenges.

Recognising that entrepreneurial self-efficacy has diverse manifestations, studies by

Chen, Greene and Crick (1998), DeNoble, Jung and Ehrlich (1999), Zhao, Seibert and

Hills (2005) have found self-efficacy to be positively associated with different

entrepreneurial tasks. But the problem is that there is a vast array of these

entrepreneurial tasks. For example, DeNoble, Jung and Ehrlich (1999) identified 35

skills and behaviours from an exploratory research of local entrepreneurs. Accordingly,

previous studies have referred to various entrepreneurial roles, tasks and dimensions

within entrepreneurial self-efficacy. To provide some clarity on this issue, McGee et al.

(2009) conducted a meta-analysis of past studies and identified five main dimensions of

entrepreneurial self-efficacy: searching, planning, marshalling, implementing people

and implementing financial related responsibilities that are associated with planning,

launching and growing a new venture. This clear identification of dimensions of

4

entrepreneurial self-efficacy suggests that it is possible that an entrepreneur may

perform effectively in some dimensions of entrepreneurship tasks, but not in others.

1.1.3 Entrepreneurial behavioural activities

While personality traits and self-efficacy aspects are considered important, other

scholars such as Gartner (1989), and Bridge, O’Neill and Cromie (2003) believe that the

focus should not be on the individuals’ psychological aspects but on the behaviours they

display (Gartner, 1989; Bridge, O’Neill & Cromie 2003). Self-evidently, entrepreneurs’

knowledge or intentions without action do not create a venture or value. Entrepreneurs’

behaviours were discussed under different themes: (a) starting a business: opportunity

seeking, planning to start a business, joining courses / workshops to gain skills to start a

business etc. (Gartner, Carter & Reynolds 2010); (b) engaging in general enterprising

behaviour: creativity and risk-taking behaviour (Gibb 1994); and (c) behaviours that are

needed for entrepreneurial success: planning, controlling, commitment and so on

(Timmons 1994; Envick & Langford 1998). Unfortunately, these behavioural activities

were not examined adequately, as most previous studies have looked at only the

intentionality-related aspects of entrepreneurs in new venture formation.

However, the behavioural aspects of entrepreneurs have recently drawn scholarly

attention (Envick & Langford 1998; Luthans & Ibrayeva 2006) to provide new insights

into the behavioural activities of practising entrepreneurs. Specifically, Luthans and

Ibrayeva (2006) observed the entrepreneurial behavioural activities of successful

entrepreneurs and have identified several specific activities. These authors grouped all

these entrepreneurial behavioural activities under nine dimensions: planning,

controlling, internal communication, human resource management, work-related tasks,

customer service, socialising, politicking and on-the-job personal time. Effective

performance in these activities is associated with entrepreneurial success. In order to

establish a new venture and to manage growth successfully, entrepreneurs need to be

proficient in these behavioural activities as well. Further, understanding what specific

behaviours help entrepreneurs succeed in specific environments is a necessary step,

because information can be used to enhance entrepreneurial self-efficacy required for

engaging in entrepreneurial behaviour (Luthans & Ibrayeva 2006).

5

1.1.4 Entrepreneurial information overload

There was a time when entrepreneurs lacked the necessary information for

entrepreneurial decisions. Therefore, having networks and external contacts became a

source of competitive advantage (Ahlstrom & Bruton 2006). However, the business

environment in which businesses operate today has undergone a paradigm shift with the

explosive growth in information and communication technologies. With this shift, the

availability of, and access to, information increased immensely. But, this also became a

problem of too-much information (Edmunds & Morris 2000). Therefore, the impact of

information overload was examined in different disciplines such as marketing,

management, management information systems, and organisation science (Speier,

Valacich & Vessey 1999; Shenk 1997; Eppler & Mengis 2004). The same problem can

also be faced by entrepreneurs, causing biases in their decision-making as identified by

Baron (1998), leading to sub-optimal outcomes. This can also lead to other challenges.

While information overload reduces the effectiveness of decision-making (Schick,

Gordon & Haka 1990), it increases information anxiety (Bawden & Robinson 2009).

Such emotional arousal or physiological responses resulting from anxiety, stress or fear

can negatively impact on self-efficacy (Conger & Kanungo 1988; Bandura 1977).

However, to the best of my knowledge, the extent to which the information overload

impacts on various aspects of entrepreneurship such as entrepreneurial self-efficacy and

entrepreneurial behavioural activities has not been investigated empirically.

1.2 Purpose of the study

The main purpose of my study is to examine the effects of entrepreneurial personality

characteristics on entrepreneurial self-efficacy, and how they in turn, impact on

entrepreneurial behavioural activities. Specifically, I have considered three personality

characteristics, six dimensions of entrepreneurial self-efficacy and eight activities of

entrepreneurial behaviour for empirical testing. My study will also consider how

information overload impacts on other entrepreneurship variables. Investigating the

impact of information overload is also in line with the suggestion by Rauch & Frese

(2007a), who underscored the need for considering situational conditions.

6

Specifically, my research questions are as follows:

i) How do personality characteristics of entrepreneurs impact on different

dimensions of entrepreneurial self-efficacy and entrepreneur behavioural

activities?

ii) What is the relationship between different dimensions of entrepreneurial

self-efficacy and entrepreneur behavioural activities?

iii) How does entrepreneurial information overload impact on two constructs,

namely entrepreneurial self-efficacy and entrepreneurial behavioural

activities?

To address these questions, a conceptual model is proposed based on extant literature.

Other academics and entrepreneurs were consulted before the model was finalised. The

model was empirically tested for various relationships: (i) the association between the

personality traits and the dimensions of entrepreneurial self-efficacy; (ii) the association

between the dimensions of entrepreneurial self-efficacy and the entrepreneurial

behavioural activities; (iii) the association between personality traits and the

entrepreneurial behavioural activities; (iv) the association between entrepreneurial

information overload and dimensions of entrepreneurial self-efficacy; and (v) the

association between entrepreneurial information overload and entrepreneurial

behavioural activities.

1.3 Motivation for this research

The motivation for my study is three-fold. First, earlier studies have mainly

concentrated on demographic and personality characteristics and their impact on

entrepreneurial intentions. Scholars believed that an entrepreneur’s intention (i.e.

cognitive intent) is a predictor of later behaviour (see Prabhu et al. 2012). Accordingly,

the respondents of these studies were mainly tertiary students and/or nascent

entrepreneurs, who in most cases did not own a business at all. Identifying the

predominant use of students as a sample in entrepreneurship studies, scholars have

suggested the use of real-world entrepreneurs instead (Chen, Greene & Crick 1998) or

practicing entrepreneurs (DeNoble, Jung & Ehrlich 1999). Accordingly, my study will

consider entrepreneurial characteristics, entrepreneurial self-efficacy and their impact

7

on the entrepreneurial behaviour of practicing entrepreneurs. While intent is a predictor

of behaviour, it is difficult to relate it to a posterior success. Therefore, Prabhu et al.

(2012) suggest replacing the intent with entrepreneurial behaviour in future research.

My study attempts to do this by empirically testing entrepreneurial behavioural

activities.

Second, many of the studies in entrepreneurship have focused on mature markets and

did not examine issues in emerging market economies (Bruton, Ahlstrom & Obloj,

2008). Emerging economies are experiencing rapid growth and industrialisation, and

are becoming increasingly important for the global economy (Hoskisson et al. 2000;

Ahlstrom & Bruton, 2006). However, Bruton, Ahlstrom and Obloj (2008) reviewed

articles published in top management and entrepreneurship journals between 1990 and

2006 about entrepreneurship, and found that less than one percent of them were on

emerging economies (only 43 out of 7,482). Further, Zahra (2007) also recommended

the adaptation of entrepreneurship theories developed in developed countries to

emerging economies. For richer theoretical development, Bruton, Ahlstrom and Obloj

(2008) also suggested testing the applicability of theory in different settings such as

emerging economies. Each emerging economy has some unique features that

differentiate it from other emerging economies. Therefore, emerging economies offer

the potential to test the theories for new insights that affect the entrepreneurial process,

behaviours and performance. For my study, I have chosen one of the two largest

emerging economies, India. Despite India being one of the two largest emerging

economies in the world, and the fourth largest economy as well, studies on

entrepreneurship in India were very limited (Bruton, Ahlstrom & Obloj 2008). My

study will help to better understand entrepreneurship in the Indian context as it becomes

an increasingly attractive market for multinational firms.

Third, the world has recently experienced an explosive growth of information and

communication technology which has impacted on all aspects of life, including

entrepreneurship. Few scholars were early in recognising the problem of dealing with

the copiousness of information a few decades ago (Milford & Perry 1977, Simon 1971;

Shapiro & Varian, 1999). It was termed information overload, but did not receive much

attention from researchers in entrepreneurship. Apart from a very limited amount of

8

research on the impact of information overload on entrepreneurial decision making

(Baron 1998) and its impact on the entrepreneur’s cognitive ability, causing the

entrepreneur to become overconfident (Forbes 2005), this area has largely been

overlooked by scholars of entrepreneurial research. My study considered this

dimension and incorporated it in the form of ‘entrepreneurial information overload’.

1.4 Contributions of the study

My study makes several contributions that are useful for academic research, as well as

for practitioners of entrepreneurship. They are briefly discussed below:

First, previous studies have examined the role of age, gender and human capital

(DeTienne & Chandler 2007), homemaker status (Singh & Lucas 2005), and intentions

(Ajzen, 1991) as predictors of entrepreneurial behaviour. In these studies, the focus was

on entrepreneurial activities such as opportunity identification, and gathering resources

to start a business or write a business plan, thus focusing on the entrepreneurial

intentions or initial venture creation activities only. As Bird and Schjoedt (2009) have

pointed out, many of these studies used students rather than entrepreneurs as

respondents. There is a consensus among researchers that the research in the area of

entrepreneurial behaviour has not been sufficiently addressed and more empirical data

are required to understand ‘what entrepreneurs actually do’ (Bird & Schjoedt 2009;

Bird, Schjoedt & Baum 2012; Gartner, Carter & Reynolds 2010). In fact, Bird and

Schjoedt (2009, p. 350) specifically ‘call for more studies and better operationalization

of entrepreneurial behaviour’ and for examining entrepreneurial behaviour extending

beyond the context of the start-up new ventures. A few years ago, Luthans and

Ibrayeva (2006) undertook a study of entrepreneurs’ behaviours by observing them in

transition economies and prepared a list. My study uses these entrepreneurial activities

identified by Luthans and Ibrayeva (2006) for empirical analysis and also by sampling

practicing entrepreneurs. I believe they are relevant to my context as the transition

economies share many features of emerging economies. Therefore my methodological

contribution by operationalising entrepreneurial behaviour allows other scholars to

examine and gain insights into entrepreneurial behavioural activities. Further, the

results of my study would be useful for practicing entrepreneurs.

9

Second, while previous studies have examined entrepreneurial self-efficacy as an

important predictor of entrepreneurial competence and behaviour, the construct used a

composite score to measure self-efficacy in entrepreneurial contexts (Chen, Greene &

Crick 1998; DeNoble, Jung & Ehrlich 1999; Forbes 2005). However, a recent study has

suggested that there are several dimensions within the construct of entrepreneurial self-

efficacy (McGee et al. 2009). These are: searching, planning, marshalling, and

implementing people related and finance related responsibilities. Combining different

dimensions of the construct into one composite measure is not only inappropriate, but

also limits our understanding of how entrepreneurs are prepared for their

responsibilities. Although McGee et al. (2009) have identified these different

entrepreneurial self-efficacy dimensions, these authors have tested them on students and

nascent entrepreneurs. However, my study examined them in the context of practicing

entrepreneurs. This makes it easy to identify specific dimensions within entrepreneurial

self-efficacy in which the entrepreneurs feel confident in their abilities. I am also able

to examine the impact of each dimension of entrepreneurial self-efficacy on the

dimensions of entrepreneurial behavioural activities in order to identify any inherent

relationships that may exist between various dimensions of these two constructs. I

believe that my results have greater relevance to both practitioners and students of

entrepreneurship for training purposes.

Third, while information overload has been around as a construct and been used in

various disciplines (Eppler & Mengis 2004; Schick, Gordon & Haka 1990), not much

has been done to examine its impact on entrepreneurship. Research on the impact of

information overload on entrepreneurship was sporadic and limited (Baron 1998;

Forbes 2005). This is surprising, given that we live in a world that is revolutionised by

information and communication technology. I have adapted the concept of ‘information

overload’ to the field of entrepreneurship, and propose a term ‘entrepreneurship

information overload’ (EIO). I examine the impact of EIO on entrepreneurs’

personality characteristics, entrepreneurial self-efficacy, and entrepreneurial behavioural

activities. To the best of my knowledge, my study is the first of its kind, and can

potentially guide future studies on this topic.

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Fourth, as Bruton, Ahlstrom and Obloj (2008) identified, most of the research in

entrepreneurship is done in developed or mature economies, and the developing

countries are largely ignored. In fact, less than one percent of publications on

entrepreneurship from 1990 to 2006 covered emerging economies. Not surprisingly, the

research in the area of entrepreneurship is also limited in India, even in the local

journals and magazines. To address this gap, our study is undertaken in a large

emerging economy, namely India, which opened its economy about two decades ago,

and is currently a global player in information technology. This provided a unique

context for us to examine entrepreneurship. Also, Zahra (2007) recommended the

adaptation of entrepreneurship theories developed in developed countries to emerging

economies. Therefore, results from this study would allow for a greater understanding

of entrepreneurship in India, which is fast becoming a global player. For many Western

multinationals, understanding entrepreneurship in India is useful as they seek to enter

India through establishing partnerships, licences and joint ventures. Further, small

business owners can benefit from identifying their strengths and weaknesses in the areas

of entrepreneurial self-efficacy and entrepreneurial behavioural activities.

In general, the conceptual model that I proposed and tested in my study can form the

basis for, or act as a platform for, future research in emerging economies.

1.6 Outline of the thesis

This chapter is an introduction to the research study. It includes an overview of the

studies conducted so far in the area of entrepreneurship and the characteristics and

behaviour of the entrepreneur This chapter states the purpose and research questions

of the study, motivations for this research, as well as the expected contribution of this

study. This chapter also includes a discussion on the limitations of this study. The

subsequent chapters of this study are as follows:

Chapter two presents an extensive review of the literature covering concepts and

theories relating to entrepreneurship and entrepreneurs. This chapter has been divided

into six sections to discuss the main aspects. The first section examines the concept of

‘entrepreneurship’ and provides a review of the various definitions of entrepreneurship.

11

The second section explores the research undertaken in the area of entrepreneurial

characteristics with a specific focus on personality traits. In the third section,

entrepreneurial self-efficacy is examined. Section four discusses the various studies

undertaken in the area of entrepreneurial behavioural activities, and the final section of

this chapter covers the concept of information overload and its applicability to the

entrepreneurship domain through the construct of entrepreneurial information overload.

Chapter three is titled, ‘Entrepreneurship issues in India’ and examines the socio-

cultural and economic context of India. It briefly covers the caste system, economic

reforms undertaken, and how education is also used to encourage entrepreneurship.

Chapter four builds on the gaps identified in the literature reviewed in the second

chapter, and proposes a conceptual framework for this study. It includes four major

constructs: (i) entrepreneurial personality characteristics, (ii) entrepreneurial self-

efficacy, (iii) entrepreneurial behavioural activities, and (iv) entrepreneurship

information overload. Based on the proposed conceptual framework, this chapter

articulates the research hypothesis for this study, with explanations for relationships

between the constructs identified in the framework.

Chapter five discusses the research methodology used to conduct this study. It

elaborates on the design of the measurements and the justification of selected

measurements used for the constructs and dimensions. It also discusses the methods

and techniques used along with the details of data collection procedures.

Chapter six presents and discusses the results. First, I include the characteristics of the

sample. Then I outline the results in the sequence of hypothesis based on the

conceptual model. At the end of the results section, I summarise all the hypotheses

tested and whether they are accepted or rejected based on the results. Then I discuss the

results in the light of the extant literature.

Chapter seven concludes my thesis by providing a summary of my research and its

practical implications to entrepreneurs, educators and policy makers. Further,

limitations have been recognised and recommendations are made for future research.

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CHAPTER 2

LITERATURE REVIEW

This chapter reviews the extant literature in the field of entrepreneurship with a view to

identifying significant theoretical and methodological contributions made by scholars in

this area. The relevant discussion is presented as follows. First, the concept and

various definitions of entrepreneurship are presented. Second, entrepreneurial

personality traits are discussed. Thirdly, I examine entrepreneurial self-efficacy.

Fourthly, the current state of entrepreneurial behaviour is detailed. Finally, the literature

on entrepreneurial information overload is reviewed.

Early last century, Schumpeter (1934) underscored the importance of entrepreneurship

for increasing innovation and competition. New ideas are expected to bring competition

and variety, which in turn are likely to replace or displace obsolete firms - a

phenomenon referred to as ‘creative destruction’. Such activity is expected to transform

the economy through start-up activities in new industries (Wennekers & Thurik 1999).

It is seen that entrepreneurship is not a new topic, and has been discussed by academics

since the 18th century and has continued to gain attention.

Scholars highlight the growing importance of entrepreneurship in the modern world

(Acs & Audretsch 2010; Kuratko 2005; Van Praag & Versloot 2008; Wennekers &

Thurik 1999). In the current competitive global scenario, it is seen that on the one hand,

the governments in various countries are unable to create jobs and are relying heavily on

businesses to do so. At the same time, in an attempt to become efficient and fight

competition, large corporations are undertaking various approaches such as downsizing

and outsourcing, leaving new ventures and entrepreneurs to create jobs and grow the

economy (Mazzarol 2007). Entrepreneurship is considered to be an important

mechanism to facilitate economic development through new firm formation, thereby

creating jobs (Baron 2000), wealth (Thandi & Sharma 2004) and economic success (Li,

Zhang & Matlay 2003).

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2.1 Concept and definition of entrepreneurship

Various scholars (Hebert & Link 1989; Holmes & Schmitz 1990; Murphy, Liao &

Welsch 2006; Van Praag 1999) have referred to the pioneering contributions of

Cantillon (1755/1931), Schumpeter (1942), Schultz (1975), Kirzner (1973, 1985),

Knight (1921/1971) and Say (1803/2001) to the academic discussion on

entrepreneurship. In modern times, the term entrepreneurship has been used differently

in diverse disciplines over the years (Gartner 1990; Hebert & Link 1989; Ireland &

Webb 2007; Murphy, Liao & Welsh 2006), each contributing to building a general

theory of entrepreneurship. Therefore, to understand what constitutes entrepreneurial

activity and to arrive at an acceptable definition of entrepreneurship and / or an

entrepreneur, the views put forth by different schools of thought were commonly

distinguished as classical, neo-classical, Austrian and behavioural approaches; the main

ideas of these approaches are examined here.

The term ‘entrepreneur’ is derived from the French word ‘entreprendre’ which means

‘to undertake’ (Oxford Dictionary, 2009). The earliest reference to the term

‘entrepreneur’ was made by Cantillon (1680-1734) from an economic perspective by

describing an entrepreneur as one who engages in arbitrage and bears risk. Say (1767-

1832) interpreted the role of the entrepreneur as being central to a firm as a co-ordinator

and manager. He assigns an important position to the entrepreneur in production,

distribution and consumption. Other economists, such as Alfred Marshall (1842-1924),

extended the meaning of entrepreneur to include not only the ‘risks’ relating to the

supply of commodities (production), but also making provision for innovation and

progress (Hebert & Link 1989). Marshall believed entrepreneurs are cost minimisers

and therefore innovators, who embody a set of abilities that are scarce in any society.

An early contributor to the development of the theory of entrepreneurship was

Schumpeter (1883-1950), who focused on innovation as an endogenous process and the

entrepreneur as being a prime mover within the economic system through innovation.

Schumpeter, however, did not support the notion of the entrepreneur as a capitalist and

risk-bearer. Instead, he defines an entrepreneur as a person who seeks opportunities for

profit through ‘new combinations’ in production. This ‘new combination’ is

14

synonymous with innovation, which is the basis for meaningful economic progress. In

this process, old firms that are incapable of carrying out ‘new combinations’ cease to

exist and are replaced by firms that are able to perform the ‘new combination’ or

innovation. Schumpeter observes that such an entrepreneur possesses ‘a mental freedom

… [that] is something peculiar and by nature rare’ (1934, p. 86). It is this rare mental

attitude that distinguishes entrepreneurs as leaders who are willing to establish new

paths.

While scholars like Cantillon (1755) and Marshall (1930) emphasised the risk that

entrepreneurial activity involves, Knight (1885-1972) draws a distinction between risk

and uncertainty, and states that only a subset of individuals in any society (i.e., the

entrepreneurs) exercises judgement effectively whenever uncertainty is involved, and

takes responsibility for the decisions made. As a reward for undertaking tasks bearing

uncertainty, the entrepreneur gains residual payment, prestige, and satisfaction (Knight

1921, 1971). However, uncertainty includes a type of probability which cannot be

classified on any valid basis because it concerns the outcome of a unique event (van

Praag 1999).

Therefore, the ability of an entrepreneur to make a judgement of the amount of

uncertainty involved, and to make an estimate of its value, differentiates him / her from

the rest of society (van Praag 1999).

Kirzner, in his earlier work in 1973, described entrepreneurs as people who display an

alertness to identify and exploit profit opportunities and who require a special type of

knowledge which is “knowing where to look for knowledge” (p.68), although he did not

explicitly mention risk and uncertainty. Hebert and Link (1989) were concerned that

such a view “downplays the importance of uncertainty in human decision making”

(p.47). In a later work, Kirzner (1999) clarifies his view of the entrepreneur as being

alert to opportunities, which requires a willingness to shoulder risks, and states that

uncertainty is endemic in the entrepreneurial firm life-cycle: if entrepreneurs are alert,

they will identify ‘marginal products at multi-period instances over time’. Such

behaviour will depend upon the entrepreneur’s ability to deal with uncertainty and the

degree of risk that is involved.

15

Even according to Schultz (1980), entrepreneurs are those who respond to opportunities

arising from disequilibria rather than having an ability to deal with uncertainty and risk.

Schultz maintains that risk and uncertainty are ever present in the economy and that “the

bearing of risk is not a unique attribute of entrepreneurs . . . [even as] entrepreneurs

assume risk, there also are people who are not entrepreneurs who assume risk” (1980,

p.441). Schultz gives an example of farmers who certainly bear risks. However, they do

the same activities as their ancestors did. Their work is repetitive and very mundane. It

does not require searching for new information, but simply using past experience in

dealing with the allocation of resources. In this example, Schultz highlights that the

bearing of risk alone is not necessarily an attribute unique to entrepreneurship.

After examining the contribution of these various economists (e.g. Cantillon, Kirzner,

Knight, Schultz & Schumpeter), Hebert and Link (1989) proposed a definition of

entrepreneurship by focusing on the individual: “the entrepreneur is someone who

specialises in taking responsibility for and making judgemental decisions that affect the

location, form, and the use of goods, resources, or institutions” (p.47). These authors

claim that their new definition accommodates, within a market system, a range of

entrepreneurial activities such as coordination, arbitrage, ownership, speculation,

innovation and resource allocation.

While the various concepts and views about entrepreneurship discussed above have

merit, several studies (e.g. Gartner 1990; Shane & Venkataraman 2000) carried out in

the 1990s have redefined the concept by presenting frameworks that include different

dimensions covering a range of issues. Gartner (1990) has identified two major

perspectives of entrepreneurship. The first one focuses on the characteristics of

entrepreneurship which include the entrepreneur, innovation, growth, and uniqueness.

The second one focuses on the outcomes of entrepreneurship; this perspective also

regards a situation as being entrepreneurial only if it creates value or if an individual has

gained from the outcome. Shane and Venkataraman (2000), on the other hand, defined

entrepreneurship as a study of an individual’s ability to recognise opportunities, to

evaluate, and to exploit these opportunities. This broader view is more than just firm

creation in that it includes the entrepreneurs’ abilities, as well as how value is created.

16

Taking a different approach, Smilor (1997) terms entrepreneurship as a subversive

activity because “it upsets the status quo, disrupts accepted ways of doing things, and

alters traditional patterns of behaviour” (p.341). This is in line with the seminal works

of Schumpeter (1936, 1942) where he argues that entrepreneurs carry out new

combinations and revolutionise the patterns of production. This characteristic of

revolutionising happens when entrepreneurs start a new venture (Bygrave 1989; Gartner

1990; Low & Macmillan 1988). The concept of entrepreneurship has taken many

forms. We also see that entrepreneurs are involved in franchising (Kaufmann & Dant

1998); they are not only involved in establishing new firms, but also in existing firms

when they undertake corporate entrepreneurship (Covin & Slevin 1991; Wortman

1987). They are involved in formal and informal economies (La Porta & Shleifer 2008).

Entrepreneurs are also involved in social entrepreneurship, which is entrepreneurial

ventures that aim to resolve social problems and improve society in general (Parkinson

& Howorth 2008). Since entrepreneurship takes so many different forms, it is necessary

to examine some definitional issues of entrepreneurship.

2.1.1 Plurality of definitions

The study of entrepreneurship has received attention from scholars in a variety of

disciplines such as economics, management, finance, psychology, anthropology and

sociology (Hebert & Link 1989; Ireland & Webb 2007). This multi-disciplinary interest

in entrepreneurship has given rise to a variety of theories and definitions. Several

studies have attempted to define the term entrepreneurship focusing on different aspects

(e.g. Bygrave & Hofer 1991; Kets de Vries 1996; Low & MacMillan1988). For

example, Schumpeter (1934) and Drucker (1985) focused on innovation or the creation

of new processes, methods, and new products, whereas Low and MacMillan (1988) and

Bygrave and Hofer (1991) defined entrepreneurship as creating a new organisation.

Others such as Aldrich and Zimmer (1986) and Shapero (1977) focus on the

behavioural aspects of entrepreneurship. This means that there is no single definition

that is sufficiently comprehensive to encompass all the factors of entrepreneurship. A

huge variety of definitions are seen in the literature, and the most commonly cited

definitions are identified and tabulated in Table 2.1.

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Table 2.1: Sample of Definitions of Entrepreneurship/Entrepreneur Author/Source Definition

Schumpeter (1936, p.78) Schumpeter (1942, p.132)

“Everyone is an entrepreneur when he actually ‘carries out new combinations,’ and loses that character as soon as he has built up his business, when he settles down to running it as other people run their businesses.” “The function of entrepreneurs is to reform or revolutionize the pattern of production by exploiting an invention or, more generally, an untried technological possibility for producing a new commodity or producing an old one in a new way, by opening a new source of supply of materials or a new outlet for products, by reorganizing an industry and so on.”

Carland et al. (1984, p.358)

“An entrepreneur is an individual who establishes and manages a business for the principal purpose of profit and growth. The entrepreneur is characterized principally by innovative behaviour and will employ strategic management practices in the business.”

Drucker (1985) Drucker (1995, p.28)

Defines the entrepreneur as an “innovator”. A business person who builds an enterprise without innovating is not, in his view, an entrepreneur at all. “the entrepreneur always searches for change, responds to it, and exploits it as an opportunity”

Low and MacMillan (1988, p.141)

Entrepreneurship is defined as the “creation of new enterprise”.

Bygrave and Hofer (1991, p.14)

“The entrepreneurial process involves all the functions, activities, and actions associated with the perceiving of opportunities and the creation of organizations to pursue them”. “An entrepreneurial event involves the creation of a new organisation to pursue an opportunity.” “An entrepreneur is someone who perceives an opportunity and creates an organization to pursue it.”

Kets de Vries (1996, p.865)

“An entrepreneur is an individual who is instrumental to the conception of the idea of an enterprise and its implementation”

Sharma and Chrisman (1999, p.17)

They define entrepreneurship as “acts of organizational creation, renewal, or innovation that occur within or outside an existing organisation”

Shane and Venkataraman (2000, p.218)

They define entrepreneurship as being when “opportunities to create future goods and services are discovered, evaluated, and exploited”

Hisrich, Peters, & Shepherd (2005, p.8)

“Entrepreneurship is the process of creating something new with value by devoting the necessary time and effort, assuming the accompanying financial, psychic, and social risks, and receiving the resulting rewards”

Kurakto & Hodgetts (2001, p.4) Kuratko & Hodgetts (2004, p.43)

“Entrepreneurs are individuals who recognize opportunities where others see chaos or confusion.” “Entrepreneurship is a process of innovation and new-venture creation through four major dimensions – individual, organizational, environmental, process – that is aided by collaborative networks in government, education, and institutions.”

18

As can be seen from the table above, identifying a comprehensive definition of

entrepreneur or entrepreneurship is a challenging task, since there is enormous variety

in definitions, some of which do not overlap, each focusing on certain aspects with

regard to what constitutes an entrepreneur or entrepreneurship. Considering the vast

array of divergent views, Bygrave and Hofer (1991) observe that “entrepreneurship

scholars have been embroiled in a never-ending debate over the definition of an

entrepreneur” (p. 13). However, Baumol (1993) considers that definitions are

“complementary rather than competitive, each seeking to focus attention on some

different feature of the same phenomenon” (p.198). It is evident from the review of the

literature that entrepreneurship has evolved from the mere use of resources in order to

survive, to the creative use of resources in order to stimulate wealth (Murphy, Liao &

Welsh 2006). To create wealth, the entrepreneur has to identify opportunities, deal with

uncertainty and be exposed to risk.

As seen in the above discussion, it could be surmised that definitions of

entrepreneurship draw from multiple theoretical perspectives. As Murphy, Liao and

Welsch (2006, p.13) put it, “the body of entrepreneurship research is stratified, eclectic,

and divergent”, generating “many theories and frameworks”. However, a closer scrutiny

of the definitions listed above indicated four aspects that are common to

entrepreneurship: opportunity recognition, risk taking, business creation, and business

growth. The next section examines the role of the individual in the process of

entrepreneurship.

2.2 Entrepreneur’s background

A review of the definitions of entrepreneurship would clearly point out that an

entrepreneur is a central entity to a firm (e.g. Fastré & Van Gils 2007; Kuratko &

Hodgetts 2001; van Praag 2005). As an individual, an entrepreneur is the source of

action that takes place in a firm. Therefore, it is crucial to understand the role of the

entrepreneur in successfully establishing and managing the growth of a firm. In a

business context, establishing a successful firm requires an entrepreneur to deal with

complex scenarios and situations. Not all individuals take up entrepreneurship as their

career option, and not all those who become entrepreneurs are successful. Obviously,

19

the greatest determinant of business success is the entrepreneur himself or herself

(Sahin, Nijkamp & Rietdijik 2009). By behaving entrepreneurially, the individual

engages in a process that creates value for the firm by recognising and exploiting

opportunities.

Within a particular context, the effectiveness of entrepreneurs is influenced by both

demographic and personality characteristics (Sahin, Nijkamp & Rietdijik 2009).

Demographic characteristics have been examined by a number of studies covering

various aspects such as age, gender, and educational backgrounds, characteristics which

have been examined in previous studies (e.g. Kim, Aldrich & Keister 2006; Kourilsky

& Walsad 1998). Personality-related aspects studied include personality traits (Collins,

Hanges & Locke 2004; Rauch & Frese 2007a & 2007b), entrepreneurial skills and

competencies (Ahmad et al. 2009; Man, Lau & Chan 2002), entrepreneurial behaviour

(Collins, Hanges & Locke 2004; Endres & Woods 2006), and entrepreneurial self-

efficacy (Chen, Greene & Crick 1998; DeNoble, Jung & Ehrlich 1999). It is therefore

felt that individuals with the appropriate demographic and personality factors would

perform the role of entrepreneur effectively. Among other theoretical constructs, our

study examines entrepreneurs’ personal backgrounds, specifically focusing on their

personality characteristics. However, I will briefly mention the role of demographic

characteristics below, as they also form a part of entrepreneurs’ background details.

2.2.1 Demographic characteristics

The most popular demographic characteristics examined by scholars of

entrepreneurship are: age (Colombo & Delmastro 2001; Lévesque & Minniti 2006),

gender (Blanchflower 2004; Kolvereid, Shane & Westhead 1993; Mazzarol et al. 1999),

education (Blanchflower 2004; Colombo & Delmastro 2001; Robinson & Sexton 1994)

and work experience (Blanchflower & Meyer 1991; Colombo & Delmastro 2001). But

there were also other demographic characteristics that were considered. These include

family support (Pistrui et al. 2000), previous employment (Mazzarol et al. 1999;

Robinson & Sexton 1994), ethnicity (Aldrich & Waldinger 1990), immigrant status

(Thandi & Dini 2010) and religion (Audretsch, Boente & Tamvada 2007; Nunziata &

Rocco 2011). The impacts of the demographic characteristics varied in different

20

contexts, but were found to be important for those taking up entrepreneurship as a

career.

Some findings from studies on the demographic characteristics are discussed here.

Colombo and Delmastro (2001) found that entrepreneurs engaged in a high-tech

business had similar backgrounds with regard to age, level of education and experience.

Lévesque and Minniti (2006) found that the probability of starting a business increases

with age up to 35 years, after which it decreases. Pistrui et al. (2000) compared

entrepreneurs in eastern and western parts of Germany as to the role of family support

on entrepreneurship. These authors found that entrepreneurs from the western parts of

Germany believed that they had more family encouragement compared to those from

the east. They also found that a large percentage (60 per cent) of the German

entrepreneurs from the western side had at least one of their parents who was an

entrepreneur, and some of them inherited their parents’ business and / or had had family

investors. Ciavarelli et al. (2004) found that entrepreneurs’ relevant industry experience

was significantly related to the survival of the venture. Their previous experience helped

them to reduce environmental uncertainty, as they could easily connect with the

suppliers or customers and establish networks, thereby improving the chance of the

survival of their venture.

Of late, research that focused merely on demographic characteristics of entrepreneurs

has been on the decline. Recognising that starting a business is a risky decision,

Koellinger, Minniti and Schade (2007) assert that it is not just the objectively

measureable socio-demographic variables that are important for entrepreneurial

behaviour; instead, it is the subjective preferences and perceptions of the entrepreneurs

that have a significant impact on entrepreneurial behaviour. Consequently, in the last

decade or so, the focus of research in understanding entrepreneurs has shifted from

entrepreneurs’ socio-demographic variables to their personality characteristics,

competencies and success (e.g. Rauch & Frese 2007a, 2007b; Man, Lau & Snape 2008).

Therefore, examining non-demographic variables such as entrepreneurs’ personality

characteristics, self-efficacy and behavioural activities is critical to our understanding of

entrepreneurial behaviour and performance. The next section examines the personality

characteristics of entrepreneurs.

21

2.2.2 Personality characteristics

Since an individual is at the centre of entrepreneurship, scholars in this field have been

concerned about the role of individual attributes of entrepreneurs embedded in his or her

personality. From this perspective, it is felt that “there is a trait or a set of traits that

characterise an entrepreneur and are predictive of entrepreneurial behaviour (Chell

2008, p. 83). Therefore, these personality characteristics are considered to be “stable

over time and provide the reasons for the person’s behaviour” (Mount et al. 2005, p.

448). These traits determine an individual’s affective, behavioural and cognitive style.

These are concerned with the emotions, actions and conscious mental activity

respectively of the individual concerned. Since these traits have been conceptualised as

having the propensity to act, scholars have assumed that personality traits are predictors

of entrepreneurial behaviour (Rauch & Frese 2000).

A review of the extant literature reveals the importance of personality factors in shaping

up an individual’s decision to become a founder of a business (Brockhaus 1975;

Hisrich, Langan-Fox & Grant 2007; Jennings & Zeithaml 1983; Shaver & Scott 1991).

The foundation for research in this area was provided by Mill (1848) who highlighted

that the assumption of risk is a key part of entrepreneurial activity. Then, there was an

emphasis on innovation that could bring new and more efficient products and services

(Schumpeter 1934). While scholars such as Mill and Schumpeter have explained

entrepreneurship activities and their environment, the focus then shifted to the person

involved in entrepreneurship, i.e. the entrepreneur (Shaver & Scott 1991). It was

believed that the entrepreneur had a number of personality characteristics that

distinguished him or her from others. This was consistent with the literature around that

time on vocation-person fit, which proposed that people choose their occupation on the

basis of their personalities, needs and values (Holland 1985).

The stream of research on entrepreneurial personality received a significant impetus

from scholars such as McClelland (1961), Hornaday and Aboud (1971), Brockhaus

(1980b) and Scheré (1982), to name but a few. The pioneering research of McClelland

(1961) shows the need to achieve (nAch) as a very important predictor of

entrepreneurial behaviour. According to his theory, individuals high in need for

achievement will be attracted to taking up an entrepreneurial career and will perform

22

well because of their tendency to excel and a continuous need to improve their

performance. Subsequent research by several scholars (Collins, Hanges & Locke 2004;

Hornaday & Aboud 1971) indicated similar associations between the need for

achievement characteristics of entrepreneurs and their entrepreneurial intention (as well

as behaviour).

Another personality characteristic of entrepreneurs identified is the internal locus of

control proposed by Rotter (1966). Scholars have identified this characteristic as being

linked with the individual’s intention to start a business (Brockhaus 1982; Seligman

1990) and also firm performance (Boone, Brabander, & Witteloostuijn 1996).

Likewise, strong empirical evidence was found to show that innovativeness is a

predictor of entrepreneurial intention (Sexton & Bowman-Upton 1986) and that

entrepreneurs have a higher level of innovative preference than managers (Carland &

Carland 1991). Another personality characteristic of entrepreneurs, namely a risk-

taking propensity, was found to be strongly associated with entrepreneurial intention

(Zhao, Seibert & Lumpkin 2010) and it was also found that entrepreneurs displayed a

significantly higher risk-taking propensity compared to small-business owners and

managers (Carland et al.1995).

Entrepreneurs were also found to have more tolerance for ambiguity than top executives

and managers, since entrepreneurs have to deal with the uncertainty inherent in the

entrepreneurial environment (Scheré 1982). It is seen that individuals who manifest

higher levels of ambiguity tolerance perceive the uncertainty in the environment

positively as desirable, and deliberately seek such situations (MacDonald 1970; Gasse

1982). Yet another important characteristic identified was need for autonomy, which is

said to drive entrepreneurship (Brandstatter 1997). Individuals with this characteristic

will prefer to avoid restrictive environments and make independent decisions by setting

up their own goals and ways to achieve those goals. Therefore, individuals with a high

need for autonomy were found to be motivated to choose to be self-employed (Carter et

al. 2003; Feldman & Bolino 2000), as they would be in control of their decisions and

avoid restrictive rules of established organisations.

23

Some recent studies have gone further to not only look at personality characteristics of

entrepreneurs, but also to examine the relationship between personality traits and

business creation and success (e.g., Barrick & Mount 2005; Zhao & Seibert 2006).

Scholars believe that entrepreneurs engage in both innovation processes and job

creation (Carree & Thurik 2003; Wong, Ho & Autio 2005), and in this process, they

organise a firm by coordinating the resources required to exploit market opportunities

under conditions of uncertainty (Alvarez & Barney 2005). In this context of uncertainty

and risk, entrepreneurs must possess some traits that enable them to go through the risky

process of business venturing (Bouchikhi 1993). This clearly points out the need for

examining personality characteristics such as risk propensity, among others.

Another stream of study focused on the importance of decision making and a venture’s

success. Researchers believe that during the entrepreneurship process, entrepreneurs

face decision-making situations that will determine the success of their venture.

Clearly, entrepreneurs need to not only possess knowledge, but also a variety of skills

and abilities which in turn are influenced by personality characteristics (Caliendo,

Fossen & Kritikos 2014).

On the premise that personality characteristics are critical for entrepreneurship, scholars

have identified several characteristics. A sample of these personality characteristics is

shown in Table 2.2.

24

Table: 2.2 Personality characteristics examined in entrepreneurship studies Personality Characteristics

Authors

Need for Achievement McClelland 1961; Collins, Hanges & Locke 2004; Cromie 2000

Locus of control Rotter 1966; Caliendo, Fossen & Kritikos 2014; Mueller & Thomas 2001

Risk taking Kihlstrom & Laffont 1979; Caliendo, Fossen & Kritikos 2014; Wagener, Gorgievski & Rijsdijk 2010

Innovativeness & Creativity

Bartram 2005; Mazzarol & Reboud 2006; Mueller & Thomas 2001; Utsch and Rauch 2000

Need for autonomy Brandstatter 1997; Carter et al. 2003

Tolerance of ambiguity Wagener, Gorgievski & Rijsdijk 2010

Assertiveness Caliendo & Kritikos 2008

Independence Wagener, Gorgievski & Rijsdijk 2010; Cromie 2000

Stress tolerance Frese 2009

Self-reliance Lee & Tsang 2001

Extroversion Lee & Tsang 2001

Self-confidence Kirkwood 2009

Persistence Cromie & Johns 1983

Trust Caliendo, Fossen & Kritikos 2012

Reciprocity Caliendo, Fossen & Kritikos 2012

Determination Cromie & Johns 1983

Initiative Utsch & Rauch 2000

Passion for work Frese 2009

Proactive personality Crant 1996; Frese 2009

The table above shows a list of 19 popular personality characteristics found in the

literature. I have already discussed some of these personal characteristics that

distinguish entrepreneurs. Further, Rauch and Frese (2007a) have conducted a meta-

analysis of personality characteristics in entrepreneurship recently and identified a list

of 51 personality characteristics that formed part of the studies included in their

analysis. The detailed results of this study will be discussed later in this chapter, but it is

important to point out that this study found evidence to positively link entrepreneurs’

25

personality characteristics with business creation, and that certain personality traits had

higher correlations as they matched with the entrepreneurial tasks.

In contrast to the above studies, researchers such as Aldrich (1999), Blanchflower and

Oswald (1998), who tried to explain entrepreneurship using personality traits, could not

derive any significant findings. Likewise, Brockhaus and Horwitz (1986) also examined

the relationship between the personality traits of entrepreneurs and business creation,

but could not find any supporting evidence. It is not surprising, then, when Gartner

(1985) argues that using a person-centric approach to document a typical entrepreneur

may not be useful, since there is a significant amount of diversity amongst the types of

entrepreneurs, and the variation among them is even larger than the difference between

an entrepreneur and a non-entrepreneur. Due to this heterogeneity among entrepreneurs,

an ‘average entrepreneur’ does not exist, and an average personality profile of

entrepreneurs cannot be arrived at.

In a context of scepticism over whether personality characteristics impact on

entrepreneurship, Low and MacMillan (1988) question the very purpose of personality-

based research, since most of the studies were “confined largely to documenting and

reporting the [entrepreneurs’] personality characteristics, with little attempt to uncover

causal relationships or to explore implications for practice” (p.141), and they argue that

such personality-based descriptive studies do not help in theory development. Even a

couple of decades later, the lack of an appropriate research approach was observed by

Rauch and Frese (2007a), who point out that many studies in this area “were not

theoretically driven but were descriptive in nature” (p. 358). Not surprisingly, some

authors (Aldrich 1999; Chell 1985; Gartner 1985) have already advocated that it was no

longer useful to study personal characteristics of entrepreneurs as such. Probing this

issue further, Delmar (2000) argues that the study of personality traits in

entrepreneurship is obsolete. Some of the reasons for his belief lie in the limitations of

using personality traits to profile entrepreneurs. For instance, the traits identified consist

of a large list and there is not much of a consistency in the traits identified and linked to

entrepreneurship. Further, these traits are not static, change over a period of time, and

may also be culture-dependent, as most of these studies are US-based. Delmar (2000)

also argues that instead of using multi-dimensional constructs, personality studies are

26

using one-dimensional constructs which are obsolete in relation to modern

psychological research.

As seen in the above discussion, several personality traits/characteristics were used to

profile entrepreneurs. But a more important issue is to examine how these traits impact

on entrepreneurs when they engage in entrepreneurial initiatives. It is important to

recognise that scholars have differentiated between broad and specific personality traits.

The following discussion, therefore, highlights the role of personality characteristics,

both broad and specific types, in influencing entrepreneurial initiatives.

2.2.2.1 Broad personality traits

This stream of research on personality traits has identified several traits, resulting in a

large and diverse list of personality characteristics, for example as seen in Table 2.2.

However, evidence suggests that all the personality traits can be reduced to, or

categorised into, five broad personality categories of traits or characteristics, and

popularly known as the Big Five (Costa & McCrae 1992; Digman 1990). It is suggested

that all the individual personality traits can be viewed as being part of, or embedded in,

one of the Big Five constructs: emotional stability, extraversion, openness to

experience, agreeableness and conscientiousness. The Big Five model has been used by

several researchers to identify and examine the relationships between personality traits

and entrepreneurial aspects such as status and intention.

Previously, the Big Five constructs were examined by several scholars in organisational

and leadership studies (Alessandri & Vecchione 2012; Barrick, Mount & Judge 2001).

For example, in the last two decades, the Big Five model was used to understand

individual differences (Goldberg 1993), predict academic performance of students,

academic motivation (Komarraju, Karau & Schmeck 2009), or understand job

preferences, career successes and job performances (Barrick & Mount 1991; Mount et

al. 2005).

In the entrepreneurship research, studies were undertaken in the Big Five model by

various scholars over the years (Norman 1963; Borgatta 1964; Digman 1990; Costa &

McCrae 1992; Ciavarell et al. 2004; Zhao & Seibert 2006). In the process of

27

development, scholars have identified their own big five constructs (e.g. Norman 1963,

Borgatta 1964). While the list of the Big Five has undergone some changes over the

period, recent studies have finally coalesced around the five constructs, based on the

taxonomy developed by Costa and McCrae (1992). The constructs of the Big Five

model and their corresponding traits are presented in Table 2.3.

Table 2.3 Summary of the Big Five characteristics and their corresponding traits Big Five characteristics Traits Extraversion Assertive, dominant, energetic, active, talkative,

and enthusiastic Emotional stability Positive: calm, even-tempered, self-satisfied,

comfortable, unemotional, hardy, stable, confident, and effective Negative: Anxiety, hostility, depression, self-consciousness, impulsiveness, and vulnerability

Agreeableness

Trusting, forgiving, caring, altruistic, gullible, being courteous, flexible, good-natured, cooperative, soft-hearted and tolerant

Conscientiousness Responsible, well-organised, planful, hardworking, achievement-oriented, motivated, and perseverance

Openness to experience Being imaginative, creative, cultured, curious, original, broadminded, intelligent, artistically sensitive, innovative

Source: Costa and McCrae 1992; Caliendo, Fossen & Kritikos 2014; Ciavarella et al. 2004; Judge et al. 1999; Zhao & Seibert 2006

Each of the Big Five constructs is briefly discussed below. The first construct is

extraversion and relates to the individual being assertive, ambitious, socially oriented,

and seeking leadership roles (Judge et al. 1999). Research findings indicate extraversion

is a clear predicator of performance for managers and salespeople (Barrick & Mount

1991). Being extraverted makes individuals sociable and helps in the development of

social networks (Casciaro 1998). Extraversion is therefore seen to have a positive

impact on networking activities (Zhao & Seibert 2006). This ability to establish

networks with suppliers and customers is likely to increase the chances of venture

success (Baron & Markman 2000).

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The second construct is emotional stability (which is similar to neuroticism in its

negative specification). Individuals with high emotional stability will be even-tempered

and have the ability to maintain relationships (Ciavarella et al. 2004). Emotionally

stable individuals will be more self-confident, stay relaxed in times of pressure and will

be more able to tolerate stress situations (Caliendo, Fossen & Kritikos 2014, Judge et al.

1999). Scoring low on this factor would mean that individuals would be more likely to

experience a multitude of problems such as anxiety, fear, depression and irritability

(Judge et al. 1999). Therefore, individuals with high emotional stability are expected to

become entrepreneurs (Caliendo, Fossen & Kritikos 2014). Entrepreneurs who have

high emotional stability will be able to manage anxiety, address their well-being and,

thereby, manage performance pressures and expectations. Ciavarella et al. (2004) did

not, however, find any relationship between the entrepreneur’s emotional stability and

the survival of the business venture. On the other hand, Zhao, Seibert and Lumpkin

(2010) did find that high emotional stability was positively related to entrepreneurial

intentions as well as performance. The ability to stay calm and even-tempered increases

the likelihood of the entrepreneur being able to perform better.

The third factor is agreeableness, which is related to individuals being co-operative as

well as likeable. A high score on agreeableness means that individuals are co-operative,

courteous and flexible in dealing with others. This may be particularly important where

teamwork and customer service is important. On the other hand, a low score on

agreeableness implies that such individuals are self-centred, inflexible and bargain hard.

In the area of entrepreneurship, researchers (Ciavarella et al. 2004; Baron & Markman

2000) posit that this type of trust and cooperation in the business relationships result in

entrepreneurs’ ability to enter new businesses, achieve new product development,

increase shareholder wealth, and in the likelihood of long-term venture survival.

However, others scholars (Zhao & Seibert 2006; Caliendo, Fossen & Kritikos 2014)

refer to the negative effects of this personality trait, stressing that entrepreneurs who

score highly on agreeableness and in their efforts to please others might restrain

themselves from making the hard bargains which are necessary for improved

performance.

29

The fourth factor is conscientiousness, which is characterised by achievement

orientation, dependability, and orderliness (Ciavarella et al. 2004; Judge et al. 1999).

This trait was found to be a predicator of job performance for both managers and

salespersons (Barrick & Mount 1991). Individuals with this characteristic can

overcome obstacles because they are hard-working, dutiful, dedicated, and persevere to

succeed, thereby increasing the likelihood of venture survival and a longer lifespan for

the venture. This personality characteristic is manifested in three related facets:

achievement orientation (hardworking and persistent), dependability (responsible and

careful), and orderliness (planful and organised). Recent empirical evidence provides

support for the contention that conscientiousness at work is positively linked to positive

job behaviour and performance (Judge et al. 1999). In the area of entrepreneurship, as

seen earlier, the trait of achievement orientation is linked to successful entrepreneurship

(McClelland 1961) and entrepreneurs working very hard and for long hours (Barrick &

Mount 1991). However, there is not much evidence linking individuals who are ‘hard

working or dutiful’ with entrepreneurship. In fact, it is argued that the trait of being

dutiful is negatively linked to entrepreneurial development (see Rauch & Frese

2007a). It is suggested that the personality characteristic of being dutiful is more suited

to employees than entrepreneurs (Caliendo, Fossen & Kritikos 2014). Conventional

wisdom indicates that conscientiousness is positively related to entrepreneurship.

However, recent scholars argue that if the overall construct of conscientiousness is used

to predict entrepreneurial success, there could a possibility of contradictory effects

within the construct (Caliendo, Fossen & Kritikos 2014; Rauch & Frese 2007a).

The fifth construct of the Big Five is openness to experience. Individuals with this

attribute are seen as being intellectual, intelligent and open to new ideas and experiences

(Ciavarella et al. 2004). Perhaps, among the Big Five constructs, this trait is probably

closest to the innovation aspect proposed by Schumpeter (1934). Individuals who score

highly on this characteristic should be creative, innovative and curious (McCrae 1987),

and high in cognitive ability (Barrick & Mount 1991). Therefore, such individuals are

expected to possess ideas that are original and be open-minded. This should allow an

entrepreneur to acquire new knowledge and innovative thinking to develop new

strategies and, in doing so, improve the life span of the new venture. Therefore,

Caliendo, Fossen & Kritikos (2014) expect that the higher an individual’s openness to

30

experience, the greater the probability of that individual becoming an entrepreneur, or

even surviving as an entrepreneur.

Researchers from the entrepreneurial discipline have applied the Big Five constructs to

examine their role in predicting entrepreneurial performance (e.g., Ciavarella et al.

2004; Zhao & Seibert 2006; Zhao, Seibert & Lumpkin 2010). A study by Ciavarella et

al. (2004) posited that the Big Five personality attributes would provide a measure of

the entrepreneur’s personality. Their findings revealed mixed results. While

conscientiousness was positively related to long-term venture survival, openness to

experience was negatively related; the other three characteristics (extraversion,

emotional stability and agreeableness) were unrelated to the long-term survival of the

firm. In a subsequent study, Zhao and Seibert (2006) argued that the Big Five model is a

better approach as it has withstood the reliability and validity tests vis-a-via the specific

traits approach; they also believed that Big-Five personality characteristics are better

predictors of entrepreneurial status, and can also help in differentiating between

entrepreneurs and non-entrepreneurs. These authors suggest that entrepreneurs are of

various types and need matching skills and processes. For example, entrepreneurs who

are open to experience are more likely to start ventures where new technologies are

applied, while entrepreneurs who are associated with extraversion are more likely to

engage in a venture that requires a sales approach. In a recent study, Caliendo, Fossen &

Kritikos (2014) found that the three of the Big Five traits, i.e., openness to experience,

extraversion and emotional stability, increase the probability of an individual’s entry

into self-employment.

However, some scholars have expressed concern about the use of broad personality

characteristics such as the Big Five attributes (e.g., Ciavarella et al. 2004; Caliendo,

Fossen & Kritikos 2014). The Ciavarella et al. (2004) study shows that only one

construct, namely conscientiousness, was positively related to long-term venture

survival, and others are either not related at all or negatively related. Further, each of

these broad personality characteristics have different specific traits or components, and

the effect may not be in the same direction. Dudley et al. (2006) also found that the

general traits approach is not sufficiently related to entrepreneurial tasks. Although

Zhao and Seibert (2006) tried to promote the Big Five approach, Rauch and Frese

31

(2007a) criticised them for including both broad and specific traits in the same rubric,

thereby making it difficult to examine the best predicators for the entrepreneurial tasks.

Caliendo, Fossen and Kritikos (2014) point out that conscientiousness has two

components, namely achievement-orientation and being dutiful; while achievement-

orientation has a positive effect, being dutiful has a negative effect on entrepreneurial

activity. Thus, these two components of conscientiousness will have contradictory

effects within the construct.

Due to the above concerns with regard to the Big Five model, there is debate amongst

researchers as to whether broad personality traits or specific personality traits are key to

entrepreneurial performance becoming important (Hansemark 2003; Barrick & Mount

2005; Dudley et al. 2006; Rause & Frese 2007a). Hansemark (2003) strongly argued

that we should only abandon personal characteristics if there is concrete evidence that

they play no role in an individual’s entrepreneurial efforts. Taking a clear positive stand,

Barrick and Mount (2005) advocated using specific personality characteristics in

predicting entrepreneurial performance because they found that the narrow traits “rely

on explicit description of entrepreneurial activities that may be situated in time and

place and role” (2005, p.367). Further, Rauch and Frese (2007a) believe that

researchers should rely on (specific / narrow) personality traits that are more directly

relevant to entrepreneurship activities, since they will be better predictors of

entrepreneurial performance. Some of these specific or narrow characteristics include

need for achievement, risk-taking propensity, innovativeness, locus of control, need for

autonomy, determination, initiative, creativity, self-confidence and trust, to name but a

few. As Zhao and Seibert (2006) have pointed out, the types of entrepreneurs vary, and

individual personality characteristics may need to match those types and also the

contexts in which they operate.

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2.2.2.2 Specific entrepreneurial personality traits

Due to the limitations of the Big Five personality model in entrepreneurship research,

recent studies in entrepreneurship have moved away from this approach. As mentioned

in the preceding section, specific or narrow personality traits were again highlighted for

their impact on an individual’s entrepreneurial efforts. For example, Rauch and Freese

(2007a) point out that specific personality traits that match personality and work

characteristics are more likely to predict entrepreneurial behaviour. Endorsing the need

for “putting the person back into entrepreneurship research” (p. 353), the authors argue

that there is a relationship between business owners’ personalities and business creation

as well as business success, but the personality traits vary for different phases of

entrepreneurship such as start-up activities (e.g., identifying opportunities, organising

resources, starting the venture) through to business success (venture performance and

survival).

Evidence shows a revival of research interest in personality traits in entrepreneurship

studies (Tang & Tang 2007). Some specific personality traits linked to entrepreneurship

tasks are innovativeness (Bausch & Rosenbusch 2005; Heunks 1998), need for

achievement (Lee & Tsang 2001; Littunen 2000; Stewart & Roth 2007), proactive

personality (Baum, Locke & Smith 2001; Crant 1996; Rauch & Freese 2007a), stress

tolerance (Rauch & Freese 2007a), need for autonomy (Brandstatter 1997; Cromie

2000), risk-taking propensity (Brockhaus & Horwitz 1986; Caliendo, Fossen & Kritikos

2014; Douglas & Shepherd, 2002; Shaver & Scott 1991), generalised self-efficacy

(Chen, Gully & Eden 2004; Rause & Frese 2007a) and internal locus of control

(Caliendo, Fossen & Kritikos 2014; Littunen 2000; Rotter 1966). While there is

enough literature about each of these popular personality traits, the findings of some

popular studies are summarised in Table 2.4.

33

Table 2.4 Specific personality traits Specific personality traits

Dimensions Authors

Need for achievement

Work ethic Pursuit of excellence Mastery Dominance

Littunen (2000); Lumpkin & Erdogan, (2004); Stewart & Roth (2007).

Locus of control Chance Internal Powerful others

Brockhaus (1975, 1980a); Caliendo, Fossen & Kritikos (2014); Harper (1998); Lee & Tsang (2001); Littunen (2000).

Risk-taking propensity Ability to handle risk, ability to evaluate risk, copes well with uncertainty, enjoys taking risks, willingness to take chances

Brockhaus (1980b); Buttner & Rosen, (1988); Hartog, Ferrer-i-Carbonell & Jonker (2002); Stewart and Roth (2001)

Proactivity Propensity to act Tendency towards action Initiative Perseverance

Baum, Locke & Smith (2001); Bird (1989); Crant (1996)

Passion Emotional energy Devotion Enthusiasm

Baum, Locke and Smith (2001); Bird (1989); Chen, Yao, & Kotha (2009); Smilor (1997)

Energy level Overall level of functioning in carrying out day-to-day activities i.e. enthusiasm and endurance

Thomas and Mueller (2000)

Innovativeness and creativity

Introduction of new goods Introduction of new methods of production Opening of new markets Industrial reorganisation

Carland et al. (1984); Harris, Gibson & Mick (2009)

Many studies have identified and examined the impact of a single trait. For instance,

locus of control and firm performance ( Boone, Brabander & Witteloostuijn 1996), risk-

taking propensity and entrepreneurship (Brockhaus 1980) or need for achievement and

entrepreneurial behaviour (Collins, Hanges & Locke 2004). While there are many traits

identified as being important for entrepreneurs, three traits have been given much

attention and have been commonly applied in research in entrepreneurship (see Sahin,

Nijkamp & Rietdijk 2009; Tang & Tang 2007). These are: need for achievement,

internal locus of control and risk-taking propensity. Further, in an exhaustive study on

entrepreneurial personality, Chell (2008) refers to these very three specific

characteristics as ‘The Big Three’. For these reasons, I have also chosen these three

personality characteristic in my study. Each of them is discussed below:

34

2.2.2.2.1 Need for achievement

One of the most widely discussed psychological measures in entrepreneurship literature

is the personal characteristic of the need for achievement (Collins, Hanges & Locke

2004; Hornaday & Aboud 1971; McClelland 1961). The term is used to describe a

person’s desire for excellence (Cassidy & Lynn 1989). Initially, this concept was

proposed by Murray (1938, cited in Shaver and Scott 1991). According to Murray, the

need for achievement means:

“To accomplish something difficult. To master, manipulate, or organize physical objects, human beings, or ideas. To do this as rapidly, and as independently as possible. To overcome obstacles and attain a high standard. To excel one’s self. To rival and surpass others. To increase self-regard by the successful exercise of talent” (Murray, 1938, p.164, cited in Shaver & Scott, 1991, p.31).

Later on, this concept was examined in depth by McClelland (1961) as referring to a

drive to excel or to achieve a goal. This characteristic is very important as it influences

an individual’s work behaviour to a great extent (Lumpkin & Erdogan 2000). The need

to achieve gives rise to an individual’s expectation of doing something better or faster

than others or even their own personal accomplishments (Hansemark 2003). Such

individuals are high achievers and like situations where they take personal responsibility

and also find solutions to challenges and problems. Achieving targets results in feelings

of accomplishment and satisfaction for them.

In a business context, entrepreneurial occupations provide the opportunities for

individuals who have a high need for achievement (Collins, Hanges & Locke 2004).

According to Littunen (2000), McClelland’s theory suggests that individuals with a high

need for achievement will not only become entrepreneurs but also succeed better than

others in their careers as entrepreneurs. Several studies examined the role of need for

achievement in the entrepreneurship field. In one of the early studies (McClelland

1965), students with a higher need for achievement were found to gravitate towards

business occupations of an entrepreneurial nature. Johnson (1990) reviewed previous

studies on achievement motivation and found a positive relationship between

achievement motivation and entrepreneurship in 20 out of 23 studies. Other studies that

differentiated entrepreneurs from non-entrepreneurs found that entrepreneurs generally

35

have a higher need to achieve than non-entrepreneurs (e.g. McClelland 1965; Langan-

Fox and Roth 1995; Stewart & Roth 2007). A study of female entrepreneurs revealed

the existence of this personality characteristic among them. Langan-Fox and Roth

(1995) developed a typology of female entrepreneurs, namely the need achiever, the

pragmatic and the managerial entrepreneur. Of these, the need achievers scored very

highly on the need achievement, and the managerial entrepreneurs scored highly on

power and influence, with the pragmatics scoring moderately on both motivations of

achievement and power. It can be seen, then, that the need for achievement has an

impact on both male and female entrepreneurs. Bridge, O’Neill and Cromie (2003),

suggest that enterprising people have a need for achievement. It is this need for

achievement that stimulates the individuals to take action (behavioural activities). These

authors also suggest that the high achiever will regard money as a measure of

achievement and in this case, money is not an end in itself, but rather something that

provides an entrepreneur with feedback on their achievement.

Studies were also undertaken to examine the impact of the need for achievement on

venture performance (e.g., Begley & Boyd 1987; Davidsson 1989; Lee & Tsang 2001).

Begley and Boyd (1987) found a positive correlation between achievement orientation

of entrepreneurs and the growth rate of their firms. Later, Davidsson (1989) found a

positive relationship between need for achievement and the willingness of the small

business owner to pursue venture growth. Stewart et al. (1999) conducted a study of 767

small business owner-managers and corporate managers in the US; the small owner-

managers were further categorised into an entrepreneur and the small business owner,

and were compared with the corporate managers. The results showed that owner-

managers who were categorised as entrepreneurs were higher in achievement

motivation compared to the other two groups, namely small business owners and

corporate managers. In a recent study, Stewart and Roth (2007) identified need for

achievement as an important characteristic for founders who are keen on growing their

firms. Lee and Tsang’s (2001) study of entrepreneurs in Singapore found that this

personality trait has the greatest impact on venture performance. These authors found

that Singaporean entrepreneurs’ fear of failure makes them achieve business success,

which is indicated by venture growth. Collins, Hanges and Locke (2004) conducted a

meta-analysis of 41 studies and found that achievement motivation not only influenced

36

the choice of an entrepreneurial career, but was also significantly correlated with

entrepreneurial performance (measured by various constructs such as sales growth,

stock growth and self-reported scales). The authors also found that individuals with a

high need for achievement were more attracted to entrepreneurship, as this career offers

them a high degree of control over outcomes, personal responsibility, and moderate

degree of risk as well as feedback on performance. Interestingly, these factors were also

found to be common to managers, and perhaps due to this reason, the differences

between entrepreneurs and managers were fewer compared to those between

entrepreneurs and non-managers such as engineers and scientists.

However, other scholars were not sure of such a direct relationship between the need for

achievement and entrepreneurship. For example, Hull, Bosley and Udell (1980) found

that the need for achievement is a weak predictor of an individual’s desire to start a

business. Brochhaus (1982) observed that McClelland’s empirical research did not

directly connect this characteristic with the decision to own and manage a venture. In

fact, Begley and Boyd’s study (1986) did not find any relationship between various

personality characteristics, including achievement motivation, of founders and non-

founders and business performance. Low and MacMillan (1988) also show some

reservations in mentioning the need for achievement as a characteristic unique to

entrepreneurs. Rather, they believed that it is a characteristic common to many

successful individuals. Hansemark (2003) undertook a longitudinal study of

entrepreneurs to test the predictive validity of this trait in entrepreneurial activity, and

concluded that the findings that showed successful entrepreneurs have a greater need for

achievement than unsuccessful entrepreneurs was not sufficient proof that this

personality characteristic was an important pre-requisite predicator for entrepreneurship.

This finding implies that any need for achievement characteristics may have developed

after individuals became entrepreneurs or because of entrepreneurial activity rather than

being a predicator.

Some scholars suggest that it is not adequate to focus on personality traits only. Instead,

they suggest that complex models of business venturing have to be developed to

understand the entrepreneurship process. Utsch and Rauch (2000) examined the effect

of achievement orientation on venture performance through the mediation of two

37

behavioural activities, namely innovativeness and initiative. The findings from this

study showed that achievement orientation impacted on venture performance in terms of

profit and employee growth through its impact on two mediating variables, namely

innovative behaviour and initiative. Of the two mediating variables, innovative

behaviour indicated a stronger link to performance outcomes compared to initiative

behaviour. Similarly, Korunka et al. (2003) have examined a complex configuration that

comprised entrepreneurial personality along with resources, environment and

organisational activities. Their findings from a subset of 153 new business owner-

managers (out of a 941 sample size that covered other types of managers) were very

relevant to my study. The authors found these entrepreneurs to be characterised by

strong need for achievement, and they also had a strong internal locus of control, strong

personal initiative and a medium risk-taking propensity. The effect of resources,

environment and organising activities were found to be only moderate. However, these

authors conclude that it is inappropriate to investigate the personality characteristics of

entrepreneurs in isolation from the wider contextual factors that affect patterns of

entrepreneurial activity. Therefore, it is also important to highlight the relevance of

cultural factors in the study of entrepreneurship. Unfortunately, most of the studies on

achievement orientation, as developed by McClelland (1961), were conducted only in

the US, which made Thomas and Mueller (2000) question the relevance and

applicability of the entrepreneurial personality characteristics across cultural contexts,

as they believed that the dominant values of a nation’s culture would influence its

entrepreneurs as well. Their study found that cultures of high uncertainty avoidance and

high individualism exhibit greater entrepreneurial orientation. However, some cultures

are not supportive of entrepreneurship. For example, failure in business is considered to

be a stigma in Asian countries and in some parts of Europe, while in the US, the

American norms are more forgiving and even viewed as a positive learning experience,

as they regard failure to be a step in a process of experimentation (Landier 2001). On

the other hand, Japanese culture is less forgiving of failed entrepreneurs and limits their

access to resources, thus depriving these entrepreneurs of even an opportunity for

redemption (Mitshuashi & Bird 2011). Hence the contextual factors of entrepreneurship

cannot be ignored.

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Notwithstanding such criticism, it is argued that individuals who have a higher need for

achievement motivation will be more likely to engage in activities that are necessary to

succeed and perform well in entrepreneurial efforts (Collins, Hanges & Locke 2004;

McClelland 1965; Tang & Tang 2007). McClelland (1965) argued that individuals with

high need for achievement will be more likely to take calculated risks, research the

environment, and be willing to undertake activities where they find opportunities to

achieve something. In addition, empirical evidence has also been found to show that

need for achievement has a significant impact on venture performance (Lee & Tsang

2001; Korunka et al. 2003). Stewart and Roth (2007) confirm that high levels of

achievement motivation are associated with the demands of the entrepreneurial role.

They also highlight that in countries where the entrepreneurial environment is tougher,

the most achievement-driven individuals are the ones who will attain entrepreneurship

status. In my study context, where the sample is drawn from a large emerging market,

the environment in which entrepreneurship is pursued is quite challenging, and needs

achievement motivation. For this reason, my study investigates the role of

entrepreneurs’ need for achievement.

2.2.2.2.2 Internal locus of control

Another common personality characteristic in entrepreneurship study is the locus of

control (Littunen 2000). This construct was originally developed by Rotter (1966) and

used to describe a person’s sense of control over his or her life. Locus of control refers

to a generalised expectancy that operates across a wide range of situations, relating to

whether or not an individual has control or power over what happens to them (Rotter

1966). Within this construct, two dimensions of locus of control were identified:

internal and external. According to Lefcourt (1966, p. 207), internal locus of control

refers to “the perception of positive and / or negative events as being a consequence of

one’s own actions and thereby under personal control”, while external control refers to

“the perception of positive and / or negative events as being unrelated to one’s own

behaviours in certain situations and therefore beyond personal control”. Hence

individuals with internal locus of control believe that they determine their future

outcomes with their own actions. On the other hand, individuals with external locus of

39

control believe that their future outcomes are determined by external factors or

randomly.

As a concept, locus of control found immediate acceptance and interest in various

management disciplines. This construct was also examined in leadership studies (Durant

& Nord 1976), decision making (Kets de Vries 1977) and strategy formulation (Miller,

Kets de Vries & Toulouse 1982). Locus of control was found to be associated with job

motivation, effort, satisfaction and performance (Judge & Bono 2001; Spector 1982).

Researchers have also examined locus of control among top decision makers of

organisations and found a positive relationship with CEOs (Boone, Brabander & van

Witteloostuijn 1996) and general managers (Govindarajan 1989). Individuals with

internal locus of control would be able to take responsibility and meet challenges to

influence and lead organisations to achieve set goals.

Reviewing the research undertaken on the role of locus of control in several

organisational and managerial settings, Jennings and Zeithaml (1983) stated that the

findings of these studies mark locus of control as being pertinent for entrepreneurial

research, and advised research in this field. This concept was considered to be relevant

because entrepreneurs are self-motivated individuals who take initiatives for their

entrepreneurial efforts and take responsibility for their outcomes rather than depending

on others (McClelland 1961; Mueller & Thomas 2001). As decision-makers,

entrepreneurs regularly make decisions pertaining to their business outcome, and their

decisions will depend on how they perceive the consequence of their decisions

(Caliendo, Fossen & Kritikos 2014). Hence locus of control is expected to be an

important personality characteristic of entrepreneurs that influences their behaviour.

Due to the very nature of entrepreneurship, where the individual is the initiator of the

venture and also takes responsibility for its success, internal locus of control rather than

external locus of control attracted the attention of researchers (Borland 1974; Brockhaus

1975). Both Borland (1974) and Brockhaus (1975) examined business students and

found that those who had entrepreneurial intentions (starting their own business in the

future) possessed a higher internal locus of control than those who did not have such

plans. Locus of control was also used to distinguish successful entrepreneurs from

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unsuccessful ones (Brockhaus 1980a, 1982) and entrepreneurs from non-entrepreneurs

(Aldrich & Zimmer 1986). In another study, Cromie and Johns (1983) also found that

practicing entrepreneurs have significantly more internal locus of control than

managers. They believed that individuals who have more internal locus of control are

less likely to allow external events to dominate their lives, and are also more proactive

than reactive when coping with their environments.

Internal locus of control was found to be more effective in dealing with risk. Externals

(i.e., individuals with external locus of control) are known to be associated with non-

risky / conservative behaviour (Boone, Brabander & van Wittelootuijn 1996;

Govindarajan 1989), while internals (ie., individuals with internal locus of control, who

therefore have a high level of perceived control) prefered entrepreneurial behaviour that

takes risks (Boone, Brabander & van Wittelootuijn 1996; Hansemark 2003; Mueller

and Thomas 2001). A person with high internal locus of control assumes that they can

use their effort and skill and thereby control events in their lives (Boone, Brabander &

van Wittelootuijn 1996). Since internal locus of control belief endows entrepreneurs

with a perception of being in control, it is also a necessary personality characteristic that

is closely related to their propensity to act (Shapero 1982). Hence, it could be surmised

that an ability to take initiatives and responsibility are associated with the personality

characteristic of internal locus of control.

While the concept of locus of control was being examined by researchers, there was an

ongoing debate about what constitutes the construct itself. As mentioned earlier, the

construct of locus of control was first proposed by Rotter (1966), and the measurement

scale consisted of 23 dichotomous forced choices representing end points of a

unidimensional scale, which meant that the individual’s locus of control varied along

the internal-external continuum. Many studies have used this Rotter’s internal-external

(I-E) Scale (e.g., Ahmed 1985; Cromie & Johns 1983, Pandey & Tewary 1979;

Timmons 1978). However, Shaver and Scott (1991) believe that these studies have

made a tactical mistake because Rotter’s I-E scale had been developed with the

intention of studying locus of control as a broad construct to study behaviour in diverse

situations. The global I-E scale, which captures all aspects of locus of control, may not

be the best way to measure a specific setting such as new venture creation, since not all

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of the dimensions measured in this scale were equally plausible predictors of

entrepreneurship (Gatewood, Shaver & Gartner 1995; Shaver & Scott 1991). Other

scholars such as Levenson (1974) have further split the external dimension into Chance

and Powerful Others. The latter dimension (ie., ‘Powerful Others’) is uniquely useful in

examining differences in cross-cultural differences based on political and economic

philosophies and their impact on entrepreneurship. Bonnet and Furnham (1991) used a

three-dimensional locus of control scale that included internal, external, and chance

aspects, as they were concerned that Rotter’s uni-dimensional scale is limited in its

coverage. They believed that people view the effects of chance and powerful others

differently. However, some scholars continued to use the original Rotter’s scale, but

with some modifications (e.g., Mueller & Thomas 2001). Continuing this line of

thinking, Chell (2008) suggests that future studies in the locus of control area should

include multiple measures, mediation effects and performance outcomes, instead of

using it solely as a differentiator between entrepreneurs and other populations.

Irrespective of whichever scale has been used, studies have shown a positive link

between internal locus of control and entrepreneurship (Pandey & Tewary 1979;

Cromie & Johns 1983; Keh, Foo & Lim 2002; Krueger 2009). Individuals with a high

internal locus of control believe that they determine the future outcomes of their actions

and therefore this trait is regarded as a crucial indicator of enterprising potential

(Cromie & Johns 1983; Littunen 2000). Recognising the relative importance of internal

locus of control, scholars in entrepreneurship have most commonly applied the ‘internal

locus of control’ orientation in their studies (e.g., Hansemark 2003; Krueger & Brazeal

1994; Lee & Tsang 2001; Sahin, Nijkamp & Rietdijk 2007). Comparing the internal

and external locus of control, Littunen (2000) points out that the internal locus of

control is positively associated with entrepreneurial behaviour, while the external locus

of control impedes learning and encourages passivity (Littunen 2000). For instance,

enterprising individuals with high internal locus of control may get frustrated working

for others who may curtail their behaviour. This may result in setting up their own

ventures (Bridge, O’Neill & Cromie 2003). Such individuals would like to take control

into their own hands because they believe that they ‘can make things happen’, and

underplay the importance of luck and fate that are outside their sphere of control.

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Locus of control has also been linked to Kirzner’s (1973) concept of entrepreneurial

alertness (Gilad, 1982, 1986). In particular, Gilad (1986) found that individuals having

an internal locus of control tend to believe that events are triggered by their own

behaviour, and this perception leads them to see more opportunities and therefore

increases their entrepreneurial alertness. Further, Harper (1998) extended Gilad’s theory

and posits that internal locus of control increases entrepreneurial alertness, which helps

in identifying more opportunities and thus leads to entrepreneurship. Krueger (1993)

identifies a close link between an individual’s desire for control and the initiation and

maintenance of goal-directed behaviours; the author believes that this trait is

significantly associated with entrepreneurial intentions.

In the last decade or so, other empirical studies provided evidence about the positive

influence of internal locus of control on entrepreneurship in varied settings. Gray (1999)

examined the impact of both dimensions of locus of control on small businesses. The

findings of this study reveal that while the external locus of control had a direct

(negative) impact on business survival (i.e. success), internal locus of control had an

indirect positive effect on business survival and size (measured by employment growth)

and income. This indirect effect was seen through the entrepreneur’s inventive decision

making style and proactive business strategy. In a study of successful new business

owner-managers, Korunka et al. (2003) found the respondents to have a high internal

locus of control compared to nascent entrepreneurs. Even with regard to starting a new

business, Caliendo, Fossen and Kritikos (2014) found that persons who scored highly

on internal locus of control had a higher probability of starting a business (and also of

being in one), and persons who scored highly on external locus of control had a lower

probability of starting (or being in) a business.

On the whole, the concept of locus of control has been considered to be very important

in various aspects of entrepreneurship: forming entrepreneurial intentions (Krueger,

2009), estimating their risks and evaluating their entrepreneurial opportunity (Keh, Foo

& Lim, 2002), and also encouraging entrepreneurial behaviour (Muller & Thomas,

2001). Entrepreneurs are initiators and decision-makers and therefore their perception

of control will influence their behaviour. Because of these reasons, more researchers

are, in recent times, examining locus of control in the entrepreneurship domain

43

(Schjoedt & Shaver, 2012). The current research has also considered the internal locus

of control factor.

2.2.2.2.3 Risk-taking propensity

Another important characteristic often associated with entrepreneurs is the

entrepreneur’s risk-taking propensity. While discussing the concept of entrepreneurship,

scholars often emphasise that one key factor, that defines an entrepreneur is their

innovative behaviour, manifested by their risk-taking behaviour (see Rauch & Frese

2000). By nature, entrepreneurial functions are not structured, and there is a huge

amount of uncertainty as entrepreneurs have to assume the risk involved in starting their

businesses and growing them. As such, they bear the ultimate responsibility for the

decisions they take (Kilby 1971, Knight 1921/1971). Therefore, many scholars propose

that entrepreneurs need to have a higher risk-taking propensity than others in order to

undertake entrepreneurial functions (e.g., Schumpeter 1934; Carland III et al. 1995).

A risk-taking propensity was defined as “an individual’s current tendency to take or

avoid risks” (Sitkin & Weingart 1995, p.1575), while a risk taker was seen as someone

who “pursues a business idea when the probability of succeeding is low” (Chell 2008,

p.102). Explaining this concept further, Brockhaus (1980b, p. 513) describes it as “the

perceived probability of receiving the rewards associated with success of a proposed

situation, which is required by an individual before he will subject himself to the

consequences associated with failure, the alternative situation providing less reward as

well as less severe consequences than the proposed situation”. Sexton and Bowman

(1985) found that potential entrepreneurs showed a higher need for risk taking, showing

a “willingness to expose themselves to situations with uncertain outcomes” (p.134).

A review of the relevant literature reveals that early scholars were cognisant of the issue

of entrepreneurial risk-taking as an important entrepreneurial activity. The earliest

mention was in the early 18th century by Cantillion, who mentioned risk bearing, among

others, as an important characteristic of an entrepreneur. Other scholars that followed

also touted risk-taking as an important aspect of entrepreneurship. For example, Adam

Smith (1723-1790) argued that entrepreneurs were concerned with creating wealth, and

44

the profits they earned were considered to be a reward for risking their capital. Alfred

Marshall (1842-1924) identified two types of business owners. One type consisted of

people who were innovative and unable to avoid taking risks, and the second type

included those people who copied existing business models. Marshall believed that to

be successful, a businessman should endure mental strain and great anxiety in

organising and developing innovative methods to effectively manage a profitable

enterprise.

Von Thünen (1850/1960) examined the concept of entrepreneurial risk in his book The

Isolated State through his explanation of profit. He identified entrepreneurial gain as

profit minus (i) interest on invested capital, (ii) insurance against business losses, and

(iii) the wages of management, and the residual being a return to entrepreneurial risk.

He believed that entrepreneurs were rewarded for incurring those risks which no

insurance company would cover because those risks were unpredictable and therefore

uninsurable. He declares ‘‘there exists no insurance company that will cover all and

every risk connected with a business. A part of the risk must always be accepted by the

entrepreneur’’ (p. 246). According to von Thunen, the entrepreneur is the person who

takes the venture-related problems home at the end of the day and has sleepless nights

thinking about them. The return the entrepreneur earns is a reward for the uninsured

risk undertaken as well as for being the initiator, problem solver and innovator. Knight

(1921) distinguished risk from uncertainty. He explained that some changes in the

circumstances are foreseeable, making them predictable; therefore, the risks associated

with such circumstances are calculable, making such risks insurable. On the other hand,

the risks undertaken when changes cannot be predicted are uninsurable. Knight (1921)

suggested that profits were the returns on the outcome of entrepreneurs taking risks in

uninsurable uncertainty. His theory suggested that entrepreneurs are the ones who have

made informed judgements and taken calculated risks during periods of uncertainty, and

the profits they earn are the rewards for doing so. Others, who do not seek risky

endeavours, settle for relatively secure employment. This differentiation between risk

and uncertainty helps to establish the boundary between the manager and the

entrepreneur (see Chell 2008, p.33).

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Modern scholars, too, have speculated on the risk propensity behaviour of entrepreneurs

(e.g., see Baron 2007; Begley & Boyd, 1987; Brockhaus, 1980b, 1982; Chell, Haworth

& Brearley 1991; Markman & Baron 2003; McClelland, 1961; Sexton & Bowman,

1986; Sitkin & Weingart 1995; Smith & Miner 1985; Stewart & Roth 2001). Risk-

taking is inherent in every decision an entrepreneur takes, whether it is to become an

entrepreneur or to make investment decisions, since the outcomes of these decisions are

unpredictable (Caliendo, Fossen & Kritikos 2014). The consequences could be either

making profit from starting a successful firm or incurring loss from business closure or

failure. Therefore, the tendency of individuals to take risks has been viewed as an

important trait associated with entrepreneurship (Zhao, Seibert & Lumpkin 2010). In

fact, risk-taking propensity has even been hailed as a “hallmark of the entrepreneurial

personality” (Begley & Boyd 1987).

Since risk-taking is viewed as a distinguishing characteristic of entrepreneurs, scholars

examined whether it helped to differentiate entrepreneurs from non-entrepreneurs and /

or managers (Begley & Boyd 1987; Brockhaus 1980b; Carland, Carland & Stewart

1999; Palich & Bagby 1995). The results were mixed. It was found that individuals

with a higher risk-taking propensity engage in entrepreneurial ventures, while those

individuals who are risk averse choose to work for others (Carland III et al. 1995;

Stewart et al.1999). For example, the empirical study of Carland III et al. (1995)

identified risk taking as a unique trait that distinguishes entrepreneurs from managers

and non-entrepreneurs. Using a large sample (n=848), they examined risk-taking

propensity among three groups: 114 entrepreneurs, 347 small business owners, and 387

managers. They found that entrepreneurs had a higher risk-taking propensity followed

by the small business owners, with the managers showing the lowest level of risk-taking

propensity. They also looked at the impact of education and gender, and found that

those with higher education and males respectively, had higher levels of risk-taking

propensity. Similarly, Hartog Ferrer-i-Carbonell and Jonker (2002) also found that

entrepreneurs are less risk averse than employed persons. This correlates with earlier

studies that show business founders to be high in risk-taking propensity (Begley &

Boyd 1987; Carland III et al. 1995; Chattopadhyay & Ghosh 2002; Hull, Bosley &

Udell 1980; Stewart et al. 1999; Stewart & Roth 2001, 2004).

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On the other hand, some studies could not find much evidence to differentiate between

entrepreneurs and non-entrepreneurs in terms of risk-taking propensity. For example,

Brockhaus’s study (1980b) of risk-taking propensity could not distinguish entrepreneurs

from non-entrepreneurs. In this study, he examined three groups of participants:

individuals who quit their jobs to become owner-managers (i.e. entrepreneurs),

managers who had changed organisations (i.e., transferred managers), and managers

who had assumed new managerial positions (i.e., promoted as managers), all of whom

took up these positions within three months prior to the study. The results show no

difference between entrepreneurs and non-entrepreneurs in terms of risk taking, and it

became very popular with other scholars, as it was published in the well-reputed

Academy of Management Journal. Around the same time, other studies also revealed

similar results of no significant differences in the risk-taking propensity of

entrepreneurs as compared with managers (Brockhaus & Nord, 1979; Carland III et al.

1995; Hull, Bosley, & Udell 1980) or the general population (Brockhaus & Horwitz

1986; Brockhaus & Nord 1979; Palich & Bagby 1995).

Because of the conflicting findings concerning risk-taking propensity between

entrepreneurs and managers, Stewart and Roth (2001) conducted a meta-analytic review

to better understand the differences between entrepreneurs and non-entrepreneurs in

their risk propensity. The authors were concerned that there were too many studies with

small sample sizes which obfuscate and inhibit theory building. They tested this

proposition that entrepreneurs are more inclined to take risks than managers because

“the entrepreneurial function entails coping with a less structured, more uncertain set of

possibilities and bearing the ultimate responsibility for the decision” (2001, p.146).

They found that entrepreneurs did have a higher risk propensity than managers, and also

found that those entrepreneurs who were growth-oriented (i.e., those who fcused on

growth) had markedly higher risk-taking propensity than income-oriented entrepreneurs

(those who focused on income). Therefore, these results tend to confirm the proposition

that entrepreneurs are more likely to take risks than managers, but they do not support

the results of the influential study of Brockhaus (1980b). However, Miner and Raju

(2004) raise objections to the results of Stewart and Roth (2001) on the grounds of

insufficient evidence in their sample in the study (that there were only three studies in

respect of risk propensity and growth orientation). To overcome this problem, Miner

47

and Raju (2004) conducted another meta-analysis by including 14 additional studies to

the sample included by Stewart and Roth (2001) and using a Miner Sentence

Completion Scale (MSCS), a different measurement scale for risk. Based on the results

from their study, Miner and Raju (2004) suggested that entrepreneurs may not have risk

propensity, but are risk-avoidant. In fact, it was the managers who took greater risks as

their decision making process was riddled with biases. Clearly, these results contradict

the findings of Stewart and Roth’s (2001) study. However, Stewart and Roth (2004)

provided a quick rebuttal to Miner and Raju (2004) by pointing out some

methodological deficiencies and also conducting a new meta-analysis that indicated an

overall conclusion that is consistent with their previous study of 2001, which supported

the notion that entrepreneurs have a higher level of risk-taking propensity than

managers.

Clearly, the role of risk propensity in entrepreneurship is no straightforward

relationship. Recognising the complex nature of this relationship, Thomas and Mueller

(2000) suggested that not all who are risk takers will become entrepreneurs, as several

other factors also influence entrepreneurship. For example, Palich and Bagby (1995)

highlighted the role of cognitive patterns rather than risk propensity to differentiate

entrepreneurs from managers or other non-entrepreneurs. Compared to others,

entrepreneurs may perceive a situation as less risky as they are predisposed to have a

positive outlook towards business situations and view them as opportunities. Basing

their arguments on the tenets of cognitive theory, these authors explain that

entrepreneurs view a business situation more positively and focus on the high

probability for favourable outcomes than non-entrepreneurs who may take a negative

view, as they perceive them to have little potential (i.e., offering disproportionately low

returns relative to their associated risks). It is the individual’s cognitive patterns and

processes that determine natural potential for entrepreneurial behaviour rather than risk

propensity. Therefore, systematic differences in cognitive processes may help in

differentiating entrepreneurs from small business owners, since both these groups tend

to be usually associated with smaller ventures.

Another line of research suggested was to examine entrepreneurs’ risk-taking propensity

across the venture life cycle. (e.g., Stewart & Roth 2001; Baron & Markman 2005).

48

Stewart and Roth (2001) highlighted the need to examine entrepreneurs through the

venture life cycle in order to avoid the effects of survivor biases, if any. Baron and

Markman (2005) consider entrepreneurship to be a series of what they term as ‘distinct

phases’, each phase comprising of a unique set of critical activities and having different

outcome variables. They note that the importance of specific personality traits, among

other variables, may vary considerably, depending on the distinct phase of the new

venture. Based on this line of thinking, Frank, Lueger and Korunka’s study (2007)

found that the entrepreneurs’ increased level of risk propensity is associated positively

with improving the probability of start-up and / or accelerating the process of starting a

new business; however, an increased level of risk propensity is not advantageous for the

continued existence of the business.

Some scholars try to minimise the role of entrepreneurial risk in some contexts. For

example, Timmons, Smollen and Dingee (1985) argue that the risk taking of

entrepreneurs may actually decrease as the net worth of the firm increases. Here,

entrepreneurs may perhaps be more cautious as they have a larger asset to protect, and

therefore take calculated risks. This view is consistent with the Begley and Boyd (1987)

study which suggested that entrepreneurs’ boldness may be tempered as they have an

asset base to protect. They find that that the risk-taking of founders has a positive effect

on firm performance, measured by return on assets up to a point, and increasing risk-

taking beyond a certain point has a negative effect on the firm’s performance. In a later

study, Rauch and Frese (2000) found that high risk-taking has a clear negative effect on

business success. In a recent study, Zhao, Seibert and Lumpkin (2010) found that risk

propensity may be positively related to entrepreneurial intention, but not necessarily to

other measures of entrepreneurial performance.

The above discussion reveals the conflicting views of scholars about the risk-taking

characteristics of entrepreneurs. This has become an ongoing debate about whether

entrepreneurial risk is necessary, and if so, what the right amount of risk is that should

be taken by the entrepreneur. Several authors have clarified that successful

entrepreneurs take moderate or calculated risks (Palmer 1971; Caliendo, Fossen &

Kritikos 2010; Meredith, Nelson & Neck 1982; Timmons, Smollen & Dingee 1985).

Successful entrepreneurs are not reckless risk-takers, but rather scan their environment

49

carefully, interpret the risk situation and then determine the policies to address it

appropriately. This idea has been summed up well by Meredith, Nelson & Neck (1982,

p. 25) who observed that:

“[Entrepreneurs] enjoy … challenge, but they don’t gamble. Entrepreneurs avoid

low-risk situations because there is a lack of challenge and avoid high-risk

situations because they want to succeed. They like achievable challenges.”

Even a pioneering author like McClelland (1961) has also linked entrepreneurs as risk

optimisers. This implies that risk-taking is a necessity, but there is a limit to its level.

Brockhaus (1980b) speculated that the process of being an entrepreneur would increase

an entrepreneur’s desire for moderate levels of risk; entrepreneurs who have either a

high or a low risk-taking propensity would cease to remain entrepreneurs in the long

run. For this reason, Baum and Locke (2004, p.595) observe that high risk may lead to

high performance, but “it can also lead to disaster if the risks are foolish”. A recent

study by Caliendo, Fossen and Kritikos (2010) also supports this notion that

entrepreneurs who have a medium risk tolerance level have the highest survival

probabilities.

Taken together, all these studies explore the relation of risk-taking propensity to

entrepreneurship, its role in decision-making and its intensity, thus making it a critical

characteristic in understanding entrepreneurial behaviour. However, it is not clear how

risk-taking propensity influences entrepreneurs’ self-efficacy and their behavioural

activities, which calls for further examination.

2.2.2.3 Concluding remarks

In the above section, I have examined the importance of personality characteristics in

entrepreneurship, both specific characteristics and the Big Five. In the past, many

studies on personality characteristics focused mainly on the differences between

entrepreneurs and non-entrepreneurs (e.g., Brockhaus, 1980b; Cromie & Jones 1983).

However, studies on personality factors were criticised for their shortcomings (e.g.,

Baron 1998; Boyd & Vozikis 1994). This led to the use of the Big Five characteristics

by others (e.g., Ciavarella et al. 2004; Caliendo, Fossen & Kritikos 2014). These

50

studies yielded contradictory results. As a consequence, in the last decade,

entrepreneurship scholars have posited that specific personality traits are better

predictors of entrepreneurial behaviour than the more broad trait taxonomies such as the

Big Five (Caliendo, Fossen & Kritikos 2014; Rauch & Freese 2007a; Vinchur et al.

1998). In this context, three specific personality characteristics were found to be

important in entrepreneurship studies: need for achievement, locus of control and risk-

taking propensity. They have received and achieved a high level of attention and

validity (Schaper et al. 2011), and are used in my study.

Ciavarella et al. (2004) suggested that personality factors should be used alone without

considering other situational factors. Further, Rauch and Frese (2007a) in their meta-

analysis found that the personality factors were important and used them to understand

entrepreneurial behaviour in terms of new venture creation and venture success. Since

the entrepreneur (the person) is central to the entrepreneurial process, personality traits

are important to entrepreneurship research (Frank, Lueger & Korunka 2007). I

recognise that personality factors will manifest in the way they influence an

entrepreneur’s behaviour. To understand this process, my study examines the role of

three specific personality characteristics along with self-efficacy and entrepreneurial

behaviour in the presence of external aspects such as information overload.

2.3 Entrepreneurial self-efficacy

The concept of entrepreneurial self-efficacy is an adaptation of the construct of self-

efficacy which was proposed by Bandura in his seminal study in 1977. In simple terms,

it refers to one’s beliefs in his or her capacity to accomplish a certain level of

performance or desired outcomes, and which in turn influences the individual’s

behaviour (Bandura 1986). In the context of entrepreneurship, scholars have adopted the

concept of self-efficacy and termed it as entrepreneurial self-efficacy (e.g, DeNoble,

Jung & Ehrlich 1999; Chen, Greene & Crick 1998; Zhao, Seibert & Hills 2005). This

section examines the construct of self-efficacy and its adaptation to entrepreneurship,

and the issues relating to multiple-dimensionality of the construct.

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2.3.1 The concept of self-efficacy

As mentioned earlier, Bandura (1977, 1982, 1984, 1986, 1997) contributed significantly

to the concept of self-efficacy and how it influences human behaviour. Bandura (1977)

defined self-efficacy as an individual’s belief in his or her capacity to organise and

execute the courses of action required to produce given attainments. In another study,

Bandura (1986) referred to it as an individual’s judgement of their capacity to

accomplish a certain level of performance or desired outcomes. Basically, it affects an

individual’s self-perception of their abilities and tendencies, and that plays a role in the

development of that individual’s intentions and achievement of goals (Boyd & Vozikis

1994). Further, Bandura (1982, 1997) explains that people with stronger self-efficacy

are more likely to put in more effort, accept challenges and persist in the task

undertaken compared to individuals who judge themselves to have low self-efficacy,

dwell on their personal deficiencies and also imagine potential difficulties as more

formidable than they really are. This is because individuals are motivated throughout

their lives by their perceived self-efficacy rather than by an objective ability, thereby

influencing their outward behaviour (Markman, Balkin & Baron 2002). Therefore, the

role of self-perception of an individual’s skills is seen as more important than the actual

skills that the individual possesses, as it enjoins individuals who believe that they have

the relevant skills to be more willing to put in effort in the area where a person

perceives himself/herself as possessing high self-efficacy.

Following Bandura’s (1982, 1997) seminal publications on self-efficacy, this construct

was tested in varied disciplines, and also found support for its influence on human

intentions and / or behaviour. For example, self-efficacy beliefs have been tested in

clinical research which found that it is significantly related to clinical problems like

phobias, addiction, and stress (Bandura, 1983; Garcia, Schmitz & Doerfler 1990;

Marlatt, Baer & Quigley 1995). In the area of social settings, self-efficacy beliefs have

been found to be related to social skills and assertiveness (Lee 1983, 1984; Moe & Zeiss

1982). In educational research, self-efficacy was linked to academic motivation, self-

regulation, and development and achievement (Bandura 1993; Pajares 1997; Pintrich &

Schunk 1995). Self-efficacy was also found to be associated with an individual’s career

choice and development (Bandura 1997; Eccles 1994; Hackett 1995; Lent & Hackett

1987; Markman, Balkin & Baron 2002). Not surprisingly, researchers have found a link

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between an individual’s efficacy with choice of academic subjects and career (Betz &

Hackett 1981, 1986). Hackett (1995) suggests that self-efficacy beliefs not only

influence career choice, but also play a significant role in the development of core

vocational predictors such as interests, values and goals. Therefore, Markman, Balkin

and Baron (2002) observed that self-efficacy is a good predictor of intended career

options, perseverance, and personal effectiveness.

Gist (1987) extended the concept of self-efficacy to the context of organisational

behaviour and human resource management by exploring its theoretical linkages and

suggesting practical implications in these fields. The author suggests that the

performance of an organisation largely depends on the performance of the workgroups,

which could be influenced by the group’s efficacy perceptions. Stajkovic and Luthans

(1998) in their meta-analysis of 114 studies of self-efficacy found it to be significantly

correlated to work-related performance (r = .38). Maurer (2001) examined the impact of

self-efficacy on employee development behaviour and found that employees with high

self-efficacy are willing to participate in skills development activities. This study also

finds that the decline in self-efficacy is a major factor that impedes older workers’

participation in career-relevant learning and skills development. It may be useful to

note that Wood and Bandura (1989a) emphasised a reciprocal-causational relationship

between a person’s cognitive perceptions and the environment, and observed that

“people are both products and producers of their environment” (p. 362). It is this

linkage between perceptions and behaviour that makes self-efficacy an important

antecedent of human behaviour, both individually or in an organisation.

2.3.2 Concept of entrepreneurial self-efficacy (ESE)

The discussion in the preceding section shows that self-efficacy plays a central role in

an individual’s career decision (intention), and goal achievement. In the last two

decades, researchers focussed their attention on how this concept can be applied to the

entrepreneurship domain in different aspects such as choosing entrepreneurship as a

career, entrepreneurship intention and entrepreneurial actions (Barbosa, Gerhardt &

Kickul 2007; Boyd & Vozikis 1994; Chen, Greene & Crick 1998; Zhao, Seibert & Hills

2005). This approach is different to previous studies in entrepreneurship that focused on

an individual’s personality characteristics and their impact on entrepreneurial outcomes

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(Caliendo, Fossen & Kritikos 2014; Littunen 2000; Stewart & Roth 2007). Although

self-efficacy is considered as a personal attribute, this construct was found to be an

important antecedent that is linked to intention and action (e.g., Boyd & Vozikis 1994;

Kolvereid 1996; Krueger, Reilly & Carsrud 2000; Zhao, Seibert & Hills 2005).

Specifically, the concept of self-efficacy has been adapted to entrepreneurship in the

form of ‘entrepreneurial self-efficacy’ (ESE) by different authors (e.g., Chen, Greene &

Crick 1998; Wilson, Kickul & Marlino 2007). It is referred to as “the strength of a

person’s belief that he or she is capable of successfully performing the various roles and

tasks of entrepreneurship” (Chen, Greene & Crick 1998, p.295). These authors believed

that entrepreneurial self-efficacy can be used to “predict and study entrepreneurs’

behaviour choice, persistence, and effectiveness” (p. 301). For this reason, an

entrepreneur who believes in his or her capacity to execute and perform a task

successfully (i.e., possesses self-efficacy) is more likely to expect potential outcomes

from a new venture. This perception of his or her ability which I refer to as

entrepreneurial self-efficacy makes an entrepreneur sustain more effort to achieve

positive entrepreneurial outcomes.

As De Noble, Jung and Ehrlich (1999) have pointed out, early studies of entrepreneurial

efficacy did not differentiate between managerial and functional abilities. For example,

Chen, Greene and Crick’s first empirical study (1998) tried to focus on the capabilities

of entrepreneurs which appear to be similar to the roles of an effective manager. This

study developed a measure for ESE that included an individual’s assessment of their

marketing, innovation, management, risk-taking, and financial control skills. Results

from this study indicated a positive effect of ESE on the likelihood of being an

entrepreneur. Further, the ESE was found to be positively related to internal control and

negatively to chance control. Given the empirical evidence of positive relationship

between ESE and entrepreneurship, several scholars have examined this relationship in

different contexts (Forbes 2005; Krueger, Reilly & Casrud 2000; Wilson, Kickul &

Marlino 2007; Zhao, Seibert & Hills 2005). However, there has been a significant

debate on how the self-efficacy construct has to be applied to entrepreneurship studies.

The issue revolved mainly around whether to use the same construct in different

disciplines and settings or to customise the scale to specific situations. Further, scholars

54

also differed on how to capture the dimensionality of the construct when they developed

relevant scales for this purpose. These issues are discussed below.

2.3.2.1 General self-efficacy (GSE) in entrepreneurship

Several researchers have become interested in a trait-like generality dimension of self-

efficacy, which was termed general self-efficacy (GSE) (e.g., Baum & Locke 2004;

Judge, Erez & Bono 1998; Markman, Balkin & Baron 2005). GSE was defined by

Judge, Erez and Bono (1998, p. 170) as an “individual’s perception of their ability to

perform across a variety of different situations”. It means an individual’s beliefs about

his or her competence to perform in a wide variety of achievement situations. It is a

broad concept that allows for differentiating individuals based on their perception of

capacity to meet task demands across varying contexts. Referring to the generality of

self-efficacy, Bandura (1997, p. 53) states ‘what generalises is the belief that one can

mobilise whatever effort it takes to succeed in different undertakings”. Therefore, an

important antecedent of GSE is the aggregation of previous experience (Shelton 1990;

Sherer et al. 1982). Consequently, the concept of self-efficacy was applied in

entrepreneurship in a generalised way without specifically modifying it for the

entrepreneurship domain (see Baum & Locke 2004; Markman, Baron & Balkin 2005).

Several studies found a positive relationship between GSE and self-evaluation

constructs. For example, Judge et al. (1998) found that GSE was strongly related to self-

evaluation constructs such as self-esteem, neuroticism and locus of control. Chen, Gully

and Eden’s (2004) study found GSE to be positively related to other motivational traits

that include need for achievement and conscientiousness. While GSE is increasingly

being used in management and entrepreneurship studies, its construct measurement was

not standardised or used uniformly. Initially, a GSE scale was designed by Sherer et al.

(1982), and it had 17 items. This scale was also used in entrepreneurship and

personality studies (Luthans & Ibrayeva 2006, Urban 2010). However, researchers like

Chen, Gully and Eden (2001) were concerned that this GSE scale had too many items.

Therefore, they designed a new general measure self-efficacy scale consisting of 8

items. They tested this new scale for self-efficacy and found it to be more appropriate

than the original scale for GSE in terms of reliability, content and predictive validity.

55

Hence they suggested the use of this new 8-item GSE scale for all research domains, as

it captures an individual’s confidence in meeting the demands of the task / activity,

irrespective of what the task is. Chen, Gully and Eden (2001) observe that as “jobs

become broader and more complex, measuring dispositional constructs that can predict

motivational reactions and behaviours across a variety of work domains becomes

increasingly important” (p. 77). It implies that the revised GSE scale can help in

explaining motivation and performance in a variety of work contexts, regardless of

specific demands.

Researchers who used GSE felt that entrepreneurs require a set of diverse skills, and so

it would be difficult to identify a comprehensive list of such activities (e.g., Markman,

Balkin & Baron 2002). Using this measure, a few empirical studies were undertaken to

measure self-efficacy of individuals’ entrepreneurial activities (Markman, Baron &

Balkin 2005). Markman, Baron and Balkin (2005) used a GSE scale to differentiate

entrepreneurs from non-entrepreneurs, and found that entrepreneurs scored significantly

higher on self-efficacy than non-entrepreneurs. Their study involved examining the

patent inventors who started their own businesses and the patent inventors who ended

up working for an established company. While the GSE scale was used across different

disciplines including entrepreneurship, it was subjected to criticism on several grounds.

The self-efficacy construct was considered to be situation bound. For example, Wood

and Bandura (1989b, p. 408) define self-efficacy as “beliefs in one’s capabilities to

mobilize the motivation, cognitive resources, and courses of action needed to meet

given situational demands”. The more task-specific a construct of self-efficacy is made,

the better the predictive role of the construct. Bandura (1997, p. 42) himself criticised

the GSE measures on the grounds that they “bear little or no relation either to efficacy

beliefs related to particular activity domains … or to behaviour”. Since the capabilities

required to perform entrepreneurial roles are specific, a generalised GSE may not be

able to capture all the relevant roles of an entrepreneur. Hence, the words ‘given

situational demands’ or ‘particular activity domains’ direct self-efficacy constructs to a

narrow focus that needs to be contextualised to specific tasks, as was done by Gist and

Mitchell (1992) and Lee and Bobko (1994) by modifying the GSE construct scale. This

debate on whether self-efficacy is to be used in a general or customised manner had an

impact on the dimensionality of the construct as well, i.e., whether it is unidimensional

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or multi-dimensional. While scholars like Sherer et al. (1982) developed the original 17-

item GSE scale and Chen, Gully and Eden (2001) revised it to an 8-item GSE scale

specifically for entrepreneurship, it was proposed as a unidimensional scale. But in the

real world, the capabilities of entrepreneurship are multi-dimensional in their nature.

For this reason, scholars like Chen, Greene and Crick (1998) and McGee et al. (2009)

suggested a specific self-efficacy construct to be used in entrepreneurship studies;

accordingly, they have designed and empirically tested one to provide validation. This

type of specific self-efficacy construct is known as entrepreneurial self-efficacy (ESE),

which is discussed in the next sub-section.

2.3.2.2 Entrepreneurial self-efficacy (ESE)

Entrepreneurship is a complex process that requires a diverse set of roles and skills in

accordance with the core entrepreneurial activities such as opportunity recognition,

managing risk and uncertainty, and innovation (Baron 2002). In this context, it is

pertinent to recall that Bandura (1997) observed that self-efficacy can be used to predict

performance in different domains only if the self-efficacy assessment measures are

refined and tailored to the functions and ‘specific tasks’ in the context in the discipline

being examined. Therefore, the GSE approach to entrepreneurship may not able to

capture the individual’s efficacy in handling the specific roles and tasks of this domain

(Gist 1987; McGee et al. 2009). The limitations of the GSE approach lead to the

inevitable development of an entrepreneurship specific self-efficacy construct. This

construct came to be known as Entrepreneurial Self-efficacy (ESE), and was defined as

a construct that measures a person’s belief in their ability to successfully launch an

entrepreneurial venture (McGee et. al. 2009).

Entrepreneurship researchers believed that having task-related self-efficacy measures in

entrepreneurship would allow them to distinguish between entrepreneurs and non-

entrepreneurs, predict entrepreneurial intentions and also understand the entrepreneurial

decision-making process (Bird 1988; Boyd & Vozikis 1994; Chen, Greene & Crick

1998; DeNoble, Jung & Ehrlich 1999; Forbes 2005; Krueger, Reilly & Casrud 2000;

Wilson, Kickul & Marlino 2007). For example, Bird’s (1988) research illustrates that

individuals are predisposed to entrepreneurial intentions when relevant personal factors

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(e.g., prior experience, personality characteristics and abilities) and favourable

contextual factors (e.g., social, political and economic variables) exist. Boyd and

Vozikis (1994) built on Bird’s framework and proposed self-efficacy as a critical

antecedent of entrepreneurial intentions and actions / behaviour. Chen, Greene and

Crick (1998) provided robust empirical support that ESE, defined as an individual’s

confidence in his / her ability to successfully perform entrepreneurial roles and tasks,

was positively related to their intentions to start their own business.

Other researchers in this field attempted to identify specific dimensions that constitute

the ESE construct that relate to various entrepreneurial tasks such as opportunity

recognition, planning, marketing, risk taking, financial control, and coping with

challenges (Anna et al. 2000; DeNoble, Jung & Ehrlich1999; Kolveried & Isaken 2006).

By creating specific ESE scales that focus on the various entrepreneurial roles, these

studies have been able to capture the entrepreneurship domain issues more precisely.

Using this approach, these studies looked at how ESE impacts on entrepreneurial

intention (DeNoble, Jung & Ehrlich 1999) and also how ESE is impacted by external

factors such as strategic decision-making processes of the ventures they manage (Forbes

2005). In DeNoble, Jung and Ehrlich’s (1999) study, the findings showed that three

dimensions of ESE (i.e., developing opportunities, innovative environments and coping

with unexpected challenges) were positively related with entrepreneurial intention.

However, other dimensions such as initiating investor relationships, defining the

company’s core purpose, and developing critical human resources were not found to

have any effect on entrepreneurial intentions. One of the reasons suggested was that the

respondents were mainly students and inexperienced, and could not appreciate the

importance of these dimensions. Building on Chen, Greene and Crick’s (1998) work,

Forbes’ study (2005) was designed to study the self-efficacy of entrepreneurs managing

new ventures in a dynamic environment. Forbes (2005) examined the entrepreneur’s

confidence in his/her ability to perform entrepreneurial activities relating to innovation,

management, finance, marketing and risk-taking. The study found a positive

relationship between ESE and new venture performance which was measured by the

entrepreneur’s perception of their firm’s revenue and overall performance.

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In a few studies, ESE was not only found to have a positive influence on entrepreneurial

intentions, but also perform a mediating role (Hmieleski & Corbett 2008; Zhao, Seibert

& Hills 2005). For example, Zhao, Seibert and Hills (2005) have examined the

mediating role of ESE between the entrepreneurial intentions and formal learning,

entrepreneurial experience and risk propensity. Their results provide evidence for the

critical mediating role of ESE in entrepreneurial intentions for the above-mentioned

three antecedents. In their study, Hmieleski and Corbett (2008) examine the relationship

of entrepreneur improvisational behaviour with outcome variables such as the

performance of the start-up as well as the entrepreneur’s level of work satisfaction.

They find that ESE plays a critical positive moderating role in the relationship between

improvisational behaviour and performance.

While the above discussion provided evidence of ESE’s positive relationship with the

entrepreneurship domain, the construct of ESE was not uniform. Several researchers

have contributed to developing the construct of ESE (Chen, Greene & Crick 1998;

Wilson, Kickul & Marlino 2007; Zhao, Seibert & Hills 2005). To make it domain-

specific, these authors focused on identifying the core entrepreneurial tasks or skills that

could be incorporated in the ESE construct. For example, Chen, Greene and Crick

(1998) developed an ESE scale that initially referred to 26 entrepreneurial roles and

tasks. However, the factor analysis identified only 22 items loaded on five different

dimensions of entrepreneurship domain, namely (i) marketing, (ii) innovation, (ii)

management, (iv) risk-taking, and (v) financial control. They used the scale to capture

the degree to which individuals felt capable of performing the tasks associated with new

venture management and also to help distinguish between entrepreneurs and non-

entrepreneurs. The ESE scale developed by Chen, Greene and Crick (1998) has been

adopted by a few researchers (Drnovsek & Glas 2002; Forbes 2005).

Although the ESE construct was built on the five roles, Chen, Greene and Crick (1998)

relied on one composite ESE score enabling them to distinguish between entrepreneurs

and managers. They also found the total ESE score to significantly differentiate

entrepreneurship students from non-entrepreneurs (management and psychology

students). However, one significant drawback of this study was the use of a total score.

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By using a total score, the study did not measure or identify which type of self-efficacy

was more influential in creating entrepreneurial intention.

In another study, DeNoble, Jung and Ehrlich (1999) identified 35 skills and behaviours

observed among local entrepreneurs. Using Q-sort procedure, the authors identified six

theoretical dimensions that could be used in developing their construct of ESE. These

six dimensions were: i) developing new product and market opportunities, ii) building

an innovative environment, iii) initiating investor relationships, iv) defining core

purpose, v) coping with unexpected challenges and vi) developing critical human

resources. The authors have empirically tested these dimensions of ESE for their effect

on entrepreneurial intentions. As mentioned earlier, only three dimensions were found

to be associated; these are: developing new products and market opportunities, building

an innovative environment, and coping with unexpected challenges. Similarly, Zhao,

Seibert and Hills (2005) developed measures for ESE in four specific entrepreneurial

tasks: i) successfully identifying new business opportunities, ii) creating new products,

iii) thinking creatively, and iv) commercialising an idea or new development. But the

problem with this scale is also that all these four items were loaded on one factor,

creating a general measure for the overall entrepreneurial task domain.

Clearly, much progress has been made in designing a domain-specific efficacy scale for

entrepreneurs in the form of ESE. Scholars have identified various dimensions of

entrepreneurship that could be related to ESE (Chen, Greene & Crick 1998; DeNoble,

Jung & Ehrlich 1999; Forbes 2005; Hmieleski & Corbett 2008; Zhao, Seibert & Hills

2005). However, they suffer from a very serious problem in measurement. Most of

these studies have summed up the ESE scale to form ‘an overall score’ of ESE, even

while recognising the multidimensionality of the construct. This has been identified as

a big shortcoming of these studies, since forming a composite score results in diluting

the multidimensionality of the construct (McGee et al. 2009). In some cases, the

respondents were asked one closed question where the respondent was asked to provide

a yes or no response. Therefore, the impact of the underlying dimensions of the

construct is lost and cannot be examined separately.

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Given the above limitations of the ESE construct development, it became important to

address these issues. The challenge was, therefore, to design an entrepreneurial self-

efficacy construct which recognises the multi-dimensional nature of the

entrepreneurship domain, and to also ensure that the effect of each dimension is

captured well in empirical testing. This is what McGee et al. (2009) have done in their

seminal study of not only identifying the entrepreneurial dimensions, but also testing

them empirically. These authors have identified self-efficacy dimensions at an

individual level of ESE, namely: searching, planning, marshalling and implementing.

The McGee et al. study (2009) examined the effect of ESE on the entrepreneurial

intentions of nascent entrepreneurs. The authors developed their entrepreneurial self-

efficacy construct based on a four-phase venture creation process model that includes:

(i) searching, (ii) planning, (iii) marshalling, and (iv) implementing, put forth by

Stevenson, Roberts and Grousbeck (1985) and Mueller and Goic (2003). Entrepreneurs

were required to have confidence in their ability to undertake entrepreneurial tasks in

each of the four phases, which are briefly explained below.

The first phase, namely the ‘searching’ phase, refers to the entrepreneur’s ability to

identify and develop a unique idea (McGee et al. 2009). Researchers have long since

argued that for entrepreneurship to exist, opportunities must exist and the entrepreneur

must discover and exploit the profitable entrepreneurial opportunity (Shane &

Venkataraman 2000). It is a cognitive task which the latter authors believe only some

individuals possess. Entrepreneurs should have confidence in their ability to identify

opportunities and customers’ needs and wants.

During the ‘planning’ phase, the entrepreneur evaluates the idea/opportunity and

converts the idea into a feasible business plan by addressing questions that relate to

estimating demand and planning operational aspects to understand what is required to

give the idea/opportunity substance as a business (McGee et al. 2009). It is critical that

entrepreneurs have self-efficacy in their ability to estimate the demand, capital

requirements, pricing, marketing issues and so on for them to succeed.

The third phase, ‘marshalling’, involves bringing together the resources and gathering

support for the business idea (McGee et al. 2009). During this phase, the entrepreneur

61

would network with others to get information and necessary resources as well. The

entrepreneur should have confidence in their ability to explain their business idea to the

relevant stakeholders to gain their support.

The final phase consists of tasks related to ‘implementation’. The entrepreneur is

concerned with growing and sustaining the business beyond its infancy, and to do so

successfully, he/she has to be able to implement good management skills (McGee et al.

2009). Within this phase of implementation, McGee identified two categories: those

related to managing human resources and those related to managing finances.

Entrepreneurs should possess confidence in their ability to implement people-related

activities (i.e., supervising, recruiting and hiring, delegating, motivating and dealing

with day-to-day problems) and also in implementing finance-related activities (ie.,

organising and maintaining financial records, managing financial assets, understanding

financial statements). For the purpose of making the ESE construct, McGee et al.

(2009) measure ESE in the implementation phase as two ESE dimensions: one for

measuring self-efficacy in the implementation of people-related tasks, and the

entrepreneur’s efficacy in measuring the implementation of finance-related

entrepreneurial activities.

Using the above four phases as the basis for their theoretical model, McGee et al. (2009)

began a multi-step procedure to design a survey instrument that captured the

multidimensionality of the ESE construct, and discarded tasks that were irrelevant or of

little importance. At the end of a thorough screening process, the study identified 19

questions/items to best represent the five ESE dimensions without overlapping. The

fourth phase of implementing was examined as two separate dimensions: one relating to

people and the other relating to finance. By empirically testing these items, McGee et

al. (2009) found that nascent entrepreneurs showed a higher rating on the ESE measure.

To sum up, entrepreneurial self-efficacy is an important antecedent to behaviour or

actions that an entrepreneur will undertake. However, most of the studies in this area

have only looked at new venture intentions as the outcome of entrepreneurial self-

efficacy. The construct of self-efficacy itself was a bone of contention: whether it

should be generic or specific in content. Although earlier scholars have used GSE,

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recent studies have recognised the multidimensionality of the ESE construct. For

example, McGee et al. (2009) addressed many of the concerns about dimensions and

also measurement issues of ESE. Further, most of the earlier studies have used only

students as nascent entrepreneurs, but my study examines practicing entrepreneurs and

also seeks to link the ESE construct with entrepreneurial behavioural activities as well.

2.4 Entrepreneurial behaviour activities

In the preceding sections, I have examined various factors that influence

entrepreneurship such as personality characteristics (with a focus on need for

achievement, locus of control, risk-taking propensity) and entrepreneurial self-efficacy.

The main focus of a majority of studies was to distinguish an entrepreneur from a

manager (see Brockhaus 1980a, 1980b; Cromie & Johns, 1983 etc). Using this

approach, academics attempted to educate potential entrepreneurs on how to become

entrepreneurs and stimulate the creation of new ventures (Luthans, Envick & Anderson

1995; Edelman, Manolova & Brush 2008). However, these personality orientations and

traits or abilities do not automatically create economic value. The entrepreneurial

activity is anchored in the actions of the individual who organises the value creation

activity. Therefore, scholars agree that entrepreneurship is not a static concept, but a

functional one (see Ripsas 1998), and that no new ventures can be created without

sustained entrepreneurial behaviour (Shaver 2003). Understanding entrepreneurs’

behaviour gives an insight into the creation of new ventures and their success (Gartner

1989; Bird, Schjoedt & Baum 2012).

Therefore the question arises as to what entrepreneurs actually do to create and grow

new ventures. The existing literature on entrepreneurial behaviour is limited,

fragmented and ad hoc (Bird & Schjoedt 2009; Luthans, Envick & Anderson 1995;

Mueller, Volery & Von Siemens 2012). In a more recent study, Bird, Schjoedt and

Baum (2012) reviewed management and entrepreneurship journals during the period

2004 to 2010 and found only 91 articles related to the area of entrepreneur behaviour.

Their examination of these studies reveals a paucity of research and also methodological

concerns regarding operationalisation of entrepreneurs’ behaviour. Therefore, Bird et

al. (2012, p.903) observe, “behaviour in entrepreneurship research remains a surprising

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void …” and suggest more research in this area. Accordingly, I have reviewed the

existing literature to examine first the concept of entrepreneurial behaviour, and second

various ways in which the construct of enterpeneurial behaviour was used in previous

studies.

2.4.1 Concept of entrepreneurial behaviour

According to Bird (1989), entrepreneurial behaviour can be defined as an

“opportunistic, value-driven, value-adding risk-accepting, creative activity where ideas

take the form of organizational birth, growth or transformation” (p.5). A similar

definition is provided by Bird and Schjoedt (2009), who suggest that entrepreneurial

behaviour is the concrete enactment of individual or team tasks or activities required to

start and grow a new organisation. It is about the behaviour of the individual(s) as

entrepreneurs and not the firm’s behaviour. The behaviour needs to be discrete units of

action that can be observed by others in a meaningful way. Therefore, the behaviour of

entrepreneurs that results in starting and growing a new organisation draws upon the

personal attributes of entrepreneurs such as experience, knowledge, skills, abilities,

cognitions, intelligence, intentions and motivation. However, having these personal

attributes (e.g., right knowledge, skills, abilities, motivation and intention) is not

sufficient to create economic value. Instead, the presence of these personal attributes

would allow or enable entrepreneurs to consciously choose entrepreneurial activities

with the intention of finding and exploiting an opportunity and forming an organisation

[or a firm]. Therefore, entrepreneurial behaviour consists of the observable actions

(activities) of an individual and the responses that are evoked by those activities (Bird,

Schjoedt & Baum 2012).

2.4.2 Research on entrepreneurial behaviour

To find specific aspects of entrepreneurial behaviour, some scholars have examined the

literature in the area of management, and organisational and psychological studies to

identify ‘behavioural concepts’ that can be applied to entrepreneurship (e.g., Bird 1989;

Gartner, Bird & Starr 1992; Baron 2002). It was not a straightforward identification of

behavioural activities, but was part of other related aspects. For example, Bird’s (1989)

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study gathered a number of person-centred variables (such as experience, education,

motivation and values), the social context of entrepreneurial behaviour, leadership,

competencies and learning. Likewise, Gartner, Bird and Starr (1992) attempted to apply

organisational behaviour theory to ‘emerging’ organisations, but found them to be

limited at that time. Therefore, they suggested ‘richer description’ of entrepreneurial

behaviour. Baron (2002) used an organisational behaviour (OB) model of individual,

interpersonal and organisational spheres to three phases of the entrepreneurship process,

i.e., pre-launch, launch and operations. This research focused on the individual’s

cognition and decision-making issues. He also linked OB concepts to person-specific,

person-centred outcomes such as learning from a mentor, social and emotional

competence, situational leadership, influence processes, and group dynamics of teams.

Similarly, Shook, Priem and McGee (2003) used behavioural research in

entrepreneurship by highlighting judgement or cognition and how it was critical for

individuals engaged in opportunity exploitation activities. They observe, ‘we know very

little about the role of the individual in acquiring resources and organising the company’

(p. 390). On the other hand, other authors tried to identify specific and observable

entrepreneurial behavioural activities, moving away from personality-related constructs.

Shepherd, Douglas and Shanley (2000) argue that venture survival depends on

organising activities such as specifying tasks, allocating people to tasks, defining

authority structures, and building communication channels.

In the last decade, some empirical research in entrepreneurship behaviour was also

conducted. Bird and Schjoedt (2009) placed these studies on entrepreneurial behaviour

under three groups, based on whether it is used as a criterion for sampling, as an

independent variable, or as a dependent variable. Finally, they also describe the

entrepreneur’s behaviour based on social theories. In the first group, behavioural

activities served as a criterion for the selection of entrepreneurs. The most prominent of

these efforts is the Panel Study of Entrepreneurial Dynamics (PSED) conducted

between 1998 and 2000. This was followed by a similar survey on a global scale in the

form of the Global Entrepreneurship Monitor (GEM) project (see Reynolds et al. 2000;

Gartner et al. 2004; Langowitz & Minniti 2007). These surveys, together with

telephone interview and mail questionnaires, cover a broad range of topics that include

activities relating to success in organising entrepreneurial business. Embedded in these

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surveys were two questions that were designed to identify nascent entrepreneurs: (i) Are

you, alone or with others, now trying to start a business? and (ii) Are you, alone or with

others, now starting a new business or new venture for your employer? This survey

provided data that are largely contemporaneous with the new venture creation process.

Researchers were able to use these data to develop a behavioural criterion for

individuals based on whether they have engaged in entrepreneurial activities such as

‘developed a product/service, established credit with suppliers, filed a tax return for a

new business, invested own money (Gartner et al. 2004). The PSED study was

designed to examine the earliest stage of the organisational life-cycle so as to get an

understanding of the new business creation of nascent US entrepreneurs. For example,

Edelman, Manolova and Brush (2008) used these start-up behaviours to compare the

practices of nascent entrepreneurs and the practices that textbooks recommended that

entrepreneurs’ undertake. The authors found that the entrepreneurship textbooks did not

present all the activities involved in the starting up of a new venture, either by

underemphasising some activities or not adequately discussing them.

The second group of studies use entrepreneurial behaviour as an independent variable.

Here, Bird and Schjoedt (2009) refer to specific behaviour such as locating the business

in a specific area, writing a business plan, or seeking outside advice. For instance, Haber

and Reichel (2007) examined the impact of entrepreneurial activities such as writing a

business plan and planning the physical design of the venture, as well as applying for

external support like financial and advisory assistance on the venture performance,

which incidentally was only marginal. In a longitudinal study, Lichtenstein, Dooley and

Lumpkin (2006) examine the start-up activities during the venture creation process,

along with their frequency and pacing. The nine start-up behavioural activities used in

this study are those identified in the PSED study: investing own money, defining the

opportunity, organising a founding team, developing a prototype, forming a legal entity,

installing a business phone, purchasing major equipment, opening a business bank

account and asking for funding. Tornikoski and Newbert (2007) identify certain

behavioural activities of nascent entrepreneurs; these include the demonstration of

improvising behaviours (e.g, preparing a business plan, starting marketing efforts,

applying for patents, opening bank accounts, listing in the phone book and Dunn and

Bradstreet), gathering resources (e.g., purchasing raw materials and equipment), and

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displaying networking behaviour (e.g., asking for funds, and receiving outside

assistance). These authors explain the impact of the entrepreneur’s behaviours/activities

on the nascent organisation’s ability to interact with the external environment

successfully. They found that improvising and resource gathering behaviour were

effective, but not the networking behaviour. Other behaviours were less specific and

cognitive in nature rather than observable behaviour such as self-reports relating to

planning or identifying sources of finance (Alsos, Isaken & Ljunggren 2006). In another

study (Rauch, Frese & Utsch 2005), it is the employees, as stakeholders, who report the

entrepreneurs’ behaviours such as ‘support for personal initiative’ and ‘communicating

business goals’.

The third group of studies view behavioural activities as a dependent variable (Bird &

Schjoedt 2009). These studies, for example, use demographic variables such as age,

gender and human capital (DeTienne & Chandler 2007) and homemaker status (Singh

& Lucas 2005) to predict self-reported entrepreneurial behaviours. In their study of

homemaker entrepreneurs, Singh and Lucas (2005) found that both non-homemaker and

homemaker nascent entrepreneurs undertook activities such as preparing a business

plan. DeTienne and Chandler (2007) used the gender and human capital of the CEO of

young firms as predictors of a sequence of activities relating to start-up opportunity.

Research on family firms reveals that entrepreneurial behaviour is significantly

influenced by the characteristics of the family members, the CEO and the overall family

involvement in the firm (Kellermans et al. 2008). In other cases, belief cognitions and

intentions and individual differences were used as predictors of nascent behaviours

found in PSED or GEM projects (Langowitz & Minniti 2007). In this context, it is

useful to recall the popular theory of planned behaviour (TPB) postulated by Ajzen

(1991), which argues that behavioural intention is the best predictor of behaviour

because intention is “a person’s readiness to perform a given behaviour” (Ajzen 2011,

p.1122). A recent longitudinal study provides strong empirical evidence of how

intentions are linked to entrepreneurial behaviour when engaging in the entrepreneurial

process (Kautonen, van Gelderen & Tornikoksi 2013). Similarly, the study by Kautonen

and his colleagues (2013) on the impact of intention and predictive behaviour control on

business start-up behaviour also showed a positive causal relationship.

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Under the fourth grouping, Bird and Schjoedt (2009) discuss studies that explain

behaviour in the social theory context (Forbes et al. 2006; Lichtenstein, Dooley &

Lumpkin 2006). For example, Forbes and his colleagues (2006) use the theories of

attraction and resource dependence approach to explain the entrepreneurs’ behaviour of

hiring new team members. The authors suggest that the entrepreneurs would engage in

the activity of hiring a new team member if that member had close ties to the venture

capital community or shared a similar culture or values to the entrepreneur. Similarly,

Lichtenstein, Dooley and Lumpkin (2006) examined the activities of an entrepreneur

engaged in the organisation of a new firm. They observe three modes of organising:

organising the vision (expressing a strong vision and vocabulary about the venture

opportunity), strategic organisation (tangible events like formatting a book, deciding to

publish a book or through a web-page, committing personal funds, and coping with non-

venture responsibilities), and tactical organising (developing a product / service,

establishing credit with suppliers, filing tax returns, hiring employees, or investing own

money). As can be seen, many of these activities are behaviourally anchored.

While Bird and Schjoedt (2009) found that entrepreneurial behaviour has been

empirically studied as an independent, dependent and control variable, there are still

gaps in the body of knowledge. Poor measurement, self-reporting, studying students

rather than entrepreneurs, and not including time taken to complete the activity (i.e.

begin time, finish time, new behaviour start time) are some of the limitations. Scholars

have also found that many of these studies focus on vague behavioural constructs which

are difficult for objective observation and also lend themselves to varied interpretation

(Mueller, Volery & Siemens, 2012). There is a consensus among researchers that the

research in this area does not sufficiently address the nature of entrepreneurs’

behaviour, and more empirical data is required that focuses on what entrepreneurs

actually do (Bird & Schjoedt 2009; Bird, Schjoedt & Baum 2012; Gartner, Carter &

Reynolds 2010; Mueller, Volery & Von Siemens 2012).

There were also other studies in the 1990s relating to the observation of entrepreneurial

behaviour which were not covered in Bird and Schjoedt’s (2009) review. For example,

Luthans, Envick and Anderson (1995) examined the methods of research in

entrepreneurship and found that most studies were group-centred and the focus was on

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the measurement of data collected indirectly through surveys. However, entrepreneurs

are more individualistic than group-centered, and therefore need to be studied in their

naturalistic (organisational) settings. The authors suggest the use of an idiographic

approach to identify entrepreneurial behaviour from an insider’s perspective. The

idiographic method uses a direct behavioural observation of the events unfolding in the

given setting and interaction with the internal and external environments. For this

purpose, the authors have undertaken a four-stage process consisting of: (i) an

unstructured direct observation of entrepreneurs’ behaviour, (ii) post-log interviews to

ensure that behaviour was accurately observed, (iii) the use of Delphi technique for the

categorisation of the behaviours, and finally, (iv) the use of structured observation to

measure the frequency of identified behaviour. Accordingly, this method was used to

examine the behaviours of entrepreneurs (Envick & Luthans 1996), and gender

differences in the behaviour of entrepreneurs (Envick & Langford 1998). In Envick and

Luthans’s (1996) study, eight entrepreneurial behavioural categories were identified: i)

planning, ii) controlling, iii) internal communication, iv) human resources management,

v) work-related tasks, vi) customer service, vii) networking and viii) on-the job personal

time. Using the behavioural activities of entrepreneurs found by Envick and Luthans

(1996), Envick and Langford (1998) investigated gender differences in these

entrepreneurial activities. While entrepreneurs of both genders were engaged in the

eight behavioural activities, some significant differences were also found. Female

entrepreneurs engaged in controlling, communication, human resource management and

work-related tasks significantly more often than their male counterparts. On the other

hand, male entrepreneurs engaged in on-the-job personal time significantly more often

than females. There were also other differences, but they were not significant.

As seen above, the literature reveals that the construct of entrepreneurial behaviour has

originated from disciplines such as organisation and psychology. Attempts have been

made to identify entrepreneurs’ behaviours by various scholars (e.g., Brown & Hanlon

2004; Envick & Langford, 1998; Luthans & Ibrayeva 2006). A recent review by Bird,

Schjoedt and Baum (2012) found that studies so far have not addressed the nature of

entrepreneurs’ behaviour adequately, and therefore called for more empirical data to

understand what entrepreneurs actually do. This view is consistent with other

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researchers such as Mueller, Volery and Von Siemens (2012). The details of some of

these studies are discussed in the section below.

2.4.3 Identifying entrepreneurial behaviours

Brown and Hanlon’s (2004) study attempted to develop entrepreneurial behavioural

scales that can help in identifying training, coaching and developing of entrepreneurs.

The authors surveyed 34 entrepreneurs by conducting a critical incident job analysis.

Each entrepreneur was asked to report up to three examples of effective and ineffective

behaviours that they had observed other entrepreneurs perform. Using this procedure,

the authors were able to identify nine dimensions: relevant background, opportunity

identification, dedication to business, mobilising support and resources from others,

strategic business development and growth, financial management skills, employee

management, marketing/customer relations management and negotiation and risk-

taking.

In 2006, Luthans and Ibrayeva examined the role of self-efficacy among entrepreneurs

in transition economies in two parts / phases. In the first part, the authors found that

entrepreneurs’ self-efficacy had a direct and mediating effect on performance outcomes.

However, the authors believed that self-efficacy could be developed only if they knew

the specific behaviours of entrepreneurs i.e., what they actually did. To seek answers to

this question, the authors undertook a second study, with a sample of 239 from two

transition economies from Central Asia, to examine: (i) what entrepreneurs do in their

day-to-day work schedule and (ii) how frequently they do these activities. They

followed an idiographic approach (suggested by Luthans, Envick & Anderson 1995)

that consisted of different phases of data collection: an unstructured observation, a post-

log survey, Delphi analysis and a final structured observation. For this purpose, they

used a multi-behaviour (more than one behaviour observed) and multi-rater (with more

than one rater) method to focus on directly observable behaviours of entrepreneurs. The

results from this study identified nine categories of entrepreneurial behavioural

activities: planning, controlling, internal communication, human resources management,

work-related tasks, customer service, socialising, politicking, and on-the-job personal

time.

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In the immediate past, Mueller, Volery and Von Siemens (2012) used the sociological

method of structured observation to capture the behaviour of entrepreneurs, six of them

from the start-up stage and six of them in the growth phase. Instead of using the

traditional self-reporting method of data collection, Mueller and his colleagues observed

entrepreneurs in real-time and recorded them to understand the actions of the

entrepreneurs. The findings show that the actions of entrepreneurs in both start-up and

growth phases were characterised by brevity and fragmentation; they engaged in ‘short,

sporadic actions that change in an abrupt, sometimes unpredictable manner (p. 1004).

Both groups spent a considerable amount of time on communication with others. All the

growth phase entrepreneurs and a majority of the start-up entrepreneurs were heavily

involved in performing exploitation activities rather than exploration activities in order

to increase efficiency. They were equally involved in three main functions: (i) human

resources and employee relations, (ii) marketing, sales and public relations and (iii)

administration. Both the groups were also involved in the exchange of information and

opinions, and working analytically and conceptually; however, the two groups differed

significantly on the time spent in both these areas: the start-up entrepreneurs spent 36

per cent of their time on exchanging information and opinions and 28 per cent on

working analytically and conceptually, while the growth stage entrepreneurs spent 54

per cent of their time on exchanging information and opinions and only 12 per cent on

the analytical and conceptual work. Similarly, start-up entrepreneurs were more

involved in environmental monitoring, while growth stage entrepreneurs were more

involved in business development.

Based on their findings, Mueller, Volery and von Siemens (2012), presented a

taxonomy of entrepreneurs’ behaviour that is described by a continuum ranging from

the basic ‘atomic’ level to the superordinate ‘galactic’ level, with two other

intermediary levels: molecular and molar levels. At the ‘atomic’ level, an action

consists of discrete units of individual activities of entrepreneurs that are observed by an

audience (e.g., writing an email, visiting a client etc.). At the second ‘molecular’ level,

the activity captures what entrepreneurs are doing without the observer interpreting the

purpose of these actions (e.g., networking, exchanging information, directing and

controlling, consulting and selling etc.). At the ‘molar’ level, activities are differentiated

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by the functions within the organisational context (e.g., product development,

marketing, controlling and finance, human resources and employee relations etc.). The

fourth level is named the ‘galactic’ where the activities are divided into two

fundamental forms of organisational behavior: exploitation (e.g., increasing productivity

and resolving problems of the existing business) and exploration (e.g., developing a new

product line or internationalising activities).

Finally, Bird, Schjoedt and Baum (2012) summarise the literature in the area of

entrepreneurial behaviour and endorse the need for further research in this area. Even

while pointing out the existence of some good studies, they observe that the current

research is ad hoc, and, in some cases, examines only one behaviour rather than a range

of behaviours that explain ‘effective entrepreneurship’. They also make

recommendations for further research on a list of critical behaviours they believe are

considered important but are under-researched. The list includes activities such as

establishing operations, hiring employees, and marketing, and selling. Interestingly,

these authors suggest the re-use of published measures from previous studies. My study

uses the behavioural activities identified by Luthans and Ibrayeva (2006) as constructs

in my conceptual model for empirical measurement. As no empirical studies were

conducted in an emerging economy context, we are able to use the entrepreneurs’

behavioural activities identified in a transition economy for our study.

2.5 Entrepreneurial information overload (EIO)

Entrepreneurs face many challenges in their attempts to discover opportunity, create a

venture, and ultimately sustain it. While configuring and gathering resources is

necessary for the success of entrepreneurs’ efforts, a vital ingredient of this process is

information. Possessing or having access to the right amount of information and the

ability to use it optimally helps in effective decision-making relating to new venture

creation and management. However, some scholars have pointed out that when decision

makers face the challenge of dealing with too much information compared to their

ability to deal with it, this leads to a phenomenon known as information overload. I

believe that entrepreneurs, too, as decision makers, face the problem of information

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overload. This section explores the concept of information overload and how it impacts

on entrepreneurs adversely.

2.5.1 Concept of information overload

The literature reveals that information overload has been an issue for many years, but

has come under the spotlight more recently in the context of an increasing number of

technological gadgets, globalisation and the accessibility of information. Previously,

i.e. before the advent of information and communication technologies (ICT), business

managers suffered due to a lack of adequate information necessary for effective

decision-making. But with growing information technology and the ever-changing

environment, the previous paucity of information has changed with an increasing

amount of information available from diverse sources, so much so that the problem now

is not information shortage, but information overload (Speier, Valacich & Vessey,

1999).

The concept was first recognised and examined in the field of psychology (e.g., Miller,

1956). Here, Miller (1956) argued that humans have a fairly limited cognitive ability to

process information, and also that people have different levels of information

processing capability and capacity to store information. He also found that an

individual’s information processing performance increased with increased information

inputs up to a certain threshold point, after which the processing performance decreases

sharply. Interestingly, these views were expressed prior to the advent of modern ICT

technologies. Later, Milford and Perry (1977, p. 131) define information overload as

“the condition in which the amount of input [information] into a system exceeds the

processing capacity of that system”. It implies that information overload occurs when

inputs stream rapidly and where the respondent does not have enough time to sift and

process various inputs of information.

Alluding to the challenge of dealing with information, although not defining it as

information overload, the Noble Prize Laureate, Herbert Simon (1971, p. 40), observes:

“a wealth of information creates a poverty of attention”. He suggests that the

respondent’s ability to process and use the information and make decisions may be

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limited by his/her cognitive processing capability. In other words, when the respondents

receive much more information than they can handle, this leads to information overload.

Examining this concept, Schultze and Vandenbosch (1998) have referred to information

processing capacity as a U-shaped function, wherein too little information decreases the

cognitive ability, while too much information causes stress and thereby lowers the

processing capacity. However, Eppler and Mengis (2004) suggested that an increase in

information load can, up to a certain time, increase the processing capacity.

Various reasons have been advanced as causing information overload: the amount of

information (Farhoomand & Drury, 2002; Milford & Perry, 1977; O’Reilly, 1980), the

diversity of information (Iselin, 1988; 1993; Milford & Perry, 1977), time pressure

(Schick, Gordon & Haka, 1990) and processing factor (Baron, 1998; Farhoomand &

Drury, 2002; Van Zandt, 2004). Evaristo, Adams and Curley (1995) provided further

insights by explaining how the information characteristics (volume, uncertainty,

complexity and turbulence) and the task characteristics (time pressure, formalisation,

and complexities) could result in an individual’s information load. While the effect of

the ever increasing number of cues is seen as directly contributing to information

overload, Eppler and Mengis (2004) maintain that it is the combination of five factors:

information, in terms of its volume, frequency, intensity and quality; the receiver; the

tasks that need to be accomplished; the organisational design; as well as the information

technology which contribute to information overload at organisational and interpersonal

levels. In general, all the factors above influence an individual’s information

requirements and information processing capacity leading to information overload.

Recognising information overload as a major challenge, it was examined in various

disciplines such as accounting, marketing, organisational studies, and management.

Accountants are key information disseminators within an organisation, and decision

makers rely on their information to make good decisions. But accountants also suffer

from information overload because they work under extreme time pressure (Schick,

Gordon & Haka 1990; Swain & Haka, 2000). In sales management, the salespersons’

information overload was found to negatively affect their sales performance (Hunter

2004). Investigating the information overload from the customers’ perspective, Jacoby

(1984) found that available information could also overload consumers in their purchase

decision, but they were able to deal with it by being highly selective in the quantity and

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type of information they seek. Klausegger, Sinkovics and Zou (2007) found that

approximately 60 percent of managers’ work time in organisations was spent in reading

documents and processing information; however, these managers had collected too

much information which they could not use efficiently and this impacted negatively on

their task accomplishment. Examining the impact of information overload on decision

making, Speier, Valacich and Vessey (1999) argue that when individuals are subjected

to information overload, it reduces their ability to make good decisions. The authors

found that information overload not only increases the time required to make a decision,

but also decreases the quality of decisions. Decision-makers experiencing information

overload may ignore available information and become highly selective or even lose

control over information (Bawden 2001; Edmunds & Morris 2000), which could result

in less than optimal outcomes.

Organisations, also, like individuals, can face information overload when they face a

discrepancy in their information processing capabilities with regard to the amount of

information encountered (O’Reilly 1980). It is noted that each organisation has a

different structure, which also affects the information processing capacity of the unit

(Tushman & Nadler 1978). Further, it is also observed that information overload can

cause a reduction in output capacity (Driver & Mock 1975). When individuals within an

organisation perceive individual information overload, it could result in a reduction in

the overall effectiveness of the management operations (Allen & Wilson 2003). These

negative effects of information overload highlight the importance of this construct and

the need to understand its impact on individuals and organisations. I believe that this

construct is extremely important for entrepreneurs in the current world, as they too are

inundated with information from various sources, and they would not be immune from

this phenomenon.

2.5.2 Information-seeking behaviour in entrepreneurship

Following the discussion above, it is obvious that entrepreneurs, too, like managers,

would suffer from too much information, and therefore the concept of information

overload can be extended to the discipline of entrepreneurship. At the centre of the

entrepreneurship process is the individual who identifies the opportunity, gathers

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resources and brings new products to the market place. To do so effectively,

entrepreneurs need to have information that will enable them to make relevant and

timely decisions. Given the uncertain and dynamic nature of the environment in which

they operate, entrepreneurs need to keep abreast of changes in the environmental factors

in order to make good decisions. If any entrepreneur is bombarded with more

information than he or she can manage, this could impair their ability in to make better

decisions required at various stages of entrepreneurship, namely opportunity seeking,

venture creation and growth.

The literature indicates that entrepreneurs and small business owners / managers

constantly scan and monitor their operating environment in order to look for new

opportunities and also to strengthen their competitive position (Keh, Nguyen & Ng

2007; Welsch & Young 1982). In fact, they are referred to as ‘avid information

gatherers’ and search for information more than executives (Kaish & Gilad 1991, p.49).

The process of venture creation begins with recognising an opportunity, and they arise

from the entrepreneur’s ability to stay alert and be in sync with the changes that occur in

the market conditions (Kirzner 1973; Shane 2000). Scholars view the process of venture

formation as a process of learning where the entrepreneurs have to overcome the

liabilities of newness by using the information acquired by them (Cooper, Folta & Foo

1995). In a recent study, Mueller, Vollery and Von Siemens (2012) found that

entrepreneurs in the start-up stage spend approximately 36 percent of their time in

exchanging information and opinions, and the growth entrepreneurs spend 54 percent of

their time exchanging information and opinions. The dominance of this activity shows

the importance entrepreneurs are placing on environmental scanning. Information is a

critical resource that entrepreneurs use at various stages in the new venture creation and

growth. Thus, the success of a venture depends on the entrepreneur’s role, among

others, of being an information seeker, processor and assimilator.

Ikojo-Odongo and Ochollo (2004) identified three situations in which entrepreneurs

sought information: (i) major incidents: when entrepreneurs sought information

regarding training for new skills, marketing of products and inputs about sources or

supplies and their prices, (ii) minor incidents: when entrepreneurs sought information

on loans, pricing of products, environmental hazards, transport, competitors, record

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keeping, maintenance of equipment, government policies, current developments in trade

and in the country, improving quality and minimising overheads and other business

opportunities and employment, and (iii) business development: including how to

improve planning and management of businesses, to increase output and viability and

the ability to develop business ideas.

Scholars have also examined the entrepreneurs’ information needs in different

countries. A study in Singapore found that businesses considered information about

competitors, markets, business news, environment news – political, social, supplier

trends, regulatory, information technology, demographic trends and new management

methods (de Alwis & Higgins 2001). At the same time, a study of Aboriginal

entrepreneurs in Canada by Vodden, Miller and McBride (2001) reveal the most

important types of information include financing options, business planning, and

information about government programmes, markets, and marketing. A similar study of

ethnic Malaysian would-be entrepreneurs by Kassim (2010) shows that their

information needs commonly revolved around the preparation of business plans,

planning for cash-flow, borrowing capital, business opportunities and profit planning.

Stewart, May and Kalia (2008) compared the entrepreneurial information-seeking

behaviour of entrepreneurs in the US and India, and found that Indian entrepreneurs

scanned the environment more than their counterparts from the US. The authors

conclude that higher scanning frequency by Indian entrepreneurs is associated with

culture, in addition to operating circumstances. According to them, some cultures are

more disposed to greater information seeking.

Information seeking behaviour by entrepreneurs is not uniform, as entrepreneurs do not

have a single profile. Hence Welsch and Young (1982) pointed out that information

seeking behaviour depends on business complexities, cognitive orientation, and degree

of personal relationship between the entrepreneur and the source of information. These

authors have examined the role of personality factors in determining the entrepreneur’s

selection of information sources. They found that internal locus of control was

significantly related to professional, written, institutional and electronic sources of

information. Those with low self-esteem relied on professional sources (e.g, bankers,

accountants and lawyers), but those with high self-esteem did not seek much help and

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used written and institutional sources. Those with a high risk-taking propensity relied

more on trusted personal sources rather than impersonal or professional sources.

According to Cooper, Folta and Woo (1995), entrepreneurs sought information from

two major sources: professional (e.g., accountants, bankers, lawyers) and personal (e.g.,

friends or other personal networks). The authors also found that experienced

entrepreneurs were confident, and displayed less intensity in their information search

efforts compared to inexperienced entrepreneurs. Such behaviour did not change even

when they worked in a new field. Westhead et al. (2005) believed that seemingly low

search intensity by experienced entrepreneurs is because their search behaviour is

effective.

Many small businesses rely heavily on informal information sources such as word of

mouth, family and friends (Birley 1985; Smeltzer, van Hook & Hutt 1991). This is

similar to the findings of Ikoja-Odongo and Ocholla (2004), who studied informal

entrepreneurs’ use of information sources and found them to rely mostly on informal

sources; these include word of mouth, personal experience, and friends, family and

neighbours. This could perhaps be due to the cost associated with these sources. Other

scholars find the use of social networks (Baron, Byrne & Branscombe 2005) and social

capital (De Carolis & Saparito 2006) as sources of information. Social capital, in

particular, facilitates entrepreneurs by providing access to information through

appropriate timing, relevance and quality of information. Ozgen and Baron (2007)

identified three social sources of information that were useful in opportunity

recognition; these were: mentors, informal industry networks, and participation in

professional forums, with all three sources having a positive impact. Interestingly, these

authors also found that the impact of informal industry networks on entrepreneurs’

performance was mediated by their self-efficacy, which happens to be an important

variable of my study.

Casson (2005) believes that some entrepreneurs use information that is available both

publicly and privately and use their own judgement. He argues that differential access to

information generates radical differences in the entrepreneur’s perception of the

business environment and gains from efficient information management. For example,

an entrepreneur may be confident in taking a decision based on information that he or

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she alone is privy to or possesses; others who may not have access to this piece of

information will perceive such a decision to be risky. However, as Casson (2005)

reminds us, no information comes with a seal of endorsement about its truth, and

entrepreneurs make decisions, using this information, based on their perception of risk.

To aid with decision-making during these challenging times, entrepreneurs require

better quality and increased quantity of information (McEwen 2008). However, this

highlights the importance of not only getting the most relevant information, but also of

having the appropriate capability to assimilate the information while making a decision.

2.5.3 Entrepreneurial information overload and its impact

My discussion in the preceding sections shows that entrepreneurs, too, like other

business decision makers, use a lot of information from various sources. They need

information in each of the phases of entrepreneurship, starting from opportunity

recognition. It is the entrepreneur who is central to the firm and therefore plays the

crucial role of an information seeker, processor and assimilator. Information is

recognised as a key resource in decision-making processes (Schick, Gordon & Haka

1990) and entrepreneurs also need to scan the environment to get relevant information

to help them make the right decisions. While the term ‘information overload’ is not

new, it has never been used explicitly in entrepreneurship studies so far. Just as

information overload was customised to different disciplines, such as a salesperson’s

information overload (Hunter 2004; Hunter & Goebel 2008), and managerial

information overload (Farhoomand & Drury 2002), we could term the phenomenon of

information overload faced by entrepreneurs as entrepreneurial information overload

(EIO). Drawing on the literature on information overload from various disciplines, EIO

can be described as ‘a situation when the amount of venture-related information

exceeds the capacity of an entrepreneur to process, analyse and make an effective

decision’. Two major issues here, as in other disciplines, are the amount of information

available and the capacity of the entrepreneurs to use it for optimal outcomes.

Even before the explosion of information became an issue of concern in the last decade,

the study by Kaish and Gilad (1991) shows how entrepreneurs differ from corporate

managers in terms of exposing themselves to information, the sources they use to gather

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information from, and how they evaluate information cues. According to their study,

entrepreneurs in search of opportunities relied less on predictable sources and spent

more time thinking and scanning a broad landscape. Further, they found that

entrepreneurs exhibited more general alertness and were engaged in gathering

information even after hours, mostly through non-verbal scanning. In regard to

assessing and appraising the opportunity, the entrepreneurs relied more on their own

subjective impressions rather than on conventional economic analysis. This study

clearly emphasises the central role of information and information-seeking behaviour in

entrepreneurship.

To understand how we can apply information overload to entrepreneurs, we have to

understand the environment in which the entrepreneur is working. As Klausegger,

Sinkovics and Zou (2007) emphasise, living in an ‘information society’ means that

managers are bombarded with information, even if they are not actively seeking it.

Earlier studies have clearly shown two important conclusions that are relevant to

entrepreneurship: (i) individuals are faced with more information than he or she can

process at any given point in time (Gilbert et al. 1992), and (ii) our information

processing capacity is severely limited and can be readily exceeded (Baron 1998).

These two aspects are applicable to entrepreneurs who face an abundance of

information and find it difficult to sift the information to identify what is relevant and

useful.

A contributing factor to this overload is that there is a plethora of sources from which

information emanates and these sources are constantly growing. It is seen that the

‘information society’ is creating a large amount of information than we can consume,

but with the advent of new technologies, the situation of overload has further

compounded. Feather (2008, p.xviii) believes that “the technological developments of

the past 60 years have made more information more available to more people than at

any other time in human history”. This trend does not seem likely to diminish or stop.

The increase in the trend is visible with the introduction of social media and faster

internet access. As we have seen in the discussion early in this section, entrepreneurs

are avid information seekers and look for venture-related information at all stages of

their venture. They will definitely be faced with an overwhelming amount of

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information coming from various sources and much more than they can assimilate.

Many entrepreneurs, unlike the CEOs of large companies, are small and medium sized

owners and may not be well equipped with the tools to systematically glean sufficient

and relevant information. Baron (1998, p.275) observed that entrepreneurs “face

situations that tend to overload their information-processing capacity and are

characterized by high levels of uncertainty, novelty, emotion, and time pressure”. He

also finds that this pressure is felt more by entrepreneurs than other individuals, and due

to this the entrepreneurs who are impacted by information overload are susceptible to

cognitive biases such as counterfactual thinking, regret over missed opportunities, affect

infusion, self-serving bias, planning fallacy and self-justification (see Baron 1998,

p.279).

The aspect of the information processing ability of entrepreneurs is very important. It is

possible that some personality characteristics such as experience, culture, level of

confidence, and risk-taking propensity of entrepreneurs may impact on their information

seeking behaviour (Forbes 2005; Podoynitsyna, Van der Bij & Song 2011; Stewart,

May & Kalia 2008). These factors underpin how an entrepreneur will seek information,

select it and use it for decision making. However, at this stage, we are not clear how

such personality characteristics are related to the information overload being faced by

entrepreneurs. For example, while Hunter (2004) found that a perception of information

overload lowered self-efficacy (and indirectly affected performance), it was found to

play a positive role in performance outcome (Ozgen & Baron (2007). Obviously, further

investigation is required to understand these relationships between personality

characteristics that influence the information processing capability of entrepreneurs and

information overload faced by entrepreneurs.

To be successful, the entrepreneur needs to have self-efficacy in performing the tasks of

opportunity seeking, venture creation and growth. The key to success is making quality

decisions in all phases of the entrepreneurial process. The ability to perform well

throughout this process depends, among other things, on the entrepreneur’s ability to

identify and use relevant information. The right amount of information helps in coping

with uncertainty, as it reduces the level of uncertainty (Schick, Gordon & Haka 1990).

On the other hand, having an information overload reduces the effectiveness of decision

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making (Miller 1972; Shick, Gordon & Haka 1990) while increasing information

anxiety (Bawden & Robinson 2009). Emotional arousal or physiological responses

resulting from anxiety, stress or fear can negatively impact on self-efficacy (Conger &

Kanungo 1988; Bandura 1977), and can, in turn, adversely impact on entrepreneurs’

behaviour. Therefore, these negative implications of information overload can also have

a detrimental impact on entrepreneurs’ decision-making and performance.

Therefore entrepreneurs can experience information overload when there are too many

sources of information, too much information, not enough time to processs it, frequent

interruptions, and no strategic information management tools to guide them. They may

also lack the capacity to process the information in time and this might increase the

negative effect of the overload. If entrepreneurs feel the effect of information overload,

they, too, like the individuals examined in other disciplines such as marketing, medicine

and psychology may feel stressed or overwhelmed, and see a decrease in self-efficacy

that can potentially result in poor performance. While the problem of information

overload is being studied thoroughly in other disciplines, no study has to date explicitly

examined its impact empirically in entrepreneurship studies. This study seeks to

examine the impact of the entrepreneur’s perception of information overload on his/her

self-efficacy and entrepreneurial behavioural activities.

2.6 Chapter summary

To sum up, this chapter reveals that the entrepreneur who is at the centre of the

entrepreneurship process has a distinctive personality, such as need for achievement,

internal locus of control and risk-taking propensity which not only differentiates

him/her from others, but also enables them to engage in entrepreneurial activities

through their behaviour. Another key antecedent of entrepreneurial behaviour is the

concept of entrepreneurial self-efficacy. It is clear that having confidence in their ability

to undertake entrepreneurial activities provides an impetus to perform them confidently.

While some recent authors have found the multi-dimensional nature of the construct of

entrepreneurial self-efficacy, these dimensions were not investigated separately.

Similarly, two other important aspects related to entrepreneurship have not received

adequate attention from researchers. They are entrepreneurial behaviours and

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information overload, and my review of the literature showed that they are critical to the

field of entrepreneurship. Based on the literature review, it can be seen that the four

entrepreneurship areas, namely the entrepeneur’s personality traits, entrepreneurial self-

efficacy, entrepreneurial behaviours and information overload could be related. I seek

to examine these relationships in the context of emerging economies. Therefore, the

next chapter highlights the key features of India, which is considered to be the second

largest emerging economy after China.

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CHAPTER 3

ENTREPRENEURSHIP ISSUES IN INDIA

This study examines some critical entrepreneurship issues in India, which is a large

emerging economy. According to Bruton, Ahlstrom and Obloj (2008), there has been a

growing focus on entrepreneurial research in emerging markets in the recent past. In

order to understand the context in which the study is undertaken, it is necessary to

examine the main features of the emerging markets, and the background of

entrepreneurship in India. For this purpose, I have structured this chapter as follows.

First, I discuss the concept of emerging markets. Second, I comment briefly on the

country overview. Third, I examine critical issues that relate to entrepreneurship in

India.

3.1 Emerging economies and their characteristics

In spite of popular usage of the term ‘emerging economies’ and interest in these

countries, there is a growing debate around the concept of emerging economies and as

to which countries constitute this category. Some scholars also use the term ‘emerging

markets’ synonymously with the term ‘emerging economies’. Several international

organisations use this term to group different countries. The term ‘emerging economies’

was first coined by Antoine van Agtmael, a former Investment Officer of the

International Finance Corporation (an agency of the World Bank Group) in 1981. For

many multinationals, which mainly operate in mature markets, emerging economies

have become attractive as they offer them the potential for immediate sales, and allow

them to capitalise on their globally recognised brands.

Different scholars (Hoskisson et al. 2000; Mody 2004) have attempted to identify

characteristics that are common to emerging economies. Hoskisson et al. (2000, p.249)

define emerging economies as countries that satisfy two criteria: (i) a rapid pace of

economic development, and (ii) where government policies favour economic

liberalisation and the adoption of a free-market system. Due to these reasons, these

84

economies have not only received significant amounts of foreign direct investments

(FDI), but also contributed to a large amount of FDI outflows (UNCTAD, 2005).

Likewise, Mody (2004) also identified two essential features of emerging economies: a)

their high degree of volatility, and b) their transitional character. This idea was endorsed

by Gaur and Kumar (2009), who pointed out that emerging economies are characterised

by uncertain economic and political systems, and inadequate institutional support.

While significant socio-economic changes are a common trend in these countries, many

in the sector also undergo transitions in a variety of fields. For example, transition is

visible in demographic characteristics, such as in fertility rates, life expectancy and

educational status. Irrespective of the classification of emerging economies, these

economies display certain common features such as rapid industrialisation, growing use

of information technology, and bourgeoning consumer markets. Khanna and Palepu

(2010) highlighted the fact that emerging economies are “starting from a lower base and

rapidly catching up” (p.5). An important feature of emerging economies is the

development of private entrepreneurial firms, which are relatively new but have become

increasingly a salient phenomenon (Ahlstrom & Bruton 2002; Kshetri 2009). In general,

emerging economies have rates of social and business activity that place them on a path

of rapid growth and development.

Even over a decade ago, Hoskisson et al. (2000) cautioned researchers that there is no

standard list of countries that could be part of emerging economies. Using the World

Bank’s development indicators, Hoskisson et al. (2000) identified 64 emerging market

economies under four geographic regions, namely Asia, Europe, Latin America and the

Middle East/Africa. Countries even within the same geographic region are not

homogeneous either. To further compound this scenario, different lists of emerging

economies were proposed. For example, Morgan Stanley Capital International (2010)

identified 21 countries, while Dow Jones (2010) classified 35 countries as emerging

markets. A relatively recent report by PricewaterhouseCoopers (2008) predicted that a

group of emerging economies (the E7, consisting of China, India, Brazil, Mexico,

Russia, Indonesia and Turkey) will overtake the developed countries (the G7, consisting

of Canada, France, Germany, Italy, Japan, the UK and the US) by more than 50 percent

by 2050.

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Jim O’Neill, the chairman of Goldman Sachs Management, coined the acronym BRIC,

standing for Brazil, Russia, India and China. These nations form part of the emerging

economies category, but have received increased interest as many economists and

researchers believe that the BRIC countries are among the largest in terms of

demography and economies. Recently, South Africa was added to this list to make the

group BRICS. Country details of this group may be seen in Table 3.1.

Table 3.1 BRICS Countries Details (2012)

Country Gross Domestic Product (US$ Billions)

Current population (in millions)

Per Capita GDP

Literacy rates

Brazil 2254.2 198.66 11340 90.4 percent (2010 est)

Russia 2033.9 143.53 14037 93 percent (2011 est)

India 1875.2 1237 1489 62.8 per cent (2006 est)

China 8227.1 1350.7 6091 95.1 per cent (2010 est)

South Africa 384.31 51.19 7508 93 percent (2011 est)

Source: GDP per capita 2014; Principal Global indicator 2013; Population Total 2014; The World Factbook 2013a) Currently, these BRICS countries together are home to more than 40% of the world’s

population, cover more than a quarter of the world’s landmass, and account for about

25% of the global GDP (BRIC Countries – Background, Latest News, Statistics and

Original Articles, n.d.; Fawzy and Dworski 2010). They are predicted to become

economically powerful, not only in terms of current, but also future, growth, and to

outgrow the US soon.

3.2 Importance of emerging markets

These countries have already produced some of the top multinational firms in the world

like Oil and Natural Gas Corporation, Tata Consultancy Services, Infosys Inc, Wipro

Inc, Ranbaxy Pharma etc (India), Sinopec, State Grid Corporation, Industrial and

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Commercial Bank of China, China Telecom (China), CVRD, Petrobras SA, Gerdau SA

(Brazil), Lukoil, Gazprom, Severstal (Russia), and SAB Miller, MTN Group, Naspers

(South Africa). Emerging economies that now include BRICS countries have gained a

prominent position in the world economy (Wright et al. 2005). The developed and

mature economies concentrate on the emerging economies for their future growth of

markets. This is evident from the increase in the amount of foreign direct investments

(FDI) in the emerging markets. Similarly, the FDI outflows from the emerging

economies are also increasing (Surge in foreign direct investment in developing

countries reverses global downturn, 2005; Singal & Jain 2012). Given the growing

importance of the emerging economies, it is critical to understand their economies and

business activities that take place in those countries. Among those countries, India is

only next to China in both population and GDP.

Since the sample for our study is drawn from India, it is necessary to understand the

context and business environment in India. Many scholars have already documented the

institutional factors facilitating or hindering new venture performance (Peng 2002;

Kiggundu 2002). Such factors will definitely influence entrepreneurial development in

India as it opens up its hitherto closed economy and moves towards a more liberalised

system.

3.3 Overview of India

To understand entrepreneurship in emerging markets such as India, it is important to

appreciate the combination of historical factors, cultural values, the religion followed

and social structures. After being ruled by the British for over 200 years, India attained

political independence in 1947. The Republic of India has a population of over one

billion, and is very multicultural, including representation from five major ethnic races

such as Australoid, Mongoloid, Europoid, Caucasian, and Negroid (Government of

India 2014) and religious groups such as Hindus, Christians, Muslims, Sikhs, Buddhists,

Jains, Parsis, and Jews among others. Hindus now constitute the majority of the

population, at about 80%. Table 3.2 shows the diversity of the country in terms of

religions followed and languages spoken.

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As seen in Table 3.1, India has a population of more than 1.2 billion and is growing at

an average rate of 8 per cent per annum. India is also a regional power and the world’s

largest democracy. Economically, it is only next to China as a large emerging economy.

In fact, due to its economic performance in recent decades, India is considered to be ‘the

next Asian Miracle’ (Huang 2008, p. 32).

Table 3.2 India at a glance

Size 3,287,263 sq km

7th largest country in the world

Shares borders

with

India has land borders with Pakistan (2,912km) to the north-west, China (3,380km), Nepal (1,690km) and Bhutan (605km) to the north, Bangladesh (4,053km) and Burma (1,463km) to the east.

Religion (as per the 2001 census) Percentage

Hindus 80.5

Muslims 13.4

Christians 2.3

Sikhs 1.9

Buddhists 0.8

Jains 0.4

Others 0.6

Religion not stated 0.1

Major Languages spoken (2001) Percentage

Hindi 41

Bengali 8.1

Telugu 7.2

Marathi 7

Tamil 5.9

Urdu 5

Gujarati 4.5

Kannada 3.2

Punjabi 2.8

Assamese 1.3

Maithili 1.2

Other 5.9

Source: The World FactBook 2013b; Nationmaster 2014; The Registrar General & Census Commissioner 2011.

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3.4 Entrepreneurship in India

Entrepreneurship is not new to India. Even in ancient times, Indian entrepreneurs and

business people were known for their unique goods and wealth creation. In fact, this is

one of the reasons why the British went to India as traders and eventually colonised it

and made it part of the British Empire. A review of articles by Misra (1992; 2000) give

an outline of the history of entrepreneurship during British rule. In this section, I will

examine entrepreneurship under three different categories, namely the socio-cultural,

the economic and the educational spheres.

3.4.1 Socio-cultural context of entrepreneurship in India

In an Indian context, religion and other socio-cultural factors play an important role (see

Table 3.2 for a list of religions followed in India). According to Lipset (2000), while

structural conditions make development possible, it is the cultural factors that determine

whether the possibility becomes an actuality (or not). But values are embedded in

culture, and so Phelps (2007) observes, ‘values and attitudes are as much part of the

economy as institutions and policies are. Some impede, others enable.’ Hinduism is the

dominant religion and it is strongly associated with the rigid caste system. Singer

(1966) finds that, in comparison to other religions, Hinduism does not offer much

encouragement or value for one to change their situation in terms of material wellbeing.

In ancient times, occupations largely stemmed from the caste system and traditions were

sanctified by religion (Medhora 1965). Based on the Hindu scriptures, society is

segmented into four main varnas (or castes), which were placed in a hierarchy with the

Brahmin (the priest) at the top. The other castes in the hierarchy after the Brahmin are

the Kshatriya (the warrior), the Vaisya (the trader, merchant, landowner) and the Shudra

(the artisan, the commoner, and the peasant). The ‘untouchables’ were placed below the

varna system. Occupational immobility was therefore sanctified by the caste system.

Indian people maintained the status quo by getting into occupations linked to their

cultural conditioning, which is manifested by the caste they were born into. Each

individual has a duty (dharma) specific to the caste of their birth. This is a kind of

sociological division of labour.

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In contrast to the Western cultures, where the entrepreneurial activity stemmed from the

drive to achieve (McClelland 1961), irrespective of their background, commercial

activities in India were largely monopolised by the Vaisya community during the

ancient and medieval periods of Indian history (Tripathi 1971). In fact, Indian society

chose to maintain the status quo by choosing occupations based on their cultural

traditions, and entrepreneurial activity was undertaken by the castes whose duty

(dharma) it was to do business, and not the other castes (Medhora 1965; Dana 2000).

According to Weber (1958), the caste system inhibits innovation in the Indian economic

system due to its rigidity. He observes, “We are now in a position to enquire into the

effects of the caste system on the economy. These effects were essentially negative ...”

(p.111). For these reasons, as Tripathi (1992) observes, the social base of

entrepreneurial growth has remained very limited. However, analysing the impact of the

caste system as a whole on Indian personality with reference to business, Tripathi

(1992) observes, “the result was that the Indian personality, by and large, remained

unentrepreneurial, if not anti-entrepreneurial” (p. 77). But as mentioned earlier, this was

limited to one social group/caste of people.

Researchers (Hozelitz 1960; Nafziger 1978) have noted that entrepreneurship can

develop only when cultural norms permit variability in the choice of paths of life, in

other words, where caste divisions were not rigidly observed. While some of these

social scientists blamed the Hindu value systems for inhibiting the entrepreneurial spirit,

some scholars believe that when the material environment changes, the non-business

classes also take up business ventures (e.g., Mehta & Joshi 2002). To elaborate further,

the authors suggest that apart from the business class (the Parsis, Jains and the Banias),

the Patel community, which is traditionally an agricultural community, has entered the

trading sector. Interestingly, members of the Patel community who migrated to various

parts of the world have carried with them the entrepreneurial culture that helped them to

successfully establish themselves as entrepreneurs in service industries such as hotels,

motels and petrol stations (Bal 2006; Kalnins & Chung 2006).

Recent studies on the rigidity of caste-occupation matching show some interesting

results (Sharma & Singh 1980; Audretsch, Boente & Tamvada 2007). For example,

Sharma and Singh’s (1980) extensive research in northern India (particularly in the state

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of Punjab) concluded that the businesses were dominated by the Vaisya community,

which is consistent with the age-old tradition. People of this community depended on

people of their own caste (familial relations) in identifying opportunities to start

businesses, raise capital, and gain technical know-how, and they were more likely to

start businesses if members of their family were already in business. Another study by

Audretsch, Boente and Tamvada (2007) shows that religion does affect the decision to

become an entrepreneur. They find Vaisyas to be more likely to be self-employed [as

entrepreneurs] and non-Vaisyas to be less likely to be self-employed. According to the

authors, this finding confirms that the class structures of Hinduism continue to influence

occupations, particularly with respect to becoming an entrepreneur.

In the recent past, there seem to be some significant changes in occupational mobility

which breaksthe traditional barriers. For example, Sharma and Singh (1980) found that

there was an increase in the number of lower-caste people emerging on the

entrepreneurial scene. Although the members of other castes have entered the

entrepreneurial field, Sana (1993) observes that there is a higher proportion of industrial

and commercial entrepreneurs who come from the traditional trading castes. For

instance, the Marwaris, a close-knit community of the trading caste, owned 27 of the 78

large corporations in India in 1991, the second being the Parsis, who owned 12. The

Reliance business group and the Tata group are examples of the first and the second

castes (or ethnic group) respectively. Their extraordinary success is attributed to their

caste solidarity. But Murty (2014) suggests that the cosmopolitan outlook that emerged

in the post-reform period has, in a sense, ruptured the link between castes and

professions. Some Dalit people, who were at the bottom of the social hierarchy, have

also become entrepreneurs. Some of them have received support from government

sponsored programmes, as part of affirmative action which supports lower-caste

businesspeople. It is interesting to note that these Dalit entrepreneurs have created their

own federation of commerce, known as the Dalit Indian Chamber of Commerce of India

(http://www.dicci.org) which is affiliated to the Confederation of Indian Industry (CII),

the leading chamber of commerce grouping in India. This provided an opportunity for

the lower caste people to gain significant social mobility through entrepreneurship.

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3.4.2 Economic development and entrepreneurship in India

Prior to gaining independence in 1947, the Indian economy was predominantly agrarian,

and industries were small-scale in nature. These were industries like handicrafts,

involved artisans, or were related to agrarian products. The economy as a whole was

controlled and exploited for colonial interests. The entrepreneurs were mainly in the

form of traditional artisans and home-based rural firms (cottage industries) and matched

their expected caste duties. While British colonial rule was detrimental to these rural-

based industries, many Indian entrepreneurs and businessmen took the lead in

establishing large-scale industries during this time (for details, see Mishra 1992 and

2000). Prominent among them was Jamsetji Tata (1842 - 1905), who was the founder of

India’s iron and steel and hydro-electric industries in the late 19th and early 20th

centuries. He was characterised by his willingness to take risks with capital to invest in

new technology amidst uncertainty. Other such industrialists were Birlas, Dalmia and

Sahu Jain, Shri Ram and J.K. Kasturbhai. Despite being industrialists, they were also

staunch supporters of the Indian independence movement.

To wean itself away from the colonial interests and to gain self-sufficiency, the newly

independent government in India in the 1950s decided to emphasise large-scale

industries, and the traditional small-scale industries were to be an adjunct to meet other

needs of the economy. Accordingly, Pandit Jawaharlal Nehru, the first prime minster of

independent India, and Prof. Mahalonabis, the architect of the economic planning

system, focussed on creating a large industrial sector dominated and controlled by the

government. It was felt that economic development requires huge industrial

infrastructure and that the private sector would not be interested in risky investments

which were unlikely to return profits in the short run. Therefore, it was felt that the

public sector, i.e., the government-owned economic sector, should occupy the

‘commanding heights’ of the economy to champion the developmental goals of the

economy.

As India was a British colony for almost 200 years, foreign direct investment was

viewed with understandable scepticism. Even in independent India, the economy was

known for controls, permits and licences, and quotas with an idealistic view of guiding

it towards national goals. Decision making was slow and quite bureaucratic in nature.

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While democracy has a number of benefits, pro-labour regulations that are a product of

a democratic environment, were found to hinder economic performance (Besley &

Burgess 2004). Therefore, the economic growth rate was stuck at the low rate of 3.5 per

cent, which was pejoratively dubbed the ‘Hindu rate of Growth’. In the late 1980s, the

governments were somewhat unstable and changed in relatively quick succession for

various reasons. Even during this time, India started to slowly recognise the need for

liberalising the economy and started to relax the industrial regulation regime in the

1970s; they followed this up with some significant deregulation in the 1980s

(Panagariya 2004). In 1991, the government that came to power faced a myriad of

economic challenges, including the threat of sovereign default when its foreign

exchange reserves ran extremely low. This situation obviously required a radical

approach to economic policy that significantly departed from previous policies.

However, the launch of bold economic reforms in 1991 was a watershed in the

economic history of India in modern times. The focus was on developing much stronger

infrastructure to support private enterprise. India’s banking sector, capital markets, and

legal system were strengthened significantly. The predominant features of this new

approach included: privatisation, deregulations, and an opening up of the economy for

foreign direct investment. Private investment was encouraged to take an active part in

the economic development of the country. Overall, its economic system shifted away

from the ‘quota-permit raj’ of bureaucratic controls to a market-oriented system. This

resulted in an unleashing of economic potential, and some of the globally recognised

firms and brands developed during this time. Some of them include software giants like

Infosys, Wipro and Tata Consultancy Services, and pharmaceutical firms like Ranbaxy

and Dr. Reddy’s Labs.

In recent times, the government of India is also proactively engaging with

entrepreneurs, particularly with those first generation entrepreneurs, and providing them

with training and development to inculcate an entrepreneurial culture (Government of

India 2014b). With this objective, the Ministry of Micro, Small & Medium Enterprises

has set up three autonomous national-level institutes, namely: the National Institute for

Micro, Small and Medium Enterprises (NI-MSME); the National Institute for

Entrepreneurship and Small Business Development (NIESBUD) and the Indian Institute

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of Entrepreneurship (IIE). These institutes cater to the training and development needs

of potential and new entrepreneurs, as well as provide consultancy services to them.

This shows that there is now a conscious and deliberate attempt to support

entrepreneurship in India.

3.4.2.1 Small-scale sector in India

As mentioned earlier, in the initial decades after independence, the small-scale sector

was viewed as an adjunct to the public sector, which focused on large industries. These

small firms were expected to supply the consumer goods needed to support workers in

the large-scale sector or heavy industries. As the heavy industries were owned and

promoted by the government-owned public sector, only the small-scale sector was open

for private entrepreneurs and small business owners. However, the reforms in 1991

allowed the small-scale sector to grow rapidly. Table 3.3 shows the contribution of the

small-scale sector to the Indian economy from the time when epoch-making economic

reforms started in 1991.

Table 3.3 Contribution of small-scale industry to the Indian economy

Year No. of Units (in lakhs*) Total: Registered and unregistered

Fixed Investment (Rupees in Crores)

Production (in crores) Employment (in lakhs)

Export (Rupees in million)

Current

Price

Constant

Price

1990-91 67.87 93,555 63,518 68,295 158.34 96,640

1995-96 82.84 1,25,750 1,48,290 1,21,649 197.93 36,470

2000-01 101.10 1,47,348 2,61,289 1,84,428 239.09 69,797

2005-06 123.42 1,88,113 4,76,201 2,77,668 294.91 1,50,242

2010-11 311.52 7,73,487 10,95,758 NA 732.17 NA

Source: Government of India 2014a, 2014b, Ministry of Finance n.d. *Note: Lakh is equivalent one million

As seen from Table 3.3, the small-scale sector plays an important role in the Indian

economy. Between 2000-2001 and 2005-2006, and then 2010-2011, we can see a

dramatic increase in the average annual growth in the total number of small firms as

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well as employment provided. Further, there is also a steady increase in the annual

average growth in production (both at current and constant prices). It is known through

the Economic Census in 2005 that a large part of India’s workforce is engaged in the

informal economy. Even among the registered small businesses, the average

employment is only 2.4 employees (Misra, 2013). Around this time, the Indian

government introduced the ‘Small and Medium Enterprises Development Bill’, namely

the SMED Bill, 2005, so that they could further develop small enterprises, facilitate

their growth into medium enterprises, and also enhance their competitiveness (see

Economic Survey, 2005-2006 published by the Ministry of Finance, n.d.). It was

developed as a powerful instrument for achieving the twin goals of accelerating

industrial growth and creating employment opportunities. In the process, they produced

consumer goods and also addressed the problem of poverty by providing employment.

In fact, in some remote regions and rural areas where large industries cannot be

established, Srivastav and Syngkon (2008) found that these small businesses play an

important role in the economic development of such regions. A very recent government

report (Government of India 2014b) shows that 55.34 % of the micro-, small and

medium enterprises were located in the rural areas, compared to 44.66% in the urban

areas (See Table 3.4).

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Table 3.4: Indian micro-, small and medium enterprise sector (MSME) at a glance* Registered

Sector Unregistered Sector Total

Number of MSMEs (in lakh)

15.6 346.1 361.7 Manufacturing:115.0 Services: 246.8

Number of rural enterprises (in lakh)

7.1 193.1 200.2

Number of urban enterprises (in lakhs)

8.6 153.0 161.6

Number of women enterprises (in lakhs)

2.2 24.4 26.6

Employment provided to (in lakhs)

Total: 93.1 Male: 74.1 Female: 19.0

Total: 712 Male: 611 Female: 101.5

Total: 805.2 Male: 684.7 Female: 120.5

Ownership type (in lakh)

Proprietary: 14.09 Partnership: 0.63 Private Company:0.43 Co-operatives: 0.05 Others: 0.44 Not recorded:0

Proprietary: 327.45 Partnership: 3.65 Private Company: 0.65 Co-operatives: 1.16 Others: 7.65 Not recorded:6.15

Proprietary: 361.76 Partnership: 4.28 Private Company: 4.28 Co-operatives: 1.21 Others: 8.09 Not recorded:6.15

Source: Government of India 2014b, p.247 In the last decade, drastic changes were witnessed in the economy. To allow a greater

role to the private sector, the government of India has divested its investment in the

telecom industry and other hitherto public-sector industries, and significantly reduced

its regulatory involvement. This led to a fillip in the growth of the private sector, in

some cases, with the support of investment from abroad. As a result, many family-

owned firms like Tata, Birla, Ambani, DFL, and GMR have become household names

in India, and are involved in various large infrastructure ventures.

Overall, this improved the entrepreneurial climate in ways that were not thought of only

a few decades ago. Entrepreneurs, who were viewed with suspicion as profit-making

exploiters, are now acknowledged as achievers and heroes. In this changed economic

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environment, J.R.D Tata, who was a French-born Indian businessman and Chairman of

the Tata and Sons group, was conferred the highest civilian award, the Bharat Ratna

(when translated to English, it means ‘Jewel of India’). Similarly, Narayana Murthy, the

founder of software giant Infosys, is now compared to Bill Gates and revered for his

contribution to the Indian economy. Unsurprisingly, the GEM (Global Entrepreneurship

Monitor) report 2010 shows the Indian entrepreneurship climate in a very positive light

3.4.3 Education and entrepreneurship in India

In recent decades, India’s literacy rates have gone up (Kingdon 2007). To achieve

economic growth, India has also placed an emphasis on higher education, with many

universities and institutes of higher education being added every year. In 2012, there

were 567 universities in India. In addition, there are premier management and

technology institutes known as Indian Institutes of Management (IIMs), Indian

Institutes of Technology (IITs) and National Institutes of Technology (NITs). These are

owned by the central government and are spread across various states in the country. In

the last decade, higher education was opened up further to the private sector, and many

private universities were allowed to be established to meet the demand for higher

education. In the environment of economic reforms, not surprisingly, there has been an

increased emphasis on management and entrepreneurship programmes.

Management education in India is nearly 100 years old (Barman 2013). The first

tertiary-level college started in 1913 in Mumbai (then Bombay). A number of

universities started MBA programmes in the 1960s. During this time, on the

recommendation of Dean Robbins of the University of California, the first Indian

Institute of Management (IIM) was set up in 1961 in Calcutta by the government of

India. Later, other IIMs were established, which now number 13 and are located in

different parts of the country. These are the premier management educational institutes

of an international standard. Along with these management institutes, technical

institutions were also established. They were called Indian Institutes of Technology

(IITs), which also started offering management education. The economic reforms from

1991 and the privatisation of the economy that followed gave a fillip to management

education which resulted in the establishment of many private institutions and

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universities. Leading business houses like Infosys, Birlas, and Reliance etc. have started

their own business schools. Currently about 30,000 full-time MBAs and 10,000 part-

time MBAs are produced in the country. Additionally, a number of diplomas and

certificates in business-related areas are offered both by recognised and unrecognised

educational institutions. It should also be mentioned that India also hosts the world’s

largest university, namely the Indira Gandhi National Open University, which is a

distance university, with about four million students. There are many other regional

(state-level) universities that offer management education through distance or extra-

mural mode.

While many universities offer entrepreneurship education as part of the management

discipline, some specific institutions were established in India to promote

entrepreneurship. For example, the Entrepreneurship Development Institute of India

(EDII) was established in 1983 by government-owned banks and financial institutions.

Similarly, the National Science and Technology Entrepreneurship Development Board

(NSTEDB) was established in 1982 by the government of India to support

entrepreneurship in technical sectors. These institutions are supported and

complemented by the efforts of government departments and agencies in the form of

affirmative action and social empowerment programmes.

In addition, some universities have started university-based incubators to support

entrepreneurial ventures. For example, a leading premier business school in India, the

Indian Institute of Management, Ahmadabad, started the Centre for Innovation,

Incubation and Entrepreneurship (CIIE). The CIIE has successfully invested in and

incubated over 50 ventures (CIIE 2014). Likewise, many other educational institutions

such as the Birla Institute of Technology (BITS Pilani 2014) and the Indian Institute of

Technology Bombay (SINE 2013), to name but a few, are also involved in similar

initiatives, namely the Technology Business Incubator and the Society for Innovation

and Entrepreneurship (SINE). These incubators provide resources that are embedded

within the university to new venture creation on campus. Some of these resources are

highly technical and not easily available outside the university. In general, they support

innovation, provide employment and act as engines of economic development.

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Therefore, they play a crucial role in the overall economic development and wealth

creation in an emerging country like India and meet its strategic needs.

The above discussion shows that there is a large talent pool in India. While the top

graduates of the highly reputed management institutes take up professional careers in

the large firms, a very tiny proportion of them go on to establish their own businesses.

Interestingly, it is mainly those who are locally educated in regular universities that start

their business in India. Many of the small business owners and entrepreneurs are

relatively less educated and/or take up this career for want of employment. A significant

proportion of them have only school-level education or technical training at a basic

level. It is these people who establish and provide support to the economy at the ground

level.

3.5 Entrepreneurship research in India

For this study, I have examined the entrepreneurship research undertaken in India. To

my surprise, there had not been much academic research undertaken in this area. This

paucity of research relating to entrepreneurship in India was also commented upon by

Bruton, Ahlstrom and Obloj (2008), who highlighted the fact that there is only one

study from India for the period 1990-2006 that has been included in two popular

academic journals, Entrepreneurship Theory and Practice, and the Journal of Business

Venturing.

Having noted some renewed interest in newspapers and other anecdotal sources on the

role of entrepreneurship in India during the last few years, I further searched other

electronic databases. In these searches, I found a few more papers, but in general, the

research output was very limited and lacked academic rigour. The number of relevant

peer-reviewed articles found in my database searches is shown in Table 3.5.

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Table 3.5: Research on entrepreneurship in India

Journals/Database

Years Key Words relating to India

Total articles

Articles related to entrepreneurship in India)

Entrepreneurship & Regional Development (ERD)

1988-2013

Entrepreneur or Entrepreneurship

35 2

Entrepreneurship Theory and Practice

2007-2013

Entrepreneurship 7 7

EBSCO database 1979-2013

Personality and entrepreneurship

45 17

EBSCO database 1973-2013

Self-efficacy and entrepreneurship

12 2

Taylor & Francis Online

1973-2013

Entrepreneur and business

2 2

Taylor & Francis Online

1973-2013

Self-efficacy, personality and personality traits and entrepreneurs

0 0

Source: Compiled by the researcher using information from the various databases in November 2013

As mentioned earlier, my search for more research publications and similar outputs did

not prove to be much of a success and endorsed the view by taken by Bruton, Ahlstrom

and Obloj (2008) about a lack of adequate research on entrepreneurship in India. Many

of these studies were more about cultural aspects and other social institutions that

impacted on entrepreneurship in both the pre- and post-independence periods. For

example, Weber (1958) explored in-depth the social stratification and religious beliefs

of India, and the influence of the various castes and religions on trade and commerce.

Similarly, Misra (2000) examined the impact of caste and religions on entrepreneurship

in the pre-independence era. Other scholars (Tripathi 1971, 1981, Medhora 1965; Misra

2000) have delved into the values and beliefs of the various social castes and religions

and how these factors influenced the emergence of entrepreneurship in India in the post-

independence era. More current research explores various aspects such as

entrepreneurship education (Manimala 2008), family enterprises and partnerships

(Rutten 2001), industrial entrepreneurship (Koppel & Peterson 1975; van der Veen

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1976), development banks and entrepreneurship (Misra 1987), women entrepreneurship

(Bhardwaj 2014; Habib, Roni, & Haque 2005; Prasad et al. 2013), rural

entrepreneurship (Kanduja & Kaushik 2008), other development programmes and

entrepreneurship (Patel, 1987), and social entrepreneurship (Datta & Gailey 2012).

When my thesis was being finalised, I found quite a few interesting articles that had

been published in the last few months which indicated that researchers have started to

take an interest in this field (Krishnan 2013; Murty 2014; Ravi 2014; Williams &

Gurtoo 2013). The main findings of some selected articles are discussed below.

As seen earlier, entrepreneurship in India is rooted in a rich cultural context due to the

role of traditions and the caste system. Within these contextual limitations, Javillonar

and Peters (1973) examined whether entrepreneurship in India was influenced by a need

for achievement or by an extended family tradition. Their results suggest that Indian

entrepreneurship is positively linked to a particular type of ownership, namely the joint

or extended family. This is due to the fact that the joint family tradition in India is

characterised by three generations of family members living under one roof and sharing

the property and other resources. For an individual member, this joint family serves as a

self-sufficient unit and the centre of the universe and reference point. It is here that all

the major decisions on education, career, marriage etc. are taken. Hence the finding that

family ownership is a more prominent influencer than the individual personality factor

of need for achievement and is consistent with the joint family tradition of Indian

society.

Vasumathi et al. (2003) examined the impact of role stress on Indian entrepreneurs.

Following McClelland (1961), they categorised this role stress into three dimensions,

namely achievement-need related stress, power-need related stress, and affiliation-need

related stress. Their findings indicate that Indian entrepreneurs are affected by stress

caused by achievement and affiliation-need related stressors, but there is no evidence of

power-related stressors affecting them. They also find that entrepreneurs are able to

resort to silent, less expensive and tradition-bound stress reduction strategies. This may

be appropriate in a culturally rich society like India.

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Shivani, Mukherjee and Sharan (2006) looked at the socio-cultural influences on Indian

entrepreneurs. In particular, they examined a possible link between entrepreneurship

and socio-cultural factors like caste, religiosity and perceived family support. Their

study has revealed that caste and family support have a positive influence on

entrepreneurship. On the other hand, religiosity and the joint family system have no

influence. But given the cultural context of India, it also implies that they are not

hindering entrepreneurship in India. The fact that most of the entrepreneurs are from

upper castes provides evidence for the rigidity of caste-based occupations.

Interestingly, risk-propensity and innovativeness, which are critical for entrepreneurial

success in Western countries, were found to be low or moderate. These findings could

be explained due to existing structural factors relating to the society such as the caste

system and family orientation.

It is also gratifying to see a spurt in research articles in the last few months on

entrepreneurship in India. Krishnan (2013) examined how entrepreneurs’ personality

factors and entrepreneurial competences contributed to their venture success. Her

positive findings suggested that by making use of their competences, entrepreneurs can

create more opportunities for growth. In another interesting study, Williams and Gurtoo

(2013) surveyed 871 street entrepreneurs. The authors found that street entrepreneurs

are engaged in such entrepreneurial endeavours that are resilient, opportunity driven and

persistent. Bhardwaj (2014) examined the impact of education on women entrepreneurs

and found a positive influence. However, these women lacked time and resources,

which is understandable in the context of India, as they undertake the special

responsibilities of homemaking and motherhood. Ravi (2014) attempted to find the

factors that drive the development of MSME firms in different states in India. The main

findings suggest that the general improvements in physical and financial infrastructure

provided by government have contributed more to the growth of entrepreneurship. On

the other hand, there was no evidence that targeted policies such as financial subsidies

and the creation of special economic zones were of much help. It is possible that this

may be due to reverse causality of the government providing help to those firms that are

not doing well. On the whole, government support in the form of creating physical

infrastructure was found to be more effective in driving entrepreneurship.

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To sum up, entrepreneurship in India received a fillip due to government-initiated

economic reforms in the last two decades. Further, advancements in information

technology not only create new opportunities for entrepreneurs in the remote areas, but

could also hinder them through information overload. However, the presence of a high

context culture and the unique caste system underpin entrepreneurship in this country.

India, therefore, presents an ideal context to be able to test the application of

entrepreneurship theories developed in more mature economies. In particular, I would

like to test how the key entrepreneurship factors such as personality traits, self-efficacy,

and information overload can impact on entrpreneurship in the context of an emerging

economy.

3.6 Chapter summary

In this chapter, I have discussed the status of entrepreneurship in India. Since India is an

advanced emerging economy, I have described the characteristics of emerging

economies. Then I presented the details regarding entrepreneurship in India by focusing

on three areas, namely the socio-cultural background, the impact of entrepreneurship on

the economic development and how education is helping in developing

entrepreneurship culture. The discussion points out that the previous rigid social

structure is changing and that government is actively engaged in promoting

entrepreneurship.

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CHAPTER 4

CONCEPTUAL FRAMEWORK AND HYPOTHESES

In Chapter 2, I have reviewed the relevant literature relating to concepts such as

entrepreneurs’ personality characteristics, entrepreneurial self-efficacy, entrepreneurial

behaviour and information overload. Using these concepts, I propose a conceptual

framework that shows the linkages between the concepts mentioned. On the basis of

this conceptual framework, I also develop and propose a set of hypotheses which can be

empirically tested.

4.1 Conceptual framework and theoretical model

The chapter on the literature review has examined different concepts that impact on

entrepreneurship. Several personality factors have been discussed which were found to

influence entrepreneurs (McClelland 1961; Chell 2008). Also, the concept of

entrepreneurial self-efficacy was identified as being important for entrepreneurs, as it is

directly related to entrepreneurial intentions and behaviour (Krueger 2009; Rauch &

Frese 2000). Recently, some scholars have started examining entrepreneurial behaviour

i.e., they have tried to understand ‘what entrepreneurs actually do’. Finally, the concept

of entrepreneurial overload and its impact on entrepreneurship have become a major

concern in our current information-based society. I combine all these constructs, and

propose a theoretical framework in Figure 4.1. My conceptual model shows that

entrepreneurs’ personality factors are related to entrepreneurial self-efficacy. Both these

sets of constructs are in turn related to entrepreneurial behaviour. Accordingly, I have

developed a set of hypotheses that is proposed in this chapter.

Of the four major theoretical constructs that I have identified in this study

(entrepreneurs’ personality characteristics, entrepreneurial self-efficacy, entrepreneurial

behavioural activities and information overload), I examine them in pairs for their

relationships, and develop hypotheses on that basis. The hypotheses are used for

empirical testing as explained in Chapter 5 dealing with methodology.

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4.2 Personality characteristics and entrepreneurial self-efficacy

We know that individuals are at the centre of the entrepreneurship process. It is

therefore important to examine their personality characteristics and how these impact on

the entrepreneurship process. The literature shows that personality characteristics

significantly influence entrepreneurship (e.g., Brockhaus 1975; Caliendo, Fossen &

Kritikos 2014; McClelland 1961; Zhao & Seibert 2006). Researchers have identified

several personality characteristics of entrepreneurs, which are shown in Tables 2.2 and

2.3. As can be noted from these tables, the specific personality characteristics identified

are many. Of these, three personality characteristics were found to be very popular in

entrepreneurial research; these are need for achievement, internal locus of control and

risk-taking propensity (Sahin, Nijkamp & Rietdijik 2009; Tang & Tang 2007).

However, these studies were mostly conducted in developed countries. In my study, I

use them in the context of an emerging economy.

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Another personality attribute, which is different from personality characteristics, is

called entrepreneurial self-efficacy. According to Chen, Greene and Crick (1998), this

refers to the strength of a person’s belief that he or she is capable of successfully

performing various roles and tasks of entrepreneurship. The above authors believed that

entrepreneurial self-efficacy can be used to “predict and study entrepreneurs’ behaviour

choice, persistence, and effectiveness” (p. 301). Boyd and Vozikis (1994) proposed self-

efficacy as a critical antecedent of entrepreneurial intentions and actions. For this, Chen,

Greene and Crick (1998) provided empirical evidence that entrepreneurs’ self-efficacy

is positively related to their intentions to start businesses. Other scholars have examined

the relationship of specific dimensions that constitute the ESE construct to different

entrepreneurial tasks such as opportunity recognition, planning, marketing, risk-taking,

financial control, and coping with unexpected challenges. (Anna et al. 2000; DeNoble,

Jung & Ehrlich 1999; Hmieleski & Corbett 2008; Kolveried & Isaken 2006; Zhao,

Seibert & Hills 2005). Clearly, there are many dimensions in entrepreneurial self-

efficacy that are relevant to entrepreneurial tasks. However, most of the previous studies

have used a composite score to measure entrepreneurial self-efficacy and the impact of

the multiple underlying dimensions was not captured. Recently, McGee et al. (2009)

identified five different dimensions of entrepreneurial self-efficacy that are related to

the venture creation process model: a) searching, b) planning, c) marshalling, and d)

implementing. The final phase of implementing covers two different tasks relating to (d-

i) people and (d-ii) finances. I found another dimension that is related to entrepreneurial

self-efficacy. That is about e) coping with unexpected challenges in the context of

entrepreneurship as proposed by DeNoble, Jung and Ehrlich (1999). For an

entrepreneur, each of these dimensions of entrepreneurial self-efficacy is important, and

hence are included in my model for empirical investigation.

However, these two categories of dimensions of entrepreneurs (i.e. personality

characteristics and self-efficacy) do not exist in isolation, as personality characteristics

were found to affect self-efficacy (Bandura 1986). Past studies have shown that there is

some association between personality characteristics and self-efficacy (Phillips & Gully

1997; Zhao, Seibert & Hills 2005). Personality characteristics were also found to affect

an individual’s self-efficacy in job acceptance behaviour (Wooten 1991) and his/her

ability to engage in entrepreneurial activities (Rauch & Frese 2000). Explaining the

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linkage between personality traits and self-efficacy, Petrides (2011) observes,

“personality traits confer on the individual a propensity to perceive convergences and

divergences between their belief that they can attain goals and the importance that they

place on the goals” (pp.64-65). This implies that personality characteristics shape an

individual’s self-efficacy in achieving goals.

While the above discussion shows that the entrepreneurs’ personality characteristics and

their self-efficacy are related, the impact of each of these personality characteristics may

not be uniform on each dimension of entrepreneurial self-efficacy. Therefore, in the

following sections, I will examine the relationship between each personality

characteristic and the various dimensions of entrepreneurial self-efficacy, and propose a

set of hypotheses.

4.2.1 Personality characteristic of need for achievement and dimensions of entrepreneurial self-efficacy

Several scholars have identified the personality characteristic of the need for

achievement as an important construct of an individual’s personality (Collins, Hanges &

Locke 2004; Hornaday & Aboud 1971; McClelland 1961). McClelland’s (1961)

seminal work explains that individuals with a high need for achievement have a higher

drive to excel. Jackson (1974, p.6) describes this type of individual as one who

“maintains high standards” as well as one who “aspires to accomplish different tasks".

This characteristic influences an individual’s work behaviour to a great extent (Lumpkin

& Erdogan 2000). Such individuals are high achievers, and they like situations where

they take personal responsibility, particularly when they are faced with problems and/or

challenges. McClelland (1965) found that students with a higher need for achievement

were found to gravitate towards entrepreneurship and other business occupations.

According to Littunen (2000), McClelland’s theory suggests that individuals with a high

need for achievement will not only become entrepreneurs, but succeed better than

others. Empirical studies have shown that need for achievement is positively associated

with entrepreneurship (Caliendo, Fossen & Kritikos 2014; Davidsson 1989; Stewart et

al. 1999).

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Collins, Hanges and Locke’s (2004) meta-analytic study found that individuals with a

higher need for achievement were more attracted to entrepreneurship, as it offers them

an opportunity for a higher degree of control over outcomes and also allows them to

assume personal responsibility. This can be related to the concept of entrepreneurial

self-efficacy, which refers to an individual’s confidence in his/her ability to successfully

launch an entrepreneurial venture (McGee et. al. 2009) and perform entrepreneurial

roles (Chen, Greene & Crick 1998). Clearly, those who possess a higher degree of

entrepreneurial self-efficacy would also like to take personal responsibility in order to

control entrepreneurial outcomes. However, as McGee (2009) pointed out, there are

several dimensions that constitute the construct of entrepreneurial self-efficacy. In my

study, entrepreneurial self-efficacy consists of six different dimensions that were

identified from the literature; they are searching, planning, marshalling, implementing

people-related tasks, implementing finance-related tasks and ability to cope with

unexpected challenges. The first five dimensions were identified by McGee et al. (2009)

and the sixth dimension was taken from the study of DeNoble, Jung and Ehrlich (1999)

which relates to the level of confidence the entrepreneur has in his /her ability to stay

calm in the face of unexpected challenges. It is therefore necessary to examine the

relationship between the personality characteristic of the need for achievement and each

of the six dimensions of entrepreneurial self-efficacy. Accordingly, the following

hypotheses are proposed:

H1a-H1f - Personality characteristics of need for achievement and dimensions of entrepreneurial self-efficacy:

Hypothesis 1a: The personality characteristic of need for achievement is positively associated with the searching capability dimension of entrepreneurial self-efficacy.

Hypothesis 1b: The personality characteristic of need for achievement is positively associated with the planning capability dimension of entrepreneurial self-efficacy.

Hypothesis 1c: The personality characteristic of need for achievement is positively associated with the marshalling capability dimension of entrepreneurial self-efficacy.

Hypothesis 1d: The personality characteristic of need for achievement is positively associated with the implementing people-related capability dimension of entrepreneurial self-efficacy.

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Hypothesis 1e: The personality characteristic of need for achievement is positively associated with the implementing finance-related capability dimension of entrepreneurial self-efficacy.

Hypothesis 1f: The personality characteristic of need for achievement is positively associated with the coping with unexpected challenges capability dimension of entrepreneurial self-efficacy.

4.2.2 Personality characteristic of internal locus of control and dimensions of entrepreneurial self-efficacy

Locus of control is a personality trait that refers to a general expectancy across a range

of situations relating to whether or not an individual has control or power over what

happens to him or her. This construct has two dimensions of locus of control: internal

and external. According to Lefcourt (1966), internal locus of control reflects the degree

to which an individual perceives that an outcome of their behaviour is within their own

control, while the external locus of control reflects the perception of an individual that

the outcomes of their behaviour are determined by external factors and therefore not

within their own control. Hence the individuals with internal locus of control believe

that they can determine their future outcomes by their own actions. Past studies have

also shown that individuals who perceive they have control of the environment, in other

words people who have a high internal locus of control, show a relationship to greater

self-efficacy (Wood & Bandura 1989a; Phillips & Gully 1997). In entrepreneurship, we

expect that entrepreneurs are individuals who possess the personality characteristic of

internal locus of control, as they are self-motivated individuals who take the initiative in

entrepreneurial efforts and who take responsibility for achieving a venture’s set goals

(McClelland 1961; Mueller & Thomas 2001). Researchers have found that nascent

entrepreneurs who had entrepreneurial intentions had a higher degree of internal locus

of control than those who did not have such plans (Borland 1974; Brockhaus 1975).

Cromie and Johns (1993) found that practicing entrepreneurs possessed more internal

locus of control than managers. It is also suggested that a person with high internal

locus of control believes that he/she can use their skill and efforts in order to control the

events in his/her life (Boone, Brabander & Van Witteloostuijn 1996).

The above discussion points out that the ability to take the initiative and responsibility

could be associated with the personality characteristic of internal locus of control of

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entrepreneurs. This kind of psychological attitude forms the basis of entrepreneurial

self-efficacy, where the individual believes in his or her capacity to accomplish a certain

level of performance or achieve desired outcomes, which in turn influences the

individual’s behaviour (Bandura 1986). According to Markman, Balkin and Baron

(2002), individuals are motivated by their perceived self-efficacy rather than by an

objective ability; hence self-perception is very important. The perception of being able

to control an event is closely related to self-efficacy (Phillips & Gully 1997). However,

as discussed earlier, I have identified six different dimensions of entrepreneurial self-

efficacy i.e., searching, planning, marshalling, implementing people-related tasks,

implementing finance-related tasks and ability to cope with unexpected challenges. It

follows that those entrepreneurs who have a high internal locus of control will have also

have a high self-efficacy in activities pertaining to entrepreneurship such as planning,

risk-taking, and coping with the environment. At this stage, there is no empirical

evidence associating the construct of internal locus of control of entrepreneurs with each

of the six entrepreneurial self-efficacy dimensions separately. Therefore, I propose the

following hypotheses:

H2a-H2f – Personality characteristics of internal locus of control and entrepreneurial self-efficacy:

Hypothesis 2a: The personality characteristic of internal locus of control is positively associated with the searching capability dimension of entrepreneurial self-efficacy.

Hypothesis 2b: The personality characteristic of internal locus of control is positively associated with the planning capability dimension of entrepreneurial self-efficacy.

Hypothesis 2c: The personality characteristic of internal locus of control is positively associated with the marshalling capability dimension of entrepreneurial self-efficacy.

Hypothesis 2d: The personality characteristic of internal locus of control is positively associated with the implementing people-related capability dimension of entrepreneurial self-efficacy.

Hypothesis 2e: The personality characteristic of internal locus of control is positively associated with the implementing finance-related capability dimension of entrepreneurial self-efficacy.

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Hypothesis 2f: The personality characteristic of internal locus of control is positively associated with the coping with unexpected challenges capability dimension of entrepreneurial self-efficacy.

4.2.3 Personality characteristic of risk-taking propensity and dimensions of entrepreneurial self-efficacy

An important personality characteristic of entrepreneurs is risk taking. This refers to an

individual’s current tendency to take or avoid risk (Sitkin & Weingart 1995). Risk

taking is inherent in every decision an entrepreneur takes in the face of uncertain

situations, whether it is to become an entrepreneur or to make investment decisions,

particularly so because the outcomes of these decisions are unpredictable (Caliendo,

Fossen & Kritikos 2014). Therefore, the tendency of individuals to take risks has been

viewed as an important characteristic associated with entrepreneurship (Zhao, Seibert &

Lumpkin 2010). Several studies have found that individuals with higher risk-taking

propensity engage in entrepreneurial ventures, while those individuals who are risk

averse choose to work for others (Carland III et al. 1995; Stewart et al. 1999). In another

study, Hartog, Ferrer-i-Carbonell and Jonker (2002) found that entrepreneurs are less

risk averse than employed persons.

But not all studies provide categorical evidence to support a risk-taking propensity by

entrepreneurs. Brockhaus (1980b) could not differentiate between entrepreneurs and

non-entrepreneurs based on the risk-taking characteristic. In a meta-analytic study by

Stewart and Roth (2001), the authors found that entrepreneurs did have a higher risk

propensity compared to managers. But these findings were contested by Miner and Raju

(2004), who suggested that entrepreneurs are actually risk-avoidant, which in turn was

rebutted by Stewart and Roth (2004). Other scholars argue for the need to consider other

factors such as cognitive patterns (Palich & Bagby 1995) and distinct phases of

entrepreneurship (Markman, Baron & Balkin 2005). In a recent meta-analysis, Zhao,

Seibert and Lumpkin (2010) found risk is positively related to entrepreneurial intention,

but not necessarily to other measures of entrepreneurial performance. They also found

that the risk-taking characteristic is particularly important during the early stages of

entrepreneurship when the entrepreneurs seek out opportunities, network, and acquire

resources to embark on their new venture, but they are not sure if this was an asset or a

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liability afterwards. Hence, it cannot be concluded whether risk-taking is compulsory

for entrepreneurs.

Scholars such as Zhao, Seibert and Hills (2005) suggest that individuals who have a

high risk-taking propensity will be more likely to want to pursue entrepreneurial

activities because they may feel more confident in undertaking entrepreneurial roles and

tasks necessary to succeed. Such individuals will be expected to be positively associated

with entrepreneurial self-efficacy, which indicates belief in their confidence in pursuing

their goals (Markman, Balkin & Baron 2002). However, the entrepreneurial self-

efficacy construct in our study constitutes six different dimensions, namely searching,

planning, marshalling, implementing people-related tasks, implementing finance-related

tasks and ability to cope with unexpected challenges (DeNoble, Jung & Ehrlich 1999;

McGee et al. 2009). How this risk-taking propensity affects each of the dimensions of

entrepreneurial self-efficacy was not, however, examined before. Hence, I propose the

following set of hypotheses:

H3a-3f- Personality characteristics of risk-taking propensity and dimensions of entrepreneurial self-efficacy:

Hypothesis 3a: The personality characteristic of risk-taking propensity is positively associated with the searching capability dimension of entrepreneurial self-efficacy.

Hypothesis 3b: The personality characteristic of risk-taking propensity is positively associated with the planning capability dimension of entrepreneurial self-efficacy.

Hypothesis 3c: The personality characteristic of risk-taking propensity is positively associated with the marshalling capability dimension of entrepreneurial self-efficacy.

Hypothesis 3d: The personality characteristic of risk-taking propensity is positively associated with the implementing people-related capability dimension of entrepreneurial self-efficacy.

Hypothesis 3e: The personality characteristic of risk-taking propensity is positively associated with the implementing finance-related capability dimension of entrepreneurial self-efficacy.

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Hypothesis 3f: The personality characteristic of risk-taking propensity is positively associated with the coping with unexpected challenges capability dimension of entrepreneurial self-efficacy.

4.3 Entrepreneurial information overload and entrepreneurial self-efficacy

Previous research indicates that entrepreneurs who have high levels of entrepreneurial

self-efficacy are positively related to their entrepreneurial intentions and career (Chen,

Greene & Crick 1998, De Noble, Jung & Ehrlich 1999; McGee et al. 2009). Similarly, a

study by Forbes (2005) found a positive relationship between entrepreneurial self-

efficacy and new venture performance. A successful entrepreneur is expected to

perform the tasks of opportunity seeking, venture creation and growth. As De Noble,

Jung and Ehrlich (1999) point out, one of the key dimensions of entrepreneurial self-

efficacy is developing opportunities. This suggests that the key to succeed as an

entrepreneur is to make good decisions at various stages of entrepreneurship, namely

opportunity seeking, venture creation and growth. Understandably, successful

entrepreneurship requires, among others things, an ability to access information to make

relevant and timely decisions. The literature clearly shows that business owners and

managers constantly scan and monitor their operating environment in order to look for

new opportunities and strengthen their competitive position (Keh, Foo & Lim 2007;

Welsch & Young 1982).

In present times, a large amount of information is not only made available to

entrepreneurs, but is also made available sooner (Spira, 2011). Access to the right

amount of information helps in coping with uncertainty by reducing it (Schick, Gordon

& Haka 1990). Further, when information is organised into meaningful schemas, it can

contribute to entrepreneurs’ self-efficacy and performance (Ozgen & Baron 2007;

Markman, Balkin & Baron 2002). However, with the explosion of information

technology and gadgets in the modern world, business managers are subjected to

information overload, which reduces their ability to make good decisions (Speier,

Valacich & Vessey 1999). So now the problem is not just lack of access to information,

but an overload of information (Shapiro & Varian, 1999). This information overload

reduces the effectiveness of decision making (Miller, 1972; Schick, Gordon & Haka

1990) and increases information anxiety (Bawden & Robinson 2008). As mentioned

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earlier (Conger & Kanungo 1988; Bandura 1977), such emotional arousal, or

physiological responses resulting from anxiety, stress or fear, can negatively impact on

self-efficacy. In my study, the entrepreneurial self-efficacy construct has six

dimensions, as discussed earlier, and these are likely to be adversely affected by

information overload. This is because decision makers experiencing information

overload may ignore available information and become selective or even lose control

over information (Bawden 2001; Edmunds & Morris 2000). Based on these arguments,

I propose the following set of hypotheses.

H4a-4f- Entrepreneurial information overload and entrepreneurial self-efficacy dimensions

Hypothesis 4a: Entrepreneurial information overload is negatively associated with the searching capability dimension of entrepreneurial self-efficacy.

Hypothesis 4b: Entrepreneurial information overload is negatively associated with the planning capability dimension of entrepreneurial self-efficacy.

Hypothesis 4c: Entrepreneurial information overload is negatively associated with the marshalling capability dimension of entrepreneurial self-efficacy.

Hypothesis 4d: Entrepreneurial information overload is negatively associated with the implementing people-related capability dimension of entrepreneurial self-efficacy.

Hypothesis 4e: Entrepreneurial information overload is negatively associated with the implementing finance-related capability dimension of entrepreneurial self-efficacy.

Hypothesis 4f: Entrepreneurial information overload is negatively associated with the coping with unexpected challenges capability dimension of entrepreneurial self-efficacy.

4.4 Entrepreneurial information overload and entrepreneurial behavioural activities

The literature shows that with growing information technology and an ever-changing

environment, the state of information inadequacy has changed. Entrepreneurs

consciously engage in gathering information for entrepreneurial decisions and

implementation. But information is now available in abundance from multiple sources,

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leading to information overload. Eppler and Mengis (2004) maintain that a combination

of five factors causes information overload: (i) information in terms of its volume,

frequency, intensity, and quality; (ii) the receiver; (iii) the tasks that need to be

accomplished; (iv) the organisational design; and (v) the information technology. They

combine to overwhelm the information processing capacity of an individual, which

adversely affects decision making (Speier, Valacich & Vessey 1999).

According to Bird, Schjoedt and Baum (2012), entrepreneurial behaviour consists of the

observable actions (activities) of the individual and the responses that are evoked by

those activities. Some of the entrepreneurial behavioural activities identified are:

planning, business location, writing a business plan, human resources management,

seeking outside advice, and seeking external support for financial and advisory

assistance (Envick & Luthans 1996; Bird & Schjoedt 2009; Haber & Reichel 2007).

Others refer to behaviours such as gathering resources and networking (Tornikoski &

Newbert 2007). However, the range of behaviours identified is not unanimously

agreed, and scholars believe that the research has not sufficiently addressed the nature

of different entrepreneurial behavioural activities (Bird, Schjoedt & Baum 2012). Many

studies have restricted them to activities in starting a venture or exhibiting the intention

of starting one. In recent times, Luthans and Ibrayeva (2006) have tried to understand

the specific behaviours of practicing entrepreneurs i.e., what they actually do. They

have identified the following activities: planning, controlling, internal communication,

human resources management, work-related tasks, customer service, socialising,

politicking and on-job personal time. Since their study was done in the transition

economies of Kazakhastan and Kyrgyzstan, they can be easily applied to an emerging

economy as they share similar characteristics; therefore, they were used in my study.

However, it must be acknowledged that social psychologists suggest that the behaviours

are constrained by contextual factors. Past research has shown that an individual’s

behaviour can be impacted by information overload in many ways, including omission,

where the individual may fail to attend to all information, and error, where the

information may be assimilated incorrectly (Vickery & Vickery 1987). As mentioned

before, information overload makes individuals frequently suffer from cognitive strain

and stress (Schick, Gordon & Haka 1990) and results in their inability to make timely

decisions (Bawden 2001; Speier, Valacich & Vessey 1999). This can have a negative

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impact on the behavioural activities of entrepreneurs. For example, Klausegger,

Sinkovics and Zou (2007) pointed out that managers collected too much information

which they were unable to use efficiently, and this negatively impacted on their task

accomplishment. It follows that information overload can have a negative impact on the

behavioural activities of entrepreneurs. Hence, the following set of hypotheses is

proposed:

H5a-5h- Entrepreneurial information overload and entrepreneurial behavioural activities

Hypothesis 5a: Entrepreneurial information overload is negatively associated with the planning dimension of entrepreneurial behavioural activities.

Hypothesis 5b: Entrepreneurial information overload is negatively associated with the controlling dimension of entrepreneurial behavioural activities.

Hypothesis 5c: Entrepreneurial information overload is negatively associated with the internal communication dimension of entrepreneurial behavioural activities.

Hypothesis 5d: Entrepreneurial information overload is negatively associated with the human resources management dimension of entrepreneurial behavioural activities.

Hypothesis 5e: Entrepreneurial information overload is negatively associated with the work-related tasks dimension of entrepreneurial behavioural activities.

Hypothesis 5f: Entrepreneurial information overload is negatively associated with the customer service dimension of entrepreneurial behavioural activities.

Hypothesis 5g: Entrepreneurial information overload is negatively associated with the socialising dimension of entrepreneurial behavioural activities.

Hypothesis 5h: Entrepreneurial information overload is negatively associated with the politicking dimension of entrepreneurial behavioural activities.

4.5 Personality characteristics and entrepreneurial behavioural activities

Research indicates that entrepreneurs’ personality characteristics play a substantial role

in predicting behaviour (Bridge, O’Neill & Cromie 2003, Chell 2008; Rauch & Frese

2000). Personality traits in fact “provide the reasons for the person’s behaviour” (Mount

et al. 2005, p.448). These personality characteristics or traits are not merely the

psychological property of an individual, but something that manifests through behaviour

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(McCarthy 2000). Accordingly, these characteristics have been conceptualised as

having the propensity to act, and therefore predict entrepreneurial behaviour (Rauch &

Frese 2000). The literature reveals the existence of several personality characteristics as

being important to entrepreneurship, but only three of them have been identified as ‘the

big three’ (Chell 2008). These three personality characteristics are: need for

achievement, internal locus of control and risk-taking propensity. Further, Rauch and

Frese (2007a) point out that specific personality characteristics that match work

characteristics are more likely to predict entrepreneurial behaviour. Since ‘the big three’

personality characteristics were found to be important for entrepreneurship, the effect of

these characteristics on entrepreneurial behavioural activities is examined in this study.

In the past, what was construed as being entrepreneurial behavioural activities has been

largely confined to activities that engage in the intention to start a venture or actually

starting it. However, this limited understanding of entrepreneurial behaviour is not

practical, as entrepreneurship was seen to be an evolving process rather than a state of

being (Bygrave 1989). Few scholars have focused on the behavioural activities of

practicing entrepreneurs (Luthans, Envick & Anderson 1995; Luthans & Ibrayeva

2006). The entrepreneurial behavioural activities identified in these studies were related

to planning, controlling, internal communication, human resources management, work-

related tasks, customer service, socialising and politicking. I therefore examine the link

between ‘the big three’ personality characteristics and entrepreneurial behavioural

activities in my study.

4.5.1 Personality characteristic of need for achievement and entrepreneurial behavioural activities

As seen earlier, the need for achievement denotes an individual’s drive to excel in

accomplishing a goal (McClelland 1961). By achieving their targets, these individuals

feel a sense of accomplishment and satisfaction. This personality characteristic is found

to influence an individual’s work behaviour (Lumpkin & Erdogan 2000), and raise

his/her expectation of doing something better or faster than others, or even their own

personal accomplishments previously (Hansemark 2003). In the entrepreneurship field,

individuals with a higher need for achievement are more likely to engage in activities

that help them in succeeding in their entrepreneurial efforts (Collins, Hanges & Locke

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2004; McClelland 1965; Tang & Tang 2007). Begley and Boyd (1987) have found a

positive relationship between need for achievement and venture growth rates.

Similarly, Johnson (1990) found that the need for achievement can predict firm

founding, while Collins, Locke and Hanges (2000) showed it to be an effective tool to

differentiate between successful and unsuccessful business founders. Shane, Locke and

Collins (2003) endorse the importance of the need for achievement characteristic in

explaining entrepreneurial activities. In Utsch and Rauch’s (2000) study, achievement

orientation was examined for its effect on venture performance through two mediating

variables, namely innovative and initiative behaviours; the innovative behaviour was

found to have a significant impact. Similarly, Korunka et al. (2003) examined a

complex configuration that included not only entrepreneurs’ personality, but also other

constructs such as resources, environment, and organisational activities, whose effect

was found to exist moderately. Clearly, personality characteristics have an impact on the

entrepreneurs’ observable behavioural activities at varying levels. In my study, I have

included eight specific behavioural activities of entrepreneurs that were identified

recently (Luthans & Ibrayeva 2006), and I propose to examine how they are influenced

by the personality characteristic of need for achievement. Accordingly, the following set

of hypotheses is presented:

H6a-H6h - Need for achievement and entrepreneurial behavioural activities:

Hypothesis 6a: The personality characteristic of need for achievement is positively associated with the planning dimension of entrepreneurial behavioural activities.

Hypothesis 6b: The personality characteristic of need for achievement is positively associated with the controlling dimension of entrepreneurial behavioural activities.

Hypothesis 6c: The personality characteristic of need for achievement is positively associated with the internal communication dimension of entrepreneurial behavioural activities.

Hypothesis 6d: The personality characteristic of need for achievement is positively associated with the human resources management dimension of entrepreneurial behavioural activities.

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Hypothesis 6e: The personality characteristic of need for achievement is positively associated with the work-related tasks dimension of entrepreneurial behavioural activities.

Hypothesis 6f: The personality characteristic of need for achievement is positively associated with the customer service dimension of entrepreneurial behavioural activities.

Hypothesis 6g: The personality characteristic of need for achievement is positively associated with the socialising dimension of entrepreneurial behavioural activities.

Hypothesis 6h: The personality characteristic of need for achievement is positively associated with the politicking dimension of entrepreneurial behavioural activities.

4.5.2 Personality characteristic of internal locus of control and entrepreneurial behavioural activities

Another personality characteristic of entrepreneurs that can influence entrepreneurial

behavioural activities is internal locus of control. This characteristic is pertinent to

entrepreneurs who are self-motivated individuals who take the initiative and engage in

entrepreneurial efforts. They also take responsibility for their outcomes, rather than

depending on others. Prior research has found that individuals with a high degree of

internal locus of control believe that they determine the future outcomes of their actions

(Cromie & Johns 1983; Krueger 2009). Littunen (2000) points out that internal locus of

control is positively associated with entrepreneurial behaviour. Internal locus of control

is found to motivate entrepreneurial behaviour (Mueller & Thomas 2001). Individuals

with high internal locus of control may be frustrated if working for others, and set up

their own ventures (Bridge, O’Neill & Cromie 2003). Recently, Caliendo, Fossen and

Kritikos (2014) found that individuals who scored highly on internal locus of control

had a high probability of starting a business venture.

On the other hand, entrepreneurship does not stop with only intending to start, or

actually establishing, a business venture. Instead, they may be required to stabilise and

put the business on a growth path. Muller, Volery and Von Siemens (2012) observed

entrepreneurs of firms in the growth phase and found them, as practicing entrepreneurs,

to possess different types of behaviours. These are largely similar to the eight

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behaviours of entrepreneurs found by Luthans and Ibrayeva (2006) in transition

economies. I therefore expect the internal locus of control to impact on entrepreneurial

behavioural activities. Accordingly, the following set of hypotheses is proposed:

H7a-H7h - Internal locus of control and entrepreneurial behavioural activities:

Hypothesis 7a: The personality characteristic of locus of control is positively associated with the planning dimension of entrepreneurial behavioural activities.

Hypothesis 7b: The personality characteristic of locus of control is positively associated with the controlling dimension of entrepreneurial behavioural activities.

Hypothesis 7c: The personality characteristic of locus of control is positively associated with the internal communication dimension of entrepreneurial behavioural activities.

Hypothesis 7d: The personality characteristic of locus of control is positively associated with the human resources management dimension of entrepreneurial behavioural activities.

Hypothesis 7e: The personality characteristics of locus of control is positively associated with the work-related tasks dimension of entrepreneurial behavioural activities.

Hypothesis 7f: The personality characteristic of locus of control is positively associated with the customer service dimension of entrepreneurial behavioural activities.

Hypothesis 7g: The personality characteristic of locus of control is positively associated with the socialising dimension of entrepreneurial behavioural activities.

Hypothesis 7h: The personality characteristic of locus of control is positively associated with the politicking dimension of entrepreneurial behavioural activities.

4.5.3 Personality characteristic of risk-taking propensity and entrepreneurial behavioural activities

The risk-taking characteristic was found to be the distinguishing characteristic of

entrepreneurs which set them apart from non-entrepreneurs (Begley & Boyd 1987;

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Carland, Carland & Stewart 1999; Palich & Bagby 1995). It is viewed as being inherent

in every decision that entrepreneurs take, as the outcome of these decisions is

unpredictable (Caliendo Fossen & Kritikos 2014). Entrepreneurial activities do have

inherent risks associated with them, so only those individuals with a higher risk-taking

propensity will engage in these activities, while those with a low risk-taking propensity

will most likely work for others (Carland III et al. 1995; Stewart et al. 1999). However,

in other studies, risk-taking could not distinguish entrepreneurs from non-entrepreneurs

(Brockhaus 1980b; Carland III et al. 1995). Miner and Raju (2004) suggested that

entrepreneurs are actually risk-avoidant.

Otherwise, several studies which examine the impact of the risk-taking propensity focus

on its influence on an individual’s decision to become an entrepreneur, and very few

studies explore risk taking’s impact after the commitment to start a business has been

made (McCarthy 2000). Therefore, it is necessary to examine the entrepreneurs’ risk-

taking propensity across a venture’s life cycle, i.e., to go beyond the stage of starting a

business (Stewart & Roth 2001; Baron & Markman 2005). This will allow for

avoidance of survivor bias, if any. To this purpose, my study seeks to understand how a

risk-taking propensity is related to observable behavioural activities of entrepreneurs,

something which has been relatively under-researched (Bird, Schjoedt & Baum 2012).

Mueller, Volery and Von Siemens (2012) presented a taxonomy of entrepreneurs’

behaviours as a venture is established and grows. Luthans and Ibrayeva (2006)

identified eight entrepreneurial behavioural activities in transition economies. It is

therefore important to understand how the risk-taking propensity is related to the

entrepreneurial behavioural activities of practicing entrepreneurs. I propose a positive

relationship between them. Accordingly, the following set of hypotheses is presented:

H8a-H8h – Risk-taking propensity and entrepreneurial behavioural activities

Hypothesis 8a: The personality characteristic of risk-taking propensity is positively associated with the planning capability dimension of entrepreneurial behavioural activities.

Hypothesis 8b: The personality characteristic of risk-taking propensity is positively associated with the controlling dimension of entrepreneurial behavioural activities.

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Hypothesis 8c: The personality characteristic of risk-taking propensity is positively associated with the internal communication dimension of entrepreneurial behavioural activities.

Hypothesis 8d: The personality characteristic of risk-taking propensity is positively associated with the human resources management dimension of entrepreneurial behavioural activities.

Hypothesis 8e: The personality characteristic of risk-taking propensity is positively associated with the work-related tasks dimension of entrepreneurial behavioural activities.

Hypothesis 8f: The personality characteristic of risk-taking propensity is positively associated with the customer service dimension of entrepreneurial behavioural activities.

Hypothesis 8g: The personality characteristic of risk-taking propensity is positively associated with the socialising dimension of entrepreneurial behavioural activities.

Hypothesis 8h: The personality characteristic of risk-taking propensity is positively associated with the politicking capability dimension of entrepreneurial behavioural activities.

4.6 Entrepreneurial self-efficacy and entrepreneurial behavioural activities

In general, self-efficacy beliefs have been touted as being a very important variable in

understanding the behaviour of an individual because they cause individuals to reflect

on their capabilities and subsequently regulate their choices and efforts (Bandura 1982).

If the individual perceives a particular behaviour to be beyond his/her ability, then the

individual will not act in that direction, even if there is a perception of demand for such

behaviour (Boyd & Vozikis 1994). In fact, Shane, Locke and Collins (2003) have

singled out self-efficacy as being the best predictor of an individual’s performance in a

task, and they assert that individuals with high self-efficacy will “exert more effort for a

greater length of time, persist through setbacks, set and accept higher goals and develop

better plans and strategies for the task” (2003, p. 267). It is theorised that a sense of

entrepreneurial self-efficacy is essential to increase the probability of entrepreneurial

actions (Boyd & Vozikis 1994). They also suggest identifying key efficacy perceptions

in determining future performance (i.e. behaviour) levels of individuals. As Bridge,

O’Neill and Cromie (2003, p.90) assert, ‘perceived self-efficacy leads to intentions

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which ultimately lead to behaviour’, but behaviour, in turn, could influence self-

efficacy.

As discussed earlier in this chapter, this study is examining the entrepreneurial

behavioural activities of practicing entrepreneurs as identified by the studies done by

Luthans, Envick and Anderson (1995) and Luthans and Ibrayeva (2006). The

behavioural activities examined are activities in the areas of planning, controlling,

internal communication, work-related tasks, human resources management, customer

service, socialising and politicking. Thus it is proposed that there is positive association

between each specific entrepreneurial self-efficacy dimension and each dimension of

the entrepreneurial behavioural activities.

4.6.1 Dimensions of entrepreneurial self-efficacy and the planning dimension of entrepreneurial behavioural activities

While entrepreneurial self-efficacy was examined earlier in different studies (e.g., Chen,

Greene & Crick 1998; DeNoble, Jung & Ehrlich 1999; Hmieleski & Corbett 2008;

Zhao, Seibert & Hills 2005), the entrepreneurial self-efficacy construct of my study has

specific dimensions that were identified from the studies of McGee et al. (2009) and

DeNoble, Jung and Ehrlich (1999). These six dimensions are: searching, planning,

marshalling, implementing people-related tasks, implementing finance-related tasks,

and coping with unexpected challenges. However, none of these dimensions was

directly tested empirically with entrepreneurial behavioural activities, which provided

me with an opportunity to examine their relationship in this study. Studies have

examined the importance of early business planning and advocated its importance in

helping entrepreneurs achieve their goals and also make quick decisions (Delmar &

Shane, 2003). Therefore, practicing entrepreneurs are expected to continue planning

even after the venture is established and growing. Luthans and Ibrayeva (2006)

observed that entrepreneurs spent a good amount of their time in planning activities.

Hence, I propose the following set of hypotheses that shows a positive relationship

between different dimensions of entrepreneurial self-efficacy and the planning

dimension of entrepreneurial behavioural activities:

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Hypothesis 9a: The entrepreneurial self-efficacy dimension of searching is positively associated with the planning dimension of entrepreneurial behavioural activities.

Hypothesis 10a: The entrepreneurial self-efficacy dimension of planning is positively associated with the planning dimension of entrepreneurial behavioural activities.

Hypothesis 11a: The entrepreneurial self-efficacy dimension of marshalling is positively associated with the planning dimension of entrepreneurial behavioural activities.

Hypothesis 12a: The entrepreneurial self-efficacy dimension of implementing people-related capability is positively associated with the planning dimension of entrepreneurial behavioural activities.

Hypothesis 13a: The entrepreneurial self-efficacy dimension of implementing finance-related is positively associated with the planning dimension of entrepreneurial behavioural activities.

Hypothesis 14a: The entrepreneurial self-efficacy dimension of coping with unexpected challenges is positively associated with the planning dimension of entrepreneurial behavioural activities.

4.6.2 Dimensions of entrepreneurial self-efficacy and the controlling dimension of entrepreneurial behavioural activities

The entrepreneurial self-efficacy dimension used in my study consists of six

dimensions: searching, planning, marshalling, implementing people-related tasks,

implementing finance-related tasks, and coping with challenges. Though these

dimensions were drawn from the studies of McGee et al. (2009) and DeNoble, Jung and

Ehrlich (1999), they were not empirically tested against the actual behavioural activities

undertaken by entrepreneurs. In particular, we know that entrepreneurial self-efficacy

helps a person’s belief in their ability to successfully launch a venture. But such

activities need proper control of venture establishment and growth. These include

activities such as ensuring that work is done as per the plan, monitoring financial

performance, and inspecting equipment (Luthans & Ibrayeva 2006). Hence, I propose

the following set of hypotheses that shows a positive relationship between different

dimensions of entrepreneurial self-efficacy and the controlling dimension of

entrepreneurial behavioural activities:

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Hypothesis 9b: The entrepreneurial self-efficacy dimension of searching is positively associated with the controlling dimension of entrepreneurial behavioural activities.

Hypothesis 10b: The entrepreneurial self-efficacy dimension of planning is positively associated with the controlling dimension of entrepreneurial behavioural activities.

Hypothesis 11b: The entrepreneurial self-efficacy dimension of marshalling is positively associated with the controlling dimension of entrepreneurial behavioural activities.

Hypothesis 12b: The entrepreneurial self-efficacy dimension of implementing people-related capability is positively associated with the controlling dimension of entrepreneurial behavioural activities.

Hypothesis 13b: The entrepreneurial self-efficacy dimension of implementing finance-related capability is positively associated with the controlling dimension of entrepreneurial behavioural activities.

Hypothesis 14b: The entrepreneurial self-efficacy dimension of coping with unexpected challenges is positively associated with the controlling dimension of entrepreneurial behavioural activities.

4.6.3 Dimensions of entrepreneurial self-efficacy and the internal communication dimension of entrepreneurial behavioural activities

Prior empirical studies involving the entrepreneurial self-efficacy construct had only a

single score as a measure of the construct. However, my study has six dimensions

within entrepreneurial self-efficacy; these are searching, planning, marshalling,

implementing people-related tasks, implementing finance-related tasks, and coping with

unexpected challenges, which were adapted from DeNoble, Jung and Ehrlich (1999)

and McGee et al. (2009). These dimensions of entrepreneurial self-efficacy show an

individual’s belief in their ability to perform six different roles. On the other hand, an

important responsibility of entrepreneurs is internal communication. Entrepreneurship

researchers (Bird 1989; Baum, Locke & Kirkpatrick 1998) have underscored the

importance of communicating the entrepreneur’s vision to the management team and as

regards the venture as a whole. Further, entrepreneurs are required to regularly

communicate with their teams, suppliers, customers, employees and so on, in order to

realise venture goals and objectives. Therefore, having confidence in their

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entrepreneurial ability is expected to have a positive impact on the entrepreneurs’

communication responsibility towards the venture. Accordingly, I propose the following

set of hypotheses showing a positive link between all the six dimensions of

entrepreneurial self-efficacy and the internal communication dimension of

entrepreneurial behavioural activities:

Hypothesis 9c: The entrepreneurial self-efficacy dimension of searching is positively associated with the internal communication dimension of entrepreneurial behavioural activities.

Hypothesis 10c: The entrepreneurial self-efficacy dimension of planning is positively associated with the internal communication dimension of entrepreneurial behavioural activities.

Hypothesis 11c: The entrepreneurial self-efficacy dimension of marshalling is positively associated with the internal communication dimension of entrepreneurial behavioural activities.

Hypothesis 12c: The entrepreneurial self-efficacy dimension of implementing people-related capability is positively associated with the internal communication dimension of entrepreneurial behavioural activities.

Hypothesis 13c: The entrepreneurial self-efficacy dimension of implementing finance-related capability is positively associated with the internal communication dimension of entrepreneurial behavioural activities.

Hypothesis 14c: The entrepreneurial self-efficacy dimension of coping with unexpected challenges is positively associated with the internal communication dimension of entrepreneurial behavioural activities.

4.6.4 Dimensions of entrepreneurial self-efficacy and the human resources dimension of entrepreneurial behavioural activities

According to Chen, Greene and Crick (1998), entrepreneurial self-efficacy refers to an

individual’s confidence in his/her ability to successfully perform entrepreneurial roles

and tasks. They provide empirical evidence as to its positive relationship with

entrepreneurial intentions. Likewise, DeNoble, Jung and Ehrlich (1999) also found

similar evidence. Compared to the studies that took a unitary view of self-efficacy

(Sherer et al. 1982; Markman, Baron & Balkin 2005), others recognized entrepreneurial

self-efficacy to be a multidimentional construct (DeNoble, Jung & Ehrlich 1999;

McGee et al. 2009). In my study, I use six dimensions, namely searching, planning,

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marshalling, implementing people-related tasks, implementing finance-related tasks,

and coping with unexpected challenges. In this context, Sirmon and Hitt (2003) strongly

believe that human capital is a very important resource for a business venture, and

suggest that this resource be managed well to create value for the venture. Luthans and

Ibrayeva (2006) observe that practicing entrepreneurs undertake various human

resource activities like staffing, training and motivating their employees. It is expected

that confidence exhibited by individual entrepreneurs, as expressed by their level of

entrepreneurial self-efficacy, will have a positive impact on how they use human

resources. However, we do not know if the level of impact by these different

dimensions of entrepreneurial self-efficacy on the human resources dimension of

entrepreneurs’ behaviour is uniform or varies. To examine these relations further, I

propose the following set of hypotheses:

Hypothesis 9d: The entrepreneurial self-efficacy dimension of searching is positively associated with the human resources management dimension of entrepreneurial behavioural activities.

Hypothesis 10d: The entrepreneurial self-efficacy dimension of planning is positively associated with the human resources management dimension of entrepreneurial behavioural activities.

Hypothesis 11d: The entrepreneurial self-efficacy dimension of marshalling is positively associated with the human resources management dimension of entrepreneurial behavioural activities.

Hypothesis 12d: The entrepreneurial self-efficacy dimension of implementing people-related capability is positively associated with the human resources management dimension of entrepreneurial behavioural activities.

Hypothesis 13d: The entrepreneurial self-efficacy dimension of implementing finance-related capability is positively associated with the human resources management dimension of entrepreneurial behavioural activities.

Hypothesis 14d: The entrepreneurial self-efficacy dimension of coping with unexpected challenges is positively associated with the human resources management dimension of entrepreneurial behavioural activities.

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4.6.5 Dimensions of entrepreneurial self-efficacy and the work-related task dimension of entrepreneurial behavioural activities

As seen earlier, the dimensions of entrepreneurial self-efficacy indicate the level of

confidence by entrepreneurs in their ability to undertake specific tasks and roles related

to entrepreneurship. In fact, entrepreneurial self-efficacy scales used by Chen, Greene

and Crick (1998) identify 22 specific tasks and roles. Further, the confidence in

performing these tasks was used to differentiate between entrepreneurs and non-

entrepreneurs. Therefore, entrepreneurial self-efficacy was used as an important

antecedent to behaviour or actions that an entrepreneur will undertake (Ajzen 2002). At

the same time, studies have identified underlying multiple dimensions within the

construct of entrepreneurial self-efficacy (eg. DeNoble, Jung & Ehrlich 1999; McGee et

al. 2009). But Luthans and Ibrayeva (2006) have identified that entrepreneurs undertake

work-related operational activities such as filing invoices, organising the work area and

pricing the products. These activities are also very important for the business. In my

study, I have used six different dimensions of entrepreneurial self-efficacy and expect

them to have a positive impact on work-related dimensions of entrepreneurial

behavioural activities. Therefore, to examine these relationships empirically, I propose

the following set of hypotheses:

Hypothesis 9e: The entrepreneurial self-efficacy dimension of searching is positively associated with the work-related task dimension of entrepreneurial behavioural activities.

Hypothesis 10e: The entrepreneurial self-efficacy dimension of planning is positively associated with the work-related task dimension of entrepreneurial behavioural activities.

Hypothesis 11e: The entrepreneurial self-efficacy dimension of marshalling is positively associated with the work-related task dimension of entrepreneurial behavioural activities.

Hypothesis 12e: The entrepreneurial self-efficacy dimension of implementing people-related capability is positively associated with the work-related task dimension of entrepreneurial behavioural activities.

Hypothesis 13e: The entrepreneurial self-efficacy dimension of implementing finance-related capability is positively associated with the work-related task dimension of entrepreneurial behavioural activities.

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Hypothesis 14e: The entrepreneurial self-efficacy dimension of coping with unexpected challenges is positively associated with the work-related task dimension of entrepreneurial behavioural activities.

4.6.6 Dimensions of entrepreneurial self-efficacy and the customer service dimension of entrepreneurial behavioural activities

Boyd and Vozikis (1994) proposed that self-efficacy was a critical antecedent of

entrepreneurial intentions and actions. Chen, Greene and Crick (1998) provided

empirical evidence to support the assertion that entrepreneurial self-efficacy is

positively related to entrepreneurs’ intentions. As mentioned earlier, scholars such as

DeNoble, Jung and Ehrlich (1999) and McGee et al. (2009) have identified different

dimensions within the construct of entrepreneurial self-efficacy. In my study, the

construct of entrepreneurial self-efficacy has six dimensions, and I expect them to have

a positive impact on the customer service dimension of entrepreneurial behavioural

activities that was identified by Luthans and Ibrayeva (2006). In an earlier study,

Thompson (1999) argued that the success of any business is dependent on the ability of

the entrepreneur or entrepreneurial manager to find a valuable strategic fit where the

organisation’s resources and capabilities are utilised well to satisfy the expectations of

key stakeholders, including customers. Accordingly, I propose the following set of

hypotheses:

Hypothesis 9f: The entrepreneurial self-efficacy dimension of searching is positively associated with the customer service dimension of entrepreneurial behavioural activities.

Hypothesis 10f: The entrepreneurial self-efficacy dimension of planning is positively associated with the customer service dimension of entrepreneurial behavioural activities.

Hypothesis 11f: The entrepreneurial self-efficacy dimension of marshalling is positively associated with the customer service dimension of entrepreneurial behavioural activities.

Hypothesis 12f: The entrepreneurial self-efficacy dimension of implementing people-related capability is positively associated with the customer service dimension of entrepreneurial behavioural activities.

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Hypothesis 13f: The entrepreneurial self-efficacy dimension of implementing finance-related capability is positively associated with the customer service dimension of entrepreneurial behavioural activities.

Hypothesis 14f: The entrepreneurial self-efficacy dimension of coping with unexpected challenges is positively associated with the customer service dimension of entrepreneurial behavioural activities.

4.6.7 Dimensions of entrepreneurial self-efficacy and the socialising dimension of entrepreneurial behavioural activities

The defining feature of self-efficacy is an individual’s belief in his/her ability to

perform. In the context of entrepreneurial self-efficacy, this belief translates into

confidence to perform tasks relevant to entrepreneurship. A critical component for

entrepreneurship has been identified as networking and socialising (Manolova et al.

2007; Watson 2007). By networking and socialising, entrepreneurs gain access to

information, new contacts for business, and emotional support, all of which support

their entrepreneurial efforts. These socialising behaviours, in turn, add to the

entrepreneur’s self-efficacy. Therefore, it is reasonable to expect a positive relationship

between entrepreneurial self-efficacy and the socialising dimension of an entrepreneur’s

behaviour identified by Luthans and Ibrayeva (2006). However, such relationships were

not empirically tested in a situation where the entrepreneurial self-efficacy construct

consisted of multiple dimensions. Hence the following set of hypotheses is proposed:

Hypothesis 9g: The entrepreneurial self-efficacy dimension of searching is positively associated with the socialising dimension of entrepreneurial behavioural activities.

Hypothesis 10g: The entrepreneurial self-efficacy dimension of planning is positively associated with the socialising dimension of entrepreneurial behavioural activities.

Hypothesis 11g: The entrepreneurial self-efficacy dimension of marshalling is positively associated with the socialising dimension of entrepreneurial behavioural activities.

Hypothesis 12g: The entrepreneurial self-efficacy dimension of implementing people-related capability is positively associated with the socialising dimension of entrepreneurial behavioural activities.

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Hypothesis 13g: The entrepreneurial self-efficacy dimension of implementing finance-related capability is positively associated with the socialising dimension of entrepreneurial behavioural activities.

Hypothesis 14g: The entrepreneurial self-efficacy dimension of coping with unexpected challenges is positively associated with the socialising dimension of entrepreneurial behavioural activities.

4.6.8 Dimensions of entrepreneurial self-efficacy and the politicking dimension of entrepreneurial behavioural activities

Several studies have indicated the importance of politicking and lobbying for business

purposes (Elg, Schaumann & Ghauri 2012; Barron 2010; Lawton & Rajwani 2011;

Paris 2000). In developing economies, where institutions are weak, it is powerful

individuals that influence decision making in all areas of the society (see Kuncoro

2006). Therefore, entrepreneurs are expected to lobby politicians and other individuals

of influence to gain support for their entrepreneurial ventures and activities. In order to

undertake the activity of politicking, entrepreneurs need self-efficacy, a belief that they

can undertake this activity of politicking with confidence. Therefore, entrepreneurial

self-efficacy is important for entrepreneurs as they interact with politicians and other

influential people who wield enormous social and political power. Accordingly, I

propose the following set of hypotheses:

Hypothesis 9h: The entrepreneurial self-efficacy dimension of searching is positively associated with the politicking dimension of entrepreneurial behavioural activities.

Hypothesis 10h: The entrepreneurial self-efficacy dimension of planning is positively associated with the politicking dimension of entrepreneurial behavioural activities.

Hypothesis 11h: The entrepreneurial self-efficacy dimension of marshalling is positively associated with the politicking dimension of entrepreneurial behavioural activities.

Hypothesis 12h: The entrepreneurial self-efficacy dimension of implementing people-related capability is positively associated with the politicking dimension of entrepreneurial behavioural activities.

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Hypothesis 13h: The entrepreneurial self-efficacy dimension of implementing finance-related capability is positively associated with the politicking dimension of entrepreneurial behavioural activities.

Hypothesis 14h: The entrepreneurial self-efficacy dimension of coping with unexpected challenges is positively associated with the politicking dimension of entrepreneurial behavioural activities.

4.7 Chapter summary

The chapter puts forward a conceptual framework based on the variables identified in

the literature review. My conceptual framework proposes several associations: between

personality characteristics and various dimensions of entrepreneurial self-efficacy;

between personality characteristics and entrepreneurial behavioural activities; and

between entrepreneurial self-efficacy and entrepreneurial behavioural activities. It also

proposes that information overload will have an adverse impact on both entrepreneurial

self-efficacy and entrepreneurial behavioural activities. Based on the theory underlying

these relations, a number of hypotheses have been developed for empirical testing. The

methodology used to test these hypotheses is discussed in Chapter 5.

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CHAPTER 5

RESEARCH METHODOLOGY

In this chapter, the methodology used to test the proposed model and hypothesis

presented in Chapter Four is discussed. Specifically, this chapter covers the research

strategy and the methodology used in addressing the research problem. Further, this

chapter includes various aspects such as the operationalisation of each variable of the

proposed model, the rationale behind this, the development of the survey instrument,

validity and reliability analysis, sample selection, the data collection method, and a

description of the statistical analysis employed in this study.

5.1 Research approach and strategy

The research approach used will influence the nature and conduct of any research

undertaken as well as the interpretation of existing knowledge in the literature (Baker &

Foy 2008). This study employs a positivist approach using the deductive process of

theory testing. The decision to use this approach is because this research begins with a

theoretical perspective that has been drawn together from the review of extensive extant

literature. The concepts of this theoretical model have been operationalised to gain an

understanding of the relationships existing between the variables. The data that help us

to observe these concepts in the empirical world are sought using surveys from the field.

5.2 Measurement / operationalisation of variables

Gill, Johnson and Clark (2010, p. 50) define operationalisation “as the creation of rules

for using indicators of abstract concepts which tell us when instances of the concept

have empirically occurred”. The variables used in the study are abstract concepts

gathered from reviewing the literature. Gill, Johnson and Clark (2010) state that to

examine these variables, they have to be overtly linked to something that is observable

in such a way that the variation can be measured. In other words, the variables have to

be operationalised. Accordingly, the variables used in the study have been

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operationalised using observable indicators drawn from past studies. The variables

have been operationalised and tested for reliability and validity by various researchers in

earlier empirical studies. The development of each of the variables used in the study is

detailed below.

5.2.1 Personality characteristics

While many personality characteristics were examined in studies on entrepreneurship,

three personality traits have been widely discussed in the literature and have shown a

high level of validity. They are: (i) need for achievement, (ii) internal locus of control

and (iii) risk-taking propensity (Schaper, Volery, Weber & Lewis 2011, Gartner 1985,

Brockhaus 1982). In fact, they are termed ‘the big three’ (Chell 2008). This study, too,

examines these three personality traits as they have not been tested much in the context

of emerging economies.

5.2.1.1 Need for achievement

A popularly used scale was developed by Cassidy and Lynn (1989); it measures

achievement motivation using seven dimensions: the work ethic, the pursuit of

excellence, status aspiration, competitiveness, acquisitiveness for money and material

wealth, mastery, and dominance. Some scholars (Ward 1997; Hart, Stasson, Fulcher &

Mahoney 2008) have questioned the validity of this seven-factor scale on the grounds

that their corresponding factors explain less than half of their variance. Using the

approach taken by Cassidy and Lynn (1989), Littunen (2000) choose four-dimension

scales to test achievement motivation; these dimensions are: work ethic, pursuit of

excellence, mastery and dominance. Another study by Lee and Tsang (2001) used

measures prescribed by the Edwards (1959) EPPS manual. For my study, questions

were chosen from the Lee and Tsang (2001) study. The Alpha value is 0.81, and the

factor loadings range from 0.76-0.86 for the questions. The three questions chosen from

Lee and Tsang’s study were considered to be representative to test the need for

achievement.

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5.2.1.2 Internal locus of control

The construct of internal locus of control contributed by Rotter’s social learning theory

has been frequently used in entrepreneurship studies. It measures an individual’s belief

in his/her ability to control his/her life. Most studies using this construct use the Rotter’s

Internal–External scale (I-E scale). The I-E scale consists of internal and external loci

of control. The I-E scale has been proposed as a uni-dimensional scale, and this has

been mentioned as a fundamental weakness, since the construct of locus of control is

multi-dimensional (Furnham 1986). Therefore, some entrepreneurship scholars have

objected to this scale on the ground that not all the dimensions assessed by Rotter’s I-E

scale are equally plausible predictors of a specific setting of a new venture creation

and/or entrepreneurial behaviour (Gatewood, Shaver & Gartner 1995; Shaver & Scott

1991). Later on, other authors (e.g., Levenson 1981) used constructs with three

dimensions, one being internal attributing and the second, external locus of control, was

further divided into chance attributing, and powerful others. Littunen (2000) further

adopted these dimensions to capture an entrepreneur’s locus of control.

The current study focuses on ‘internal locus of control’ only. This is because of two

reasons: i) a majority of the entrepreneurship studies have found internal locus of

control to be a more valid predictor than external control for entrepreneurial behaviour

(Littunen 2000), and ii) in the Indian context of a caste-dominated social structure (see

Misra 2000), internal locus of control is expected to help overcome the mitigating

factors of a caste-based social system. To operationalise this variable, I have adapted

measures of internal locus of control from the study conducted by Littunen (2000).

5.2.1.3 Risk-taking propensity

The risk-taking propensity construct measures the entrepreneur’s risk perception and

risk propensity. In a significant study, Covin and Slevin (1989, p. 86; 1998, p.234)

measured top management’s risk-taking propensity, using three questions examining:

“i) proclivity for high risk projects with chances of very high returns or low risk projects with normal and certain rates of returns, ii) whether the top managers find it is best to explore the environment via cautious, incremental behaviour or

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by bold, wide-ranging acts which they believe are necessary to achieve the firm’s objectives, and iii) whether the manager adopts a cautious posture to minimise the probability of making costly decisions or a bold, aggressive posture in order to maximise the probability of exploiting potential opportunities”.

Building on Covin and Slevin’s measures, Naldi et al. (2007) framed three questions

covering three other items: (i) high risk projects, (ii) fearless and powerful measures and

(iii) fearless and aggressive position. Risk taking was examined in the context of family

firms and non-family firms. The alpha value for risk taking in family firms was 0.83 and

in non-family firms it was 0.76. Covin and Slevin’s (1989) study focuses more on a

respondent’s rating of the risk-taking propensity of his or her top managers, rather than

rating their proclivity to take or avoid personal risks. This study focuses on the

entrepreneur’s risk-taking propensity and its impact on the entrepreneur’s behaviour.

Therefore, only two questions from Naldi et al.’s (2007) study were taken. These

questions were further reworded to suit the current study.

Wagener, Gorgievski and Rijsdijk (2010) adopted three questions from Van den Brink,

et al. (2004). The questions have an alpha value of 0.80. For this study, only two

questions were used in the study. The third question (‘I am prepared to invest much of

my own capital to take a chance’) was not used because this study focuses on practising

entrepreneurs who are also owner-managers, rather than on those who intend to be

entrepreneurs (or potential entrepreneurs). This item was not relevant to our sample

respondents as they have already invested and are practicing entrepreneurs.

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Table 5.1 Operationalisation of entrepreneur’s personality characteristics Construct (Source)

Items

Need for achievement (Lee & Tsang 2001)

1. I will not be satisfied unless I have achieved the desired level of results.

2. Even though people tell me ‘that it cannot be done’, I will persist.

3. I look upon my work as simply a way to chieve my goals.

Internal locus of control

(Littunen 2000)

4. I am usually able to protect my personal interest. 5. My life is determined by my own actions. 6. I can pretty much determine what will happen in my life. 7. When I make plans, I am almost certain to make them

work.

Risk-taking propensity

(Naldi et al. 2007): Items 8-9.

(Wagener, Gorgievski

& Rijsdijk 2010): Items 10-11.

8. I can take fearless decisions to maximise the chance of exploiting all opportunities.

9. I regularly take calculated risks in order to obtain a potential advantage

10. If I get a chance, I take risks, even if the consequences

may be potentially unfavourable. 11. I take fearless decisions to achieve my venture

objectives, even in a turbulent business environment

Table 5.1 shows the dimensions used to measure personality characteristics of

entrepreneurs. Based on the requirements of this study, the personality scale created

consists of 11-items to measure the three important personality dimensions of

entrepreneurs: 1) need for achievement, 2) internal locus of control, and 3) risk-taking

propensity. A 7-point Likert scale ranging from 1= “Not at all” to 7 = “extremely well”

is used to examine the extent to which the statements best described the entrepreneur.

5.2.2 Entrepreneurial self-efficacy (ESE)

The concept of self-efficacy, which has its roots in social cognitive theory as postulated

by Bandura (1977), has been applied to entrepreneurship by various researchers (e.g.,

Chen, Greene & Crick 1998). The construct of ESE should capture “the degree to

which individuals believe that they are capable of performing the tasks associated with

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new-venture management” (Forbes 2005). To operationalise entrepreneurial self-

efficacy, a careful examination of existing literature and scales was undertaken.

While self-efficacy has been applied broadly across various research domains, Bandura

(1997, p.6) cautions researchers that “self-efficacy beliefs should be measured in terms

of particularised judgments of capability that may vary across realms of activity,

different levels of task demands within a given activity domain, and under different

situational circumstances”. He advises researchers to examine self-efficacy in specific

contexts and research domains. This caution has gone unheeded in different studies

where self-efficacy assessments have examined general attitudes about capabilities

rather than being tailored to specific activity domains as suggested by Bandura (Pajares

1997).

Unfortunately, some studies in entrepreneurship apply and measure general self-efficacy

in the area of entrepreneurship (e.g. see Baum and Locke 2004; Markman Baron &

Balkin 2005), although the concept of entrepreneurship has been recognised as a multi-

dimensional construct (e.g., Chen, Greene & Crick 1998; DeNoble, Jung & Ehrlich

1999). Due to a general application of the concept of self-efficacy to entrepreneurship,

such studies do not capture the level of self-efficacy in specific activities of the

entrepreneurship domain. McGee et al. (2009) note that those studies that use multi-

dimensional entrepreneurial self-efficacy measures dilute their construct by grouping

the scores of the multi-dimensional scale into one composite score (e.g., see Chen,

Greene & Crick 1998; DeNoble, Jung & Ehrlich 1999; Zhao, Seibert & Hills 2005).

Doing so does not allow for higher predictive power. In other words, it was difficult to

identify the specific areas, within the construct of self-efficacy, which were influenced

or which impacted on entrepreneurship as the case may be. To remedy this issue, the

scale developed for my study took into account suggestions made by researchers in

three ways: a) to use ESE scales that measured specific areas of the activity domain; b)

to use a multi-dimensional scale; and c) not to create one composite score for the whole

ESE construct.

To operationalise the entrepreneurial self-efficacy construct, it was first important to

identify the tasks that are associated with entrepreneurship. My study follows McGee et

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al.’s (2009) framework. Responding to the call of Forbes (2005) and Kolvereid and

Isaksen (2006) for refining the ESE construct, McGee and his associates (2009)

examined the then existing scales and took the shortcomings and suggestions into

consideration to develop their own five-factor scale that included dimensions of: (i)

searching, (ii) planning, (iii) marshalling, (iv) implementing-people, and (v)

implementing-finance. McGee et al.’s (2009) study focused mainly on nascent

entrepreneurs, that is, those who have never owned a business and who did not currently

own a business, but who, however, were actively involved in attempting to start a new

business (Reynolds, 1999). The Alpha values for each of the constructs were: searching

(0.84); planning (0.84); marshalling (0.80); implementing people (0.91); and

implementing-finance (0.84). Since the focus of this study is to examine practicing

owner-managers, another factor was added – i.e., coping with unexpected challenges, as

this was seen as being important in predicting entrepreneurial behaviour (see DeNoble,

Jung & Ehrlich 1999). The factor loading for the three questions adopted from DeNoble

et al. 1999) were 0.67, 0.79 and 0.78.

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Table: 5.2 Operationalisation of entrepreneurial self-efficacy

Construct (Source)

Item Measures

Searching (McGee et al. 2009)

1. Brainstroming a new idea for a product or service 2. Identifying the need for a new product or service 3. Designing a product or service that will satisfy customers

needs and wants Planning (McGee et al. 2009)

4. Estimating customer demand for a new product or service 5. Determining a competitive price for a new product or

service 6. Designing an effective marketing/advertising campaign for

a new product or service Marshalling (McGee et al. 2009)

7. Getting others to support your vision and plan for the new business

8. Networking with others-i.e., making contact with and exchanging information

9. Clearly and concisely explaining your business idea in everyday terms to relevant stakeholders/parties

Implementing people (McGee et al. 2009)

10. Supervising your subordinates 11. Recruiting suitable employees 12. Delegating tasks and responsibilities to your employees 13. Dealing effectively with day-to-day problems/crises

faced by your employees 14. Inspiring, encouraging, and motivating your employees 15. Training employees

Implementing finance (McGee et al. 2009)

16. Estimating the amount of start-up funds and working capital requirement for your business

17. Organising and maintaining the financial rewards of your business

18. Managing the financial assets of your business 19. Reading and interpreting financial statements

Coping with unexpected challenges (DeNoble, Jung & Ehrlich 1999)

20. Working productively under continuous stress, pressure and conflict

21. Tolerating unexpected changes in business conditions 22. Persisting in the face of adversity

On the whole, the scale measures the level of confidence the entrepreneurs have in their

ability to undertake entrepreneurial activities (see Table 5.3). This 22-item scale

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measures the entrepreneurial self-efficacy construct that incorporates the following

entrepreneurship dimensions: searching, planning, marshalling, implementing people,

implementing finance, and coping with unexpected challenges. Participants were asked

to rate themselves on a 7-point Likert scale (1= “not at all confident”, 7 = “highly

confident”).

5.2.3 Entrepreneurial behavioural activities

Unlike entrepreneurial intention or orientation, an entrepreneur’s behaviour is action-

based (Moruku 2013). According to Bird and Schjoedt (2009), behaviour includes

entrepreneurs’ activities and their responses. It is important to understand the

entrepreneurship process in order to appreciate the role played by an entrepreneur. This role can

be better understood if the entrepreneur’s activities can be investigated objectively. Baron

(2002) notes that there are three distinct phases involved in the creation of a new

venture, namely pre-launch, launch and post-launch. For each stage, Baron highlights

some of the activities to be undertaken. Since this study focuses on entrepreneurs who

have already launched their business, the activities engaged in by the entrepreneurs in

the post-launch stage are taken into consideration in the development of the construct.

They include activities in the areas of staffing, marketing, sales strategies,

communication with staff and stakeholders, and leadership (Baron & Markman 2000;

Baron 2002; Vecchio 2003).

In an attempt to define entrepreneurs’ behaviour, Bird, Schjoedt and Baum (2012)

examine the taxonomy (types of behaviour) and partonomy (parts of behaviour) of the

behavioural construct. Bird, Schjoedt and Baum (2012) find that most studies have

measured the construct by the use of single-item and summed binary measures, and in

some cases, only limited studies have used a multi-item interval scale. They also find

that most of these behaviours measured are self-reported, and with the exception of a

few studies, they find that the construct validity has not been comprehensively assessed.

Due to these limitations, it was difficult to operationalise the construct using previous

studies.

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However, a very exciting proposition was made by Luthans, Envick and Anderson

(1995), where the authors take an idiographic approach to researching behaviour due to

the limitations of the nomothetic approach that was commonly used in organisational

behaviour, management and entrepreneurship disciplines. The authors suggested a four-

step process to identify and measure entrepreneurs’ behaviour. First, they recommend

conducting an unstructured direct observation of entrepreneurs’ behaviour. Second,

they recommend following up the observations by post-log interviews to make sure that

the behaviours were accurately observed and represented the entrepreneurs’ activities.

Having made a list of behaviour activities, the authors suggest that the third step would

be to use the Delphi technique to categorise the behaviour, and fourth would be to use

structured observation to measure the frequency of the identified behaviour.

The behavioural activities chosen for the current study are mainly from Luthans and

Ibrayeva (2006). They used the four-step process suggested by Luthans, Envick and

Anderson (1995) and developed a list of observed behaviours. They employed

unstructured and structured observations of the entrepreneurs and identified

entrepreneurs’ behaviour by noting down the activities the successful entrepreneurs

engaged in. They also checked the relative frequency of these behaviours. By noting

down observed behaviours and their frequencies, Luthans and Ibrayeva (2006) did what

Bird and Schjoedt (2009) suggested later on in a different context when they observed,

“behaviours are best understood as discrete units of action that can be observed by

others, and which are “sized” to be meaningful.” Further, the observations by Luthans

and Ibrayeva (2006) were undertaken in a transition economy, and therefore were closer

to the context of my study, i.e., an emerging economy.

The dimensions identified in the Luthans and Ibrayeva (2006) study were used to create

the behavioural scale for the current study. These were 1) planning, 2) controlling, 3)

internal communication, 4) human resource management 5) work-related tasks, 6)

customer service, 7) socialising and 8) politicking. The behavioural activities that the

entrepreneur engaged in during working hours that were not central to the business

operations were not included in this study, activities such as talking with family and

friends, reading the newspaper and watching TV for pleasure. Luthans and Ibrayeva

(2006) had identified these as ‘on-job personal time’.

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The scale developed for my study took into account suggestions made by researchers

(Bird, Schjoedt & Baum 2012; Luthans, Envick & Anderson 1995; Bird & Schjoedt

2009) in three ways: a) to use behaviour activities that were observed and not just self-

reported, b) to use a multi-dimensional scale, and c) not to create one composite score

for the whole entrepreneurial behavioural activities construct.

Table 5.4 below shows the dimensions used to operationalise entrepreneurial

behavioural activities. A 7-point Likert scale is attached to these behavioural items to

test how effectively the respondent can carry out an activity. The exemplars of the

observed behaviours were converted into questions. For example, under the dimension

controlling, Luthans and Ibrayeva (2006) observed the activity “checking the work

done”. In my study, this activity was framed into “making sure the work is done as per

the plan”. Similarly, each item identified under the dimensions of planning, controlling,

and work-related tasks, was converted into activities. For internal communication, the

exemplar given was “talking with employees or a business partner”. This was divided

into two separate activities and given as “interaction with business partner/s” and

“interaction with key employees”. In human resource management, there were only

four activities mentioned in Luthans and Ibrayeva (2006). A fifth one was related to

“involvement in the selection of your employees”, and was added to the questionnaire

for this study.

For the dimension customer service, the items “explaining the product or service to

customers”, and “quoting prices to customers” were covered together under the item

“involvement in sales presentations”. For the dimension socialising, the activity “chit-

chatting about relevant social events” was not written separately since this activity is

inherent in the chosen four activities, namely “socialising with suppliers”, “socialising

with bankers”, “socialising with customers” and “socialising with other partners”.

These items do include all types of socialisation – it could include the sending or

receiving of information between the entrepreneur and the outside party with the aim of

getting to know each other and in this process their discussions could be business or

non-business related, so a separate item on chit-chatting about relevant social events

was not included.

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Table 5.3 Operationalisation of entrepreneurial behavioural activities

Construct (Source) Items

Planning (Luthans & Ibrayeva 2006)

1. Scheduling of appointments with prospective clients 2. Prioritisation of projects/activities 3. Involvement in strategy formalisation

Controlling (Luthans & Ibrayeva 2006)

4. Making sure that the work is done as per the plan 5. Monitoring of financial performance of the venture 6. Inspection of the state of the physical assets/equipment

Internal communication (Luthans & Ibrayeva 2006)

7. Interaction with your business partner/s (e.g. suppliers, distributors etc.)

8. Interaction with key employees 9. Interaction with key customers 10. Participation in venture-related meetings

HR management (Luthans & Ibrayeva 2006)

11. Involvement in the selection of your employees 12. Involvement in the training of your employees 13. Involvement in socialisation with your employees 14. Providing guidance to your employees 15. Inspiring employees to achieve higher goals

Work-related tasks (Luthans & Ibrayeva 2006)

16. Involvement in dealing with invoices 17. Involvement in pricing decisions for the key customers 18. Involvement in negotiations with your suppliers

Customer service (Luthans & Ibrayeva 2006)

19. Involvement in sales presentations (e.g. explaining the product or service to customers)

20. Involvement in the selling of your products/services 21. Handling customer complaints

Socialising (Luthans & Ibrayeva 2006)

22. Socialisation with suppliers 23. Socialisation with bankers 24. Socialisation with customers 25. Socialisation with other business partner/s

Politicking (Luthans & Ibrayeva 2006): Items 26, 28, 29. (Elg, Schaumann & Ghauri 2012): Item 27

26. Calling on government officials 27. Lobbying government officials 28. Lobbying elected officials 29. Discussing political issues related to business with

business associations/professional bodies

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For the final dimension politicking, another item was included which was not in the

Luthans and Ibrayeva study (2006). This item was “lobbying with government

officials”. In India, government departments are complex, and therefore liaising with

relevant government officials becomes necessary (Elg, Schaumann & Ghauri 2012).

Therefore, my study has also included the item “lobbying with government officials”

which is different from “lobbying with elected officials”.

The scale is made up of 29 items, and is used to examine the effectiveness of the

entrepreneur in engaging in each of the activity ranges from “not well at all = 1”, to

“extremely well = 10”, where the mid-point 4 = moderately well. The response scale

also includes “NA”, which the respondent can circle if any of the behaviours is not

applicable to them.

5.2.4 Entrepreneurial information overload (EIO)

To the best of the researcher’s knowledge, information overload (IO) has not been

examined in the entrepreneurship domain. Information overload implies that the

information processing demands more of the entrepreneur’s time and capacity than is

available for the entrepreneur to process the information. This construct has been

examined and applied in disciplines such as psychology (Miller 1956), organisation

science (see Galbraith 1974; Wetherbe 1991), marketing (Keller & Staelin 1987; Hunter

2004; Klausegger, Sinkovics & Zou 2007), accounting (Swain & Haka 2000) and

management information systems (Schultze & Vandenbosch 1998). To capture a clear

and comprehensive view of this issue and its effect on the entrepreneur, the construct

for this study was adapted from Hunter and Goebel (2008), who examined the impact of

information overload on sales performance. Their construct of information overload

consisted of questions relating to sales presentation, product information, sales

techniques and how the volume of this information overwhelmed or frustrated a

salesperson. Since Hunter and Goebel’s (2008) measures focus on the impact of IO for

salespeople, the items were reworded and made relevant for the context of the

entrepreneurship study in the form of EIO, which was operationalised in terms of 7

items. These items are shown below in table 5.4.

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Table 5.4 Operationalisation of entrepreneurial information overload

1. I feel overwhelmed due to the amount of information to be considered for making business decisions.

2. I am unable to handle the amount of information that I receive in a typical work week for making the best possible work-related decisions.

3. The amount of information that I process makes me feel stressed. 4. I feel stressed that I am losing control of the business operations because of the

volume of information that I have gathered. 5. The amount of information that I have to deal with in order to make decisions

for business growth is overwhelming. 6. The amount of available information delays my response to competitors’

actions in the market. 7. I often miss important deadlines due to the availability of an overwhelming

amount of information.

The construct of EIO measures the effects of information overload on the entrepreneur

and the activities he/she has to undertake. A sample item is “I feel overwhelmed due to

the amount of information to be considered for making business decisions”. The

response format used is a 7-point Likert scale where 1= “strongly agree” and 7=

“strongly disagree”. The EIO scale consists of 7 items designed to measure the effects

of information on the entrepreneur and the activities he/she undertakes.

5.2.5 Firm and entrepreneur related questions

There were three questions in this section. The first two questions were related to the

demographics of the firm. The third question was related to the profile of the

entrepreneur.

5.2.5.1 Firm demographics

In addition to the key variables under study, participants were asked to indicate the

number of employees in the firm at the time of filling out this survey and the industry.

The number of employees is considered a proxy for the size of the firm. The industry

categories were taken from the New Zealand Statistics website. Respondents had to

tick the appropriate box. To accommodate any business that is not in the listed

category, a separate option labelled ‘others, please specify’ was made available.

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5.2.5.2 Firm details

This question was designed to capture more firm details such as when the company was

founded, the industry/ies the firm operates in, international presence, total sales, and

assets owned.

5.2.5.3 Demographics

The next sets of questions were designed to gather the entrepreneur’s demographic

characteristics. There were a total of eleven items in this section. This included details

about the entrepreneur’s ownership of the business, experience, age and level of

education.

5.3 Developing and validating the survey instrument

Before finalising the survey instrument, I consulted academics and

practicing entrepreneurs both in New Zealand and in India. Their feedback was

gathered to confirm appropriate measures used in the questionnaire. To enhance the

validity of the survey instrument, the preliminary questionnaire was sent to the senior

academics with expertise in the field of entrepreneurship in New Zealand and in India

for their feedback on the questionnaire phraseology. They were asked to comment on

whether the questions were easy to understand (i.e. free of jargon, inappropriate

assumptions), whether the instructions were clear, whether the questions were biased or

leading and so on.

The questionnaire was finalised following advice and feedback received from the

academics and practicing entrepreneurs. On receiving feedback, two main things were

done. First, the wording of a number of ambiguous questions was changed. Second, the

question on academic qualification was designed to suit the Indian education system.

Once the questionnaire was ready, it was submitted to the Swinburne University of

Technology ethics committee. After receiving the ethics approval, it was distributed.

The questionnaire consists of parts relating to the key constructs of entrepreneurial self-

efficacy, entrepreneurial behavioural activities, entrepreneur’s personality, information

overload, and sample characteristics. Items in each part will be measured using Likert

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scales or closed-ended questions. Apart from these, demographic data about the

respondents were also included.

5.3.1 Time allocated to answer for each question

Table 5.5 shows the approximate time allocated for respondents to answer the questions

in each section. While the table indicates that the approximate time allocated to filling

the survey is 35 minutes, it would take the respondents another 10 minutes to read the

cover letter attached to the survey.

Table 5.5 Time allocated to answer for each section

Section Administration time Entrepreneurial self-efficacy 8 minutes Effectiveness of entrepreneurial behavioural activities

10 minutes

Personality characteristics 4 minutes Entrepreneurial information overload 3 minutes Firm performance 5 minutes Demographics 5 minutes Approximate time to answer the survey 35 minutes

5.4 Sample selection

The aim of this study was to empirically test the relationships among the

entrepreneurship-related variables identified in the literature review with the focus being

to generalise the results. The theoretical basis for this study, developed in Chapter 4,

shows the hypothesis to be tested. Accordingly, I sought to examine the relationships

between the entrepreneur’s personality characteristics, entrepreneurial self-efficacy, and

entrepreneurial behavioural activities in the context of entrepreneurial information

overload faced by these entrepreneurs.

For the purpose of this study, I have used the definition of an entrepreneur as proposed

by Carland et al. (1984) to guide sample selection. They describe an entrepreneur as

“an individual who establishes and manages a business for the principal purpose of

profit and growth” (p.358). The focus is on India, a large emerging market. India is a

very big country with a culturally diverse population and is home to many millions of

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entrepreneurs (Government of India 2014b). Therefore, sample selection and size are

major concerns in this study.

The sample was drawn from among practicing entrepreneurs based in India. I used a

broad definition of entrepreneurs as those who owned and also actively managed their

business ventures (Stewart & Roth 2001; Rauch & Frese 2007). The sample comprised

of owner–managers of firms in India. For this purpose, potential respondents were

selected from the list of entrepreneurs, who are members of business and social

organisations like the Confederation of Indian Industry (CII) and Rotary Clubs. Since I

am originally from India, I have personal contacts, which I used for this purpose. From

these sources, an initial sample of about 1100 owner-managers of businesses was

randomly selected.

I also had some preliminary discussions with academics of a few universities,

entrepreneurs and local business organisations in India during the months of December

2009 and January 2010 when I visited India to attend an international conference in

Delhi. In my discussions with the academics in the field of entrepreneurship, it also

became evident that my area of research had not been covered. They have a wide

network of entrepreneurs, small businesses and local business and trade organisations,

and have principally agreed to provide the necessary contacts and other support required

to facilitate the collection of data.

To get a good representation of this vast country, I ambitiously distributed the

questionnaires in all parts of India: West, East, South and North. The cities that were

included in the survey were New Delhi, Calcutta, Ahmadabad, Bangalore, Chennai, and

Coimbatore.

For this study, I have used the methods suggested by scholars to increase response rates:

a covering letter or pre-notification letter, follow-ups, reminder mails, and return

envelope with stamps (Fox, Crask & Kim 1988; Kanuk & Conrad 1975). Another

method suggested was drop-and-collect surveys (Brown 1987). The drop and collect

survey technique is a cheap and fast way of collecting responses (Brown 1987). I have

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used this approach in some cases where the entrepreneurs were busy and wanted some

time to complete their questionnaires.

A covering letter with the questionnaire was to introduce the purpose of the research

and request participation. The questionnaires were hand-delivered through friends,

business people, and academics. In some cases, hard copies were mailed to

academics/business friends in a particular city, who then helped out distributing the

surveys. Where respondents were unable to fill in the responses immediately, they

were asked whether they were happy to keep it ready for collection, or if they wished,

they could send it back by surface mail. In such cases, they were handed a postage-paid

return envelope. For the respondents who were happy to keep it ready for collection, the

people who distributed them earlier personally picked them up. So we used different

methods such as hand delivery and personal pick-up, hand delivery and postal return,

postal delivery and postal return, as well as postal delivery and personal pickup.

For the surveys where the respondents had chosen to return them by mail, the initial

distribution was followed after one month by a reminder which mailed another copy of

the questionnaire along with a general follow-up letter and a phone call. Previous

studies that used mail questionnaires reported a response rate ranging from 20%-100%

(Kanuk & Conrad 1975), and by using the drop and collect survey method, the response

rate was up to 70% (Brown 1987). Since in many cases the questionnaire was given out

by both friends and academics, there was a higher response rate. I received over 650

responses. However, after the initial screening of the questionnaires, I had only 403

usable responses. The details of the final sample selection may be seen in Table 5.6.

Table 5.6 Final response number Total number of surveys given out 1100

Returned filled out responses 650

Response rate for all returned surveys 59%

Total responses usable for data entry 403

Response rate for usable surveys 37%

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While screening the data collected, care was taken to identify any outliers. Osborne and

Overbay (2004) remind researchers of the importance to check for outliers and exclude

these since they have the potential to cause extreme scores in a data set. However, not

all outliers may be illegitimate contaminants of the data set (Barnett & Lewis 1994);

therefore I inspected each filled-in survey and used only 403 out of the 650 returned

surveys. While each survey was inspected, some of the surveys were not used because

they were insufficiently completed, as the respondents had not filled in some key

sections or in some cases they had put in multiple responses. In some cases, the

respondents appeared to not be serious about filling the form in and felt they just had to

fill it in, perhaps, because the form had been passed on to them from their friends.

Although care was taken with the wording, readability and understandability of the

questions, it seemed that some respondents had not understood what was required of

them. The surveys received from the rural areas mainly had these problems, which

could be due to low levels of education and literacy. Most of these respondents were

either not educated or educated in their local languages, while the surveys handed out

were in English only.

Outliers can also be caused due to data recording errors (Osborne & Overbay 2004). So

once the data were entered into SPSS, the records were checked a second time to ensure

that the data entry was correctly done. Care was also taken not to misrepresent any

data. Since Hayes’ (2013) procedure for the regression-based path analysis involves

boot strapping, it takes care of the potential problems that may arise due to non-normal

sample. Therefore a normality test was not required.

Table 5.7 shows a breakup of the responses received from the various cities taken in this study.

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Table 5.7 Geographical distribution of responses of the sample

Region covered

State/ Union Territory

City Number of responses

North Union Territory New Delhi 10

Punjab Chandigarh 7

West Gujarat Ahmadabad 39

Maharashtra Mumbai 2

East West Bengal Kolkata 95

South Tamil Nadu Chennai 28

Coimbatore 59

Karnataka Hosur 12

Bengaluru 127

Andhra Pradesh Hyderabad 24

Total 403

Baruch (1999) mentions the importance of reporting the response rate, since this

information helps clarify the validity of a study, and this includes taking into account

the difference between returned and usable questionnaires. He finds that in most cases,

the unusable questionnaires are due to missing data and usually the percentage of such

unusable questionnaires is negligible. However, he also acknowledges that the

difference can be significant in some cases, as seen in my current study. However, our

final sample of 403 meets the requirements of being just over 3 times the number of

items (128 items x 3 = 384 respondents) as mentioned by Cattell (1978) and Gorsuch

(1983). This sample of 403 is also above the range of 100 to 400 recommended by Hair

et al. (1995) for factor analytic studies. Further explanation regarding the sample is

given in 5.7.1.

5.5 Statistical analyses

The quantitative data collected were analysed statistically using SPSS which helps the

researcher complete calculations at the click of a button. The data collected were firstly

examined for completeness. Codes were given to each item on the questionnaire (see

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Table 5.8) and the data were defined and entered into SPSS. The next step was to

provide the logical dimensions of validity (content validity) by subjecting the data to an

exploratory factor analysis, and then its statistical dimension of reliability (construct

validity) was checked. In order to investigate our theoretical model and to examine the

relationships between variables, regression-based path analysis was used.

Table 5.8 Abbreviation used in coding

Abbreviation Definitions

PC Personality characteristics PCnAch Personality characteristic of need for achievement PCLoC Personality characteristic of internal locus of control PCRisk Personality characteristic of risk-taking propensity ESE Entrepreneurial self-efficacy Search Entrepreneurial self-efficacy dimension of searching Plg Entrepreneurial self-efficacy dimension of planning Mrsh Entrepreneurial self-efficacy dimension of marshalling Impple Entrepreneurial self-efficacy dimension of implementing people

related tasks Impfin Entrepreneurial self-efficacy dimension of implementing finance

related tasks Copch Entrepreneurial self-efficacy dimension of coping with unexpected

challenges EBA Entrepreneurial behavioural activities BhvPlg Entrepreneurial behavioural activity of planning BhvCon Entrepreneurial behavioural activity of controlling BhvCom Entrepreneurial behavioural activity of internal communication BhvHRM Entrepreneurial behavioural activity of human resources

management BhvTas Entrepreneurial behavioural activity of work-related tasks BhvSer Entrepreneurial behavioural activity of customer service BhvSoc Entrepreneurial behavioural activity of socialising BhvPol Entrepreneurial behavioural activity of politicking EIO Entrepreneurial information overload

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5.5.1 Review of sample size based on validity and reliability

An important issue of any quantitative study that affects the validity and reliability of

the instrument and determines the suitability of data for factor analyses depends on the

sample size. An adequate sample allows for findings to be generalised (Carmeli 2008).

MacCullum et al. (1999) and Fabrigar et al. (1999) argue that an adequate sample size

depends on factors such as type and number of variables and the overall structure of the

research. For instance, the properties of the variables should be taken into account when

deciding sample size (Fabrigar et al. 1999). They suggest that under good conditions

(communalities of .70 or higher), a sample of 100 might be enough, and under poor

conditions, no sample size may be sufficient to give accurate generalisation of the

population. However, the authors believe that a sample less than 400 will lead to

distorted results. Many scholars recommend that the ratio of sample size to the number

of variables should be at least three to six times the number of items, with five being the

most ideal (Cattell 1978; Gorsuch 1983). Gorsuch (1983) recommended that the sample

size should be at least 100, while others (Comrey & Lee 1992) urge researchers to

obtain a sample of at least 500 or more. A sample size in the range of 100 to 400 has

been considered as appropriate for factor analytic studies (Hair et al. 1995). In this

study, I have obtained an effective sample size of 403, and based on the

recommendations of scholars (MacCallum et al. 1999; Fabrigar et al. 1999; Hair et al.

1995), this could be considered sufficient. The indicators used to measure the

constructs have been evaluated using validity tests and reliability tests as discussed in

the next section.

5.5.1.1 Validity

Validity refers to “the degree to which a measure measures what it is supposed to be

measuring” (Webb 2000, p. 216). The validity test is done to ensure that the

variables/items have also measured the construct as was intended so that the study can

rely on the answers the respondents provide. Kidder and Judd (1986) recommend that

every survey instrument must pass face validity, either formally or informally. While

the measures used in my study were taken from previous studies that have used the

same scales, the conceptual framework of my study brings together the constructs in a

different context to be applied in a different scenario, and a face validity test was also

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done. Accordingly, in my study, the content or face validity is assessed by a group of

academics and practicing entrepreneurs in both countries, India and New Zealand.

Further, exploratory factor analysis (EFA) was used. EFA is used to identify a set of

latent constructs underlying a range of measured variables (Fabrigar et al. 1999). This

can be done without imposing a preconceived structure on the outcome (Child 1990).

Fabrigar et al. (1999) recommend the use of EFA when the communalities are low and

where there are modest numbers of measured variables per factor, since EFA produces

more accurate results. They also recommend using EFA when there is an insufficient

basis to specify an a priori model. Accordingly, in this case, EFA was carried out using

SPSS 20.0. EFA allows for determining an appropriate number of factors as well as the

pattern of factor loadings. For this purpose, the Maximum Likelihood (ML) method of

factor extraction is used. Using the ML estimation for EFA allows extracting a vast

array of goodness-of-fit information that can be further used to determine the

appropriate number of factors (Fabrigar et al. 1999).

Fabrigar et al. (1999) also suggest that factors be rotated in multidimensional space,

which will help explain the data well and arrive at a solution with the best simple

structure. In this study, oblique rotations have been used so as to estimate the

correlations among factors, thereby providing solutions with correlated factors. Oblique

rotations are shown to “provide a more accurate and realistic representation of how

constructs are likely to be related to one another” (Fabrigar et al. 1999). Gorsuch

(1983) advises using oblique over orthogonal rotation as a general approach to

achieving solutions with simple structure. The Promax method of oblique rotation

suggested by Hendrickson and White (1964) was used in my study.

5.5.1.2 Reliability

Scale reliability is concerned with the extent to which a measuring procedure

consistently yields the same results on repeated trials (i.e when the measure is used over

and over again) (Peters 2002; Webb 2000). When the survey instrument is free from

error, it will yield consistent results (Peterson 1994). One way to check this is to assess

the survey instrument by the test-retest method. This method was not practically

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feasible to use in this study. Therefore, to ensure reliability, the internal consistency test

could be used (Kerlinger 1986). Internal consistency of the scales used in the survey

may be assessed by item to total correlation and co-efficient alpha (Cronbach 1951).

The item to total correlation examines the coherencies of the responses of each item in

relation to the other items and the entire survey. For the scale to be reliable, all items

should correlate with the total. The acceptable value of an item to a total correlation

should be 0.3 and above. Where the item to total correlation is less than 0.3, this means

that the particular item in question does not correlate very well with the overall scale.

In this context, the item to correlation for each item should be examined along with the

new Cronbach’s alpha value if the item was deleted. Cronbach alpha is a popularly

used measure for internal consistency of a multi-item scale (Peterson 1994). The

threshold criteria for Cronbach alpha in most studies follow Nunnally’s (1978)

suggestion of .70 or higher for reliability. Nevertheless, Peterson (1994) observes that

Cronbach himself advocates that criteria of .50 and .30 are also acceptable. In this

study, I have applied a threshold value of .70, which meets the higher threshold

suggested by Nunnally (1978).

5.5.2 Data analysis

Initially, data are described with the aim of providing a summary picture of the sample

used. This has been done using descriptive statistics. Here, the sample has been

described in terms of their age, gender and qualifications to better understand the

entrepreneurs in the study. Regression-based path analysis was employed to investigate

the relationships between variables as proposed in the hypothesis, based on the

theoretical model discussed in Chapter 4. Here, multiple regressions are used because

this technique “allows additional factors to enter into the analysis separately so that the

effect of each can be estimated” (Sykes 1993, p. 8). Regression allows for estimating

the quantitative effect of the casual variable on the dependent variables, and the

statistical significance of the estimated relationships can also be assessed. The degree

of confidence noted enables the hypothesis to be tested.

Based on the literature review, path one examines the association between the

personality traits and entrepreneurial self-efficacy. Path two examines the association

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between entrepreneurial self-efficacy and entrepreneurial behaviour. Path three

examines the association between personality traits and entrepreneurial behaviour.

Paths four and five examine the association between entrepreneurial information

overload and dimensions of entrepreneurial self-efficacy and entrepreneurial

behavioural activities respectively.

5.6 Chapter summary

This chapter elucidates the research methods used in the current study. It explains the

sampling technique used, as well as the size and response rate. The face validity of the

survey instrument has been described. The reliability and validity analyses carried out

in the study are described. Finally, the statistical and analytical tools used in the study to

test and interpret the hypotheses are also elaborated on.

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CHAPTER 6

RESULTS AND DISCUSSION

This chapter discusses the relationships between various categories of variables relating

to entrepreneurs’ personality characteristics, entrepreneurial self-efficacy,

entrepreneurial behaviour and entrepreneurial information overload. The data were

collected by administering questionnaires between 8 February 2012 and 30 December

2012 in major cities in India. To analyse the data collected, the IBM SPSS 20.0

statistical computational package was used. The results and analysis are presented in

this chapter in four parts. First, the sample characteristics are collated and presented.

Second, a discussion on the measurement properties, which includes the reliability and

validity tests, is presented. Third, the results of regression analyses conducted for

hypothesis testing are reported. Fourth, the results have been analysed to gain insights

into the relationships between variables proposed in the conceptual framework.

6.1 Sample characteristics

As discussed in Chapter 5, a total of 650 responses was received, but only 403 were

found to be usable for data entry. The respondents were business owner-managers,

consisting of 63% of founder-owners, 29.3% of owners inheriting their business, 26%

who bought the business from others and 1.2 % who became owners of the business by

other means such as stock options. The demographic characteristics of the respondents

are presented in Table 6.1.

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Table 6 .1 Sample Demographics (n=403)

Characteristics Category Frequency Percent Gender (n=401) Male 355 88.5

Female 46 11.5 Age (n=402) 21-25 years 23 5.7

26-30 years 33 8.2 31-35 years 68 16.9 36-40 years 72 17.9 41-45 years 68 16.9 46-50 years 62 15.4 51-55 years 38 9.5 56-60 years 18 4.5 61-65 years 11 2.7 > 66 years 9 2.2

Education (n=401) No formal qualification

12 3

Secondary school qualification

24 6

Undergraduate diploma

16 4

Bachelor’s/Graduate diploma

164 40.9

Bachelor’s Honours/PG diploma

54 13.5

Master’s degree 125 31.2 Doctorate 6 1.5

6.1.1 Firm characteristics

Table 6.2 gives the breakup of the industry sector which the respondents’ businesses

belong to. Although there is a good representation from various industries, there is a

higher representation of firms in the service industry. For example, education and

training (16.4), wholesale/retail trade (12.9%) and IT (10.2 %) constituted the bulk of

the sample.

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Table 6 .2 Characteristics of the respondents’ firms (n=403) Firm details Industry sector the business belongs to Frequency Percent

Agriculture, Forestry & Fishing 19 4.7 Accommodation, cafes & restaurants 28 6.9 Transport and warehousing 32 7.9

Financial and insurance services 16 4

Administrative and support services 11 2.7 Arts and recreation services 15 3.7 Electricity, gas, water supply 24 6 Construction 33 8.2 Information,media and telecommunications 41 10.2 Property and real estate 40 9.9 Health care and social assistance 26 6.5 Mining and manufacturing 19 4.7 Wholesale/Retail trade 52 12.9 Education and training 66 16.4 Tourism and hospitality 21 5.2 Others 17 4.2

6.2 Measurement properties

Scholars attest that the ability to test the hypotheses and the quality of inferences

depend on the procedures that were used to develop the measures, the survey

instrument, and evidence that the measures are of good quality (see Churchill 1979;

Webb 2000; Peters 2002). While the survey questions were checked for the wording,

layout and applicability to the context of the study, the measurements used should also

be assessed for their reliability and validity. Churchill (1979) and Webb (2000) remind

us that the measurements should not only be tested for reliability, but also validity, since

a valid measure will always be reliable, but a reliable measure may not be valid.

Accordingly, once the data were collected, the measurement was subjected to both

validity and reliability tests.

To establish the psychometric properties of the measures used in our study, I conducted

reliability and validity analysis. For the purpose of reliability analysis, first I looked at

the correlations among all the items to see that they were highly correlated within the

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construct and differentiated from other constructs. After this, I calculated Cronbach’s

Alpha for each construct and checked for item-to-total correlation. The results of this

are presented in the following tables under the section reliability analysis.

6.2.1 Reliability analysis

Coefficient alpha is the most used and well established measure to examine the internal

consistency of a set of items (Churchill 1979; Nunnally 1978; Peters 1979). Churchill

(1979, p.68) suggests that “coefficient alpha absolutely should be the first measure one

calculates to assess the quality of the instrument”. A higher co-efficient alpha indicates

that the sample of items captures the construct it is intended to capture, and the items in

the pool share a common core. Churchill (1979) states that if the alpha is low, it means

that the sample of items is not successful in capturing the construct which motivated the

measure, and suggests that if the item pool is sufficiently large, the items that do not

share equally the common core should be eliminated. He recommends calculating the

correlation of each item with the total score and plotting these correlations in decreasing

order of magnitude, and eliminating any item with correlations near zero. Also he

suggests removing the items which cause a substantial or sudden drop in the item-to-

total correlations. I have followed this procedure, and present the results in the next

section.

6.2.1.1 Reliability test for Entrepreneurial Self-efficacy

Table 6.3 presents the correlation matrix for entrepreneurial self-efficacy, and Table 6.4

shows the reliability analysis results for measures of the entrepreneurial self-efficacy

construct.

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162

Table 6.4: Reliability Analysis Results for Measurement Scales in the Study of Entrepreneurial Self Efficacy

Scale Items Mean Std Deviation

Item to total correlation

Cronbach’s Alpha

Searching Search1 5.00 1.47 .68 Search2 5.28 1.32 .73 Search3 5.27 1.30 .63 .82 Planning Plg1 5.21 1.25 .61 Plg2 5.15 1.26 .62 Plg3 5.01 1.36 .56 .77 Marshalling Mrsh1 4.99 1.37 .59 Mrsh2 5.19 1.32 .60 Mrsh3 5.14 1.33 .57 .76 Implementing people-related tasks

ImP1 5.26 1.36 .61

ImP2 5.26 1.28 .72 ImP3 5.4 1.25 .69 ImP4 5.33 1.21 .63 ImP5 5.46 1.19 .68 ImP6 5.28 1.30 .62 .86 Implementing finance- related tasks

ImF1

5.19 1.30 .66

ImF2 5.23 1.30 .74 ImF3 5.18 1.36 .75 ImF4 5.13 1.31 .68 .86 Coping with unexpected challenges

Cop1 5.21 1.26 .63

Cop2 5.12 1.26 .76 Cop3 5.23 1.27 .65 .82

As can be seen from the information presented in the above tables, Cronbach’s Alpha

exceeded the minimum requirement of .70 for all constructs, and item to total

correlation exceeded .30 for all items. This meets the requirements suggested by

Nunnally (1978).

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6.2.1.2 Reliability test for entrepreneurial behavioural activities

Table 6.5 presents the correlation matrix for entrepreneurial behavioural activities, and

Table 6.6 shows the reliability analysis results for measurement scales for the

entrepreneurial self-efficacy construct.

164

165

Table 6.6 Reliability Analysis Results for Measurement Scales in the Study of Entrepreneurial Behavioural Activities



Cronbach’s Alpha

Planning BehPlg1 5.11 2.46 .33 BehPlg2 5.08 1.25 .52 BehPlg3 5.10 1.29 .44 .66 Controlling BehCon1 5.25 1.24 .59 BehCon2 5.08 1.32 .69 BehCon3 5.01 1.32 .66 .80 Internal Communication

BehCom1 5.32 1.28 .63

BehCom2 5.41 1.29 .72 BehCom3 5.47 1.22 .69 BehCom4 5.03 1.33 .55 .82 HR Management BehHRM1 5.13 1.36 .62 BehHRM2 5.14 1.28 .69 BehHRM3 4.94 1.40 .66 BehHRM4 5.26 1.26 .76 BehHRM5 5.26 1.27 .63 .86 Work-Related Tasks

BehTas1 4.98 1.40 .59

BehTas2 5.40 1.24 .70 BehTas3 5.30 1.30 .69 .81 Customer Service

BehSer1 5.30 1.32 .65

BehSer2 5.30 1.35 .72 BehSer3 5.23 1.32 .54 .79 Socialising BehSoc1 4.94 1.4 .68 BehSoc2 5.07 1.43 .77 BehSoc3 5.20 1.32 .73 BehSoc4 5.18 1.34 .66 .86 Politicking BehPol1 4.80 1.56 .74 BehPol2 4.63 1.76 .87 BehPol3 4.62 1.77 .86 BehPol4 4.67 1.69 .77 .92

As can be seen from the information presented in Table 6.6, Cronbach’s Alpha

exceeded the minimum requirement of .70 for all constructs except for planning. For

the construct of planning, the Cronbach’s Alpha value is .66. It is slightly less than the

cut-off value of .70. However, I decided to continue with this for further analysis

because the items for this scale were drawn from the existing literature (Luthans &

Ibrayeva 2006). Further, the item to total correlation exceeded .30 for all items.

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6.2.1.3 Reliability test for personality characteristics

Table 6.7 presents the correlation matrix for personality characteristics, and Table 6.8

shows the reliability analysis results.

Table 6.7 Correlations Matrix for Personality Characteristics

nAch1 nAch2 nAch3 LoC1 LoC2 LoC3 LoC4 Risk1 Risk2 Risk3 Risk4 nAch1 1 nAch2 .63*** 1 nAch3 .52*** .62*** 1 LoC1 .39*** .44*** .49*** 1 LoC2 .47*** .50*** .45*** .48*** 1 LoC3 .31*** .35*** .35*** .43*** .52*** 1 LoC4 .51*** .48*** .47*** .42*** .57*** .60*** 1 Risk1 .40*** .45*** .46*** .43*** .48*** .43*** .52*** 1 Risk2 .38*** .47*** .45*** .32*** .49*** .38*** .46*** .62*** 1 Risk3 .18*** .40*** .39*** .33*** .35*** .37*** .33*** .53*** .56*** 1 Risk4 .19*** .39*** .37*** .34*** .34*** .36*** .35*** .51*** .51*** .76*** 1

*** Correlation is significant at the .000 level

Table 6.8: Reliability Analysis Results for Measurement Scales in the Study of Personality Characteristics



Cronbach’s Alpha

Need for Achievement

nAch1 5.24 1.41 .64

nAch2 5.10 1.36 .72 nAch3 5.10 1.37 .63 .82 Internal Locus of control

LoC1 4.84 1.28 .53

LoC2 5.27 1.29 .65 LoC3 4.89 1.40 .64 LoC4 5.10 1.28 .66 .83 Risk-taking Propensity

Risk1 4.85 1.45 .64

Risk2 4.82 1.42 .66 Risk3 4.54 1.52 .74 Risk4 4.64 1.53 .78 .85

As can be seen from the information presented in the above tables, Cronbach’s Alpha

exceeded the minimum requirement of .70 for all constructs of personality

characteristics, and item to total correlation exceeded .30 for all items. Therefore, all

the items were retained in the scale.

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6.3.1.4 Reliability test for entrepreneurial information overload

Table 6.9 Correlations Matrix for Entrepreneurial Information Overload

EIO1 EIO2 EIO3 EIO4 EIO5 EIO6 EIO7 EIO1 1 EIO2 .43*** 1 EIO3 .30*** .62*** 1 EIO4 .26*** .61*** .66*** 1 EIO5 .48*** .43*** .49*** .54*** 1 EIO6 .24*** .45*** .54*** .54*** .56*** 1 EIO7 .25*** .52*** .57*** .59*** .45*** .67*** 1 **. Correlation is significant at the 0.000 level (2-tailed).

Table 6.10: Reliability Analysis Results for Measurement Scales in the Study of

Entrepreneurial Information Overload (EIO) Scale Items Mean Std

Deviation Item to total correlation

Cronbach’s Alpha

Entrepreneurial Information Overload

EIO1 4.18 1.54 .32

EIO2 3.71 1.53 .52 EIO3 3.78 1.45 .56 EIO4 3.61 1.50 .58 EIO5 4.05 1.45 .50 EIO6 3.83 1.51 .55 EIO7 3.64 1.66 .55 .87

As can be seen from the information presented in Table 6.10, Cronbach’s Alpha

exceeded the minimum requirement of .70 for the construct of entrepreneurial

information overload, and item to total correlation exceeded .30 for all items.

6.2.2 Exploratory factor analysis (EFA)

To examine the validity of each measure, EFA was employed. EFA helps identify the

number of constructs and the underlying factor structure. The items were subjected to

Maximum Likelihood Estimation and Promax rotation to discover common factors and

assess the variance explained by the factors of each construct. Factors with an Eigen

value of 1 or more were selected for the purpose of further analysis. For each factor, the

factor loading of more than .5 within the factor and more than .25 between the factors

was considered for the purpose of selection of the factors. Exploratory factor analysis

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was repeated to include each item of all the measures and the findings are given in the

tables below.

6.2.2.1 Factor analysis for all the measures of entrepreneurial self-efficacy

6.2.2.1.1 Searching

As can be seen from Table 6.11 below, EFA results for the construct ‘searching’

showed that searching, as hypothesised, was a uni-dimensional factor. All the three

items were loaded on this factor, and factor loadings ranged from .70 to .86. The total

variance explained by three items of the searching construct is 61.33%.

Table 6.11 Factor Analysis for the Entrepreneurial Self-Efficacy construct of Searching (Search)

Item Correlation Eigen value

Factor Loading

Variance explained Search1 Search2 Search3

Search1 1 2.22 .78 61.33% Search2 .67 1 .86 Search3 .55 .60 1 .70

6.2.2.1.2 Planning

As can be seen from Table 6.12 below, EFA results for the construct ‘planning’ showed

that planning, as hypothesised, was a uni-dimensional factor. All the three items were

loaded on this factor, and the factor loadings ranged from .65 to .77. The total variance

explained by the three items of the planning construct is 52.68%.

Table 6.12 Factor Analysis for the Entrepreneurial Self-Efficacy construct of

Planning (Plg) Item Correlation Eigen

value Factor Loading

Variance explained Plg1 Plg2 Plg3

Plg1 1 2.05 .77 52.68% Plg2 .58 1 .75 Plg3 .49 .50 1 .65

6.2.2.1.3 Marshalling

As can be seen from Table 6.13 below, EFA results for the construct ‘marshalling’

showed that marshalling, as hypothesised, was a uni-dimensional factor. All the three

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items were loaded on this factor, and the factor loadings ranged from .69 to .74. The

total variance explained by the three items of the marshalling construct is 50.84%.

Table 6. 13 Factor Analysis for the Entrepreneurial Self-Efficacy construct of Marshalling (Mrsh)


Factor Loading

Variance explained Mrsh1 Mrsh2 Mrsh3

Mrsh1 1 2.02 .71 50.84% Mrsh2 .52 1 .74 Mrsh3 .49 .51 1 .69

6.2.2.1.4 Implementing people-related tasks

As can be seen from Table 6.14 below, EFA results for the construct ‘implementing

people’ showed that implementing people-related tasks, as hypothesised, was a uni-

dimensional factor. All the six items were loaded on this factor, and the factor loadings

ranged from .67 to .80. The total variance explained by the six items of the

‘implementing people’ construct is 51.73%.

Table 6. 14 Factor Analysis for the Entrepreneurial Self-Efficacy construct of

Implementing People-Related Tasks (ImP) Item Correlation Eigen


Variance explained ImP1 ImP2 ImP3 ImP4 ImP5 ImP6

ImP1 1 3.58 .67 51.73% ImP2 .57 1 .80 ImP3 .53 .69 1 .78 ImP4 .48 .48 .54 1 .67 ImP5 .43 .52 .51 .53 1 .71 ImP6 .41 .52 .43 .44 .65 1 .67

6.2.2.1.5 Implementing finance-related tasks

As can be seen from Table 6.15 below, EFA results for the construct ‘implementing

finance’ showed that implementing finance-related tasks, as hypothesised, was a uni-

dimensional factor. All the four items were loaded on this factor, and the factor

loadings ranged from .72 to .83. The total variance explained by the four items of the

‘implementing finance’ construct is 61.28%.

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Table 6. 15 Factor Analysis for the Entrepreneurial Self-Efficacy construct of Implementing Finance-Related Tasks (ImF)


Factor Loading

Variance explained ImF1 ImF2 ImF3 ImF4

ImF1 1 2.83 .72 61.22% ImF2 .60 1 .82 ImF3 .61 .69 1 .83 ImF4 .53 .62 .62 1 .74

6.2.2.1.6 Coping with unexpected challenges

As can be seen from Table 6.16 below, EFA results for the construct ‘coping with

unexpected challenges’ shows that the construct, as hypothesised, was a uni-

dimensional factor. All the three items were loaded on this factor, and the factor

loadings ranged from .70 to .92. The total variance explained by the three items of the

‘coping with unexpected challenges’ construct is 62 %.

Table 6.16 Factor Analysis for the Entrepreneurial Self-efficacy construct of

coping with unexpected challenges (Cop) Item Correlation Eigen


Variance explained Cop1 Cop2 Cop3

Cop1 1 2.21 .70 62.00% Cop2 .64 1 .92 Cop3 .51 .67 1 .72

6.2.2.2 Factor analysis for entrepreneurial behavioural activities

6.2.2.2.1 Planning

As can be seen from Table 6.17 below, EFA results for the construct ‘planning’ showed

that planning, as hypothesised, was a uni-dimensional factor. All the three items were

loaded on this factor, and the factor loadings ranged from .38 to .88. The total variance

explained by the three factors of the ‘planning’ construct is 45.34 %.

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Table 6.17 Factor Analysis for the Entrepreneurial Behavioural Activities construct of Planning (BehPlg)


Factor Loading

Variance explained BehPlg1 BehPlg2 BehPlg3

BehPlg1 1 1.803 .38 45.54% BehPlg2 .33 1 .88 BehPlg3 .25 .59 1 .67

6.2.2.2.2 Controlling

As can be seen from Table 6.18 below, EFA results for the construct ‘controlling’

showed that the construct, as hypothesised, was a uni-dimensional factor. All the three


total variance explained by the three items of the ‘controlling’ construct is 57.93%

Table 6.18 Factor Analysis for the Entrepreneurial Behavioural Activities

construct of Controlling (BehCon) Item Correlation Eigen


Variance explained BehCon1 BehCon2 BehCon3

BehCon1 1 2.15 .67 57.93%

BehCon2 .56 1 .84

BehCon3 .51 .64 1 .77

6.2.2.2.3 Internal communication

As can be seen from Table 6.19 below, EFA results for the construct ‘internal

communication’ showed that the construct, as hypothesised, was a uni-dimensional

factor. All the four items were loaded on this factor, and the factor loadings ranged

from .58 to .87. The total variance explained by the four items of the ‘internal

communication’ construct is 54.80%.

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Table 6.19 Factor Analysis for the Entrepreneurial Behavioural Activities construct of Internal Communication (BehCom)


Factor Loading

Variance explained Beh

Com1 Beh Com2

Beh Com3

Beh Com4

BehCom1 1 2.62 .69 54.80%

BehCom2 .62 1 .87

BehCom3 .49 .70 1 .80

BehCom4 .48 .44 .50 1 .58

6.2.2.2.4 Human resource management

As can be seen from Table 6.20 below, EFA results for the construct ‘HR management’

showed that the construct, as hypothesised, was a uni-dimensional factor. All the five


total variance explained by the five items of the ‘HR management’ construct is 54.99 %.


construct of HR Management (BehHRM) Item Correlation Eigen


Variance explained Beh

HRM1 Beh HRM2

Beh HRM3

Beh HRM4

Beh HRM5

BehHRM1 1 3.19 .66 54.99% BehHRM2 .57 1 .72

BehHRM3 .53 .69 1 .73

BehHRM4 .48 .48 .54 1 .86

BehHRM5 .43 .52 .51 .53 1 .73

6.2.2.2.5 Work-related tasks

As can be seen from Table 6.21 below, EFA results for the construct ‘work-related

tasks’ showed that the construct, as hypothesised, was a uni-dimensional factor. All the

three items were loaded on this factor, and the factor loadings ranged from .66 to .83.

The total variance explained by the three items of the ‘work-related tasks’ construct is

59.54%

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Table 6.21 Factor Analysis for the Entrepreneurial Behavioural Activities construct of Work-related Tasks (BehTas)


Factor Loading

Variance explained BehTas1 BehTas2 BehTas3

BehTas1 1 2.18 .66 59.54%

BehTas2 .55 1 .83

BehTas3 .54 .68 1 .81

6.2.2.2.6 Customer service

As can be seen from Table 6.22 below, EFA results for the construct ‘customer service’

showed that the construct, as hypothesised, was a uni-dimensional factor. All the three

items were loaded on this factor, and the factor loadings ranged from.59 to .91. The

total variance explained by the three items of the factor is 58.61%.

Table 6.22 Factor Analysis for the Entrepreneurial Behavioural Activities construct of Customer Service (BehSer)


Factor Loading

Variance explained BehSer1 BehSer2 BehSer3

BehSer1 1 2.13 .76 58.61%

BehSer2 .69 1 .91

BehSer3 .45 .54 1 .59

6.2.2.2.7 Socialisation

As can be seen from Table 6.23 below, EFA results for the construct ‘socialisation’

showed that the construct, as hypothesised, was a uni-dimensional factor. All the four


total variance explained by the four items of the ‘socialisation’ construct is 61.23%.

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Table 6.23 Factor Analysis for the Entrepreneurial Behavioural Activities construct of Socialisation (BehSoc)


Factor Loading

Variance explained BehSoc1 BehSoc2 BehSoc3 BehSoc4

BehSoc1 1 2.83 .76 61.23%

BehSoc2 .69 1 .85

BehSoc3 .58 .65 1 .79

BehSoc4 .49 .60 .64 1 .72

6.2.2.2.8 Politicking

As can be seen from Table 6.24 below, EFA results for the construct ‘politicking’

showed that the construct, as hypothesised, was a uni-dimensional factor. All the four


total variance explained by the four items of the ‘politicking’ construct is 73.90%.


construct of Politicking (BehPol) Item Correlation Eigen


Variance explained BehPol1 BehPol2 BehPol3 BehPol4

BehPol1 1 3.20 .78 73.90%

BehPol2 .74 1 .92

BehPol3 .71 .83 1 .91

BehPol4 .61 .74 .76 1 .82

6.2.2.3 Factor analysis for personality characteristics

6.2.2.3.1 Need for Achievement (nAch)

As can be seen from Table 6.25 below, EFA results for the construct ‘need for

achievement’ showed that the construct, as hypothesised, was a uni-dimensional factor.

All the three items were loaded on this factor, and the factor loadings ranged from .71 to

.87. The total variance explained by the three items of the need for achievement

construct is 59.76%.

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Table 6.25 Factor Analysis for the Personality Characteristic of Need for Achievement (nAch)

Item

Correlation Eigen value

Factor Loading

Variance explained nAch1 nAch2 nAch3

nAch1 1 2.18 .72 59.76% nAch2 .63 1 .87 nAch3 .52 .622 1 .71

6.2.2.3.2 Internal locus of control (LoC)

As can be seen from Table 6.26 below, EFA results for the construct ‘internal locus of

control’ showed that the construct, as hypothesised, was a uni-dimensional factor. All

the four items were loaded on this factor, and the factor loadings ranged from .59 to .78.

The total variance explained by the four items of the ‘internal locus of control’ construct

factor is 51.13%.

Table 6.26 Factor Analysis for the Personality Characteristic of Internal Locus of

Control (LoC) Item Correlation Eigen


Variance explained LoC1 LoC2 LoC3 LoC4

LoC1 1 2.52 .59 51.13% LoC2 .48 1 .74 LoC3 .43 .52 1 .74 LoC4 .42 .57 .60 1 .78

6.2.2.3.3 Risk-taking propensity

As can be seen from Table 6.27 below, EFA results for the construct ‘risk-taking

propensity’ showed that the construct, as hypothesised, was a uni-dimensional factor.

All the four items were loaded on this factor, and the factor loadings ranged from .65 to

.88. The total variance explained by the four items of the ‘risk-taking propensity’

construct is 58.34%.

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Table 6.27 Factor Analysis for the Personality Characteristic of Risk-taking Propensity (Risk)


Factor Loading

Variance explained Risk1 Risk2 Risk3 Risk4

Risk1 1 2.75 .65 58.34% Risk2 .62 1 .67 Risk3 .53 .56 1 .88 Risk4 .51 .51 .76 1 .84

6.2.2.4 Entrepreneurial information overload

As can be seen from Table 6.28 below, EFA results for the construct ‘entrepreneurial

information overload’ showed that the construct, as hypothesised, was a uni-

dimensional factor. All the seven items were loaded on this factor, and the factor

loadings ranged from .48 to .80. The total variance explained by the seven items of the

‘entrepreneurial information overload’ construct is 49.89%.

Table 6. 28 Factor Analysis for Entrepreneurial Information Overload (EIO)


Factor Loading

Variance explained

EIO1 EIO2 EIO3 EIO4 EIO5 EIO6 EIO7 EIO1 1 3.96 .42 49.89% EIO2 .43 1 .72 EIO3 .30 .62 1 .79 EIO4 .26 .61 .66 1 .80 EIO5 .48 .43 .49 .54 1 .67 EIO6 .24 .45 .54 .54 .56 1 .73 EIO7 .25 .52 .57 .59 .45 .67 1 .75

6.3 Composite variables

Composite measures for the dependent and independent variables were first developed

by averaging the items for each of the scales. By averaging the items, it is assumed that

all the items in that scale contribute equally to the construct. This is advised only for

established scales whose psychometric properties can be established in the given

sample. We have shown this to be the case in the reliability and validity section of this

chapter.

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For testing the hypotheses, items representing each dimension of entrepreneurial self-

efficacy, entrepreneurial behavioural activities, and personality characteristics were

averaged to provide a composite value for each construct. All the items under the

entrepreneurial information overload construct were also combined to form a composite

variable.

6.3.1 Correlation matrix for composite variables

Table 6.29 shows the mean, standard deviation and correlation among the composite

variables used for hypothesis testing.

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6.4 Common method bias Since there is a possibility that the characteristics of late respondents may be similar to

those of non-respondents, I formally tested for response bias using the procedure

suggested by Oppenheim (1966). Tests for nonresponse bias was done by comparing

responses received from the first and second rounds of mailing. The t-tests results

showed no significant difference between the first and second mailing.

6.5 Hypothesis testing

Most of the constructs proposed in the theoretical model, i.e. entrepreneurial self-

efficacy (ESE), personality characteristics (PC), and entrepreneurial behavioural

activities (EBA) had multiple factors. To test the hypotheses, regression-based path

analysis using Hayes (2013) PROCESS tool for SPSS was carried out, because such a

type of regression-based path analysis considers the various conditions in combination.

In Chapter 4, I presented the conceptual framework proposing relationships between

various variables, and also a corresponding set of hypotheses. The hypotheses were

tested for the proposed relationships between personality characteristics and

entrepreneurial self-efficacy (H1a - H1f, H2a - H2f, H3a - H3f), and the relationship

between entrepreneurial information overload and entrepreneurial self-efficacy (H4a-

H4f). Tables 6.30 to 6.35 present the results of the analysis for the relationship between

personality characteristics and entrepreneurial self-efficacy as well as the association of

EIO on each dimension of entrepreneurial self-efficacy. The hypotheses of the main

effects on relationships between entrepreneurial information overload on entrepreneurial

behavioural activities (H5a – H5h), personality characteristics on entrepreneurial

behavioural activities (H6a – H6h; H7a-H7h; H8a-H8h), and entrepreneurial self-

efficacy on entrepreneurial behavioural activities ( H9a-H9h; H10a-H10h; H11a-H11h;

H12a-H12h; H13a-H13h; H14a-H14h) were also tested. The results of these tests are

presented in Tables 6.36 - 6.43.

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6.5.1 Effects of personality characteristics and entrepreneurial information overload on the searching capability dimension of entrepreneurial self-efficacy (H1a, H2a, H3a, and H4a) Table 6.30 Testing of PC and EIO association with searching capability dimension

of ESE Dependent Variable: Searching (search) Model Summary: R2 = .32, F = 32.98, p <.001 Standardised beta

coefficient Standard error

t p

constant 2.40*** .34 7.03 .000 EIO -.10* .04 -2.50 .013 PCnAch .35*** .06 5.79 .000 PCLoC .11NS .07 1.43 .154 PCRisk .18** .06 3.17 .002 *** p≤.000. ** p≤.01. *p≤.05.

The results, as can be seen in Table 6.30, suggest that the need for achievement

dimension of personality characteristics (PCnAch: β=0.35, p ≤.000) and the risk-taking

dimension of personality characteristics (PCRisk: β=0.18, p ≤.01) are positively related

to the searching capability dimension of entrepreneurial self-efficacy. This evidence

suggests that entrepreneurs who have a high need for achievement and risk-taking

propensity also perceive their level of confidence in searching for market and product

information to be high. The results also show that there is no direct effect of the internal

locus of control dimension of personality characteristics on the searching dimension of

entrepreneurial self-efficacy (PCLoC: β=0.11, p =0.154). The results also show that, as

hypothesised, entrepreneurial information overload is negatively associated with the

searching capability of entrepreneurial self-efficacy (EIO: β=-0.10, p ≤ 0.05). It shows

that information overload reduces entrepreneurs’ confidence in their searching ability.

The relevant hypotheses and results are shown below:

H1a : Personality characteristics of need for achievement is positively associated with

the searching capability dimension of entrepreneurial self efficacy.

This hypothesis was supported (β=0.35, p ≤ 0.000).

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H2a: Personality characteristics of locus of control is positively associated with the

searching capability dimension of entrepreneurial self efficacy.

This hypothesis was not supported (β=0.11, not significant [p=.154]).

H3a: Personality characteristics of risk-taking propensity is positively associated with

the searching capability dimension of entrepreneurial self efficacy.

This hypothesis was supported (β=0.18, p ≤ 0.01 [p=.002]).

H4a: Entrepreneurial information overload is negatively associated with the searching

capability dimension of entrepreneurial self efficacy.

This hypothesis was supported (β=-0.10, p ≤.05, [p=.013]).

6.5.2 Effects of personality characteristics and entrepreneurial information overload on the planning capability dimension of entrepreneurial self-efficacy (H1b, H2b, H3b, and H4b)

Table 6.31 Testing of PC and EIO association with planning dimension of ESE

Dependent Variable: Planning (Plg) Model Summary: R2 = .21, F=18.83, p < .001 Standardised beta


t p

constant 2.97*** .33 9.02 .000 EIO -.05NS .05 -1.06 .290 PCnAch .16** .06 2.59 .010 PCLoC .10NS .08 1.35 .177 PCRisk .21*** .06 3.73 .000

*** p≤.000. ** p≤.01.

Entrepreneurial characteristics of need for achievement (PCnAch: β=0.16, p < 0.01) and

risk-taking (PCRisk: β=0.21, p < 0.000) dimensions of personality characteristics are

shown to have a positive relationship with the entrepreneur’s self-efficacy in planning.

There is, however, no relationship between the locus of control dimension of

personality characteristics and entrepreneurial self-efficacy dimension of planning. The

result also shows no association between entrepreneurial information overload and

planning, and therefore the hypothesis (H2b) is rejected. The relevant hypotheses and

results are shown below:

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H1b: Personality characteristics of need for achievement is positively associated with

the planning capability dimension of entrepreneurial self efficacy.

This hypothesis was supported (β=0.16, p ≤ .010).

H2b: Personality characteristics of locus of control is positively associated with the

planning capability dimension of entrepreneurial self efficacy.

This hypothesis was not supported (β=0.10, not significant [p= .177]).

H3b: Personality characteristics of risk-taking propensity is positively associated with

the planning capability dimension of entrepreneurial self efficacy.


H4b: Entrepreneurial information overload is negatively associated with the planning

capability dimension of entrepreneurial self efficacy.

This hypothesis was not supported (β=-.05, not significant, [p= .290]).

6.5.3 Effects of personality characteristics and entrepreneurial information overload on the marshalling capability dimension of entrepreneurial self-efficacy (H1c, H2c, H3c, H4c)

Table 6.32 Testing of PC and EIO association with the marshalling capability dimension of ESE

Dependent Variable: Marshalling (Mrsh) Model Summary: R2 = .20, F= 16.74, p < .001 Standardised beta


t p

constant 3.22*** .34 9.58 .000 EIO -.11* .05 -2.38 .018 PCnAch .14* .06 2.34 .020 PCLoC .12NS .07 1.47 .142 PCRisk .22*** .06 4.03 .000

*** p ≤.000. *p ≤.05

Two of the three entrepreneur personality characteristics dimensions, namely need for

achievement (PCnAch: β=.14, p < .05) and risk taking (PCRisk: β=.22, p ≤.000), are

shown to have a positive relationship with the entrepreneur’s self-efficacy in

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marshalling and organising resources for the firm. However, internal locus of control is

not associated with the marshalling dimension of entrepreneurial self-efficacy (PCLoC:

β=12, p =.142). As hypothesised, entrepreneurial information overload is negatively

associated with the marshalling dimension (EIO: β=-.11, p ≤ .05). It negatively impacts

on the entrepreneurs’ confidence in their ability to organise resources. The relevant

hypotheses and results are shown below:

H1c: Personality characteristics of need for achievement is positively associated with

the marshalling capability dimension of entrepreneurial self efficacy.

This hypothesis was supported (β=0.14, p ≤ 0.05, [p=.020]).

H2c: Personality characteristics of locus of control is positively associated with the

marshalling capability dimension of entrepreneurial self efficacy.

This hypothesis was not supported (β=0.12, not significant [p = .142]).

H3c: Personality characteristics of risk-taking propensity is positively associated with

the marshalling capability dimension of entrepreneurial self efficacy.

This hypothesis was supported (β=0.22, p ≤.000).

H4c: Entrepreneurial information overload is negatively associated with the

marshalling capability dimension of entrepreneurial self efficacy.

This hypothesis was supported (β=-.11, p ≤.05, [p=.018]).

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6.5.4 Effects of personality characteristics and entrepreneurial information overload on the implementing people-related capability dimension of entrepreneurial self-efficacy (H1d, H2d, H3d, H4d)

Table 6.33 Testing of PC and EIO association with the implementing people-

related capability dimension of ESE Dependent Variable: Implementing people-related capability(Impple) Model Summary: R2 = .25, F = 20.94, p <.001 Standardised beta


t p

constant 3.31*** .30 11.16 .000 EIO -.09* .04 -2.20 .029 PCnAch .21*** .06 3.86 .000 PCLoC .12* .06 2.01 .046 PCRisk .13** .05 2.63 .009

*** p ≤.000. ** p ≤.01. *p ≤.05

All the three characteristics, need for achievement (PCnAch: β=0.21, p ≤.000), locus of

control (PCLoC: β=0.12, p ≤ 0.05) and risk-taking propensity (PCRisk: β=0.13, p ≤.01))

have been shown to have a direct and positive relationship to the entrepreneur’s

confidence level in implementing people-related tasks (supervising staff and other

human resource activities). This is expected, because entrepreneurs who have a need to

achieve and a high internal locus of control will take control and have confidence in

their own ability to supervise and lead people. There is also, however, a negative

relationship between entrepreneurial information overload (EIO) and the implementing

people-related task dimension of entrepreneurial self efficacy (EIO: β=-.09, p ≤ 0.05) as

hypothesised. When entrepreneurs feel overloaded with information, they lack

confidence in their ability to supervise and undertake other human resource activities.


H1d: Personality characteristics of need for achievement is positively associated with

the implementing people-related capability dimension of entrepreneurial self efficacy.


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H2d Personality characteristics of locus of control is positively associated with the

implementing people-related capability dimension of entrepreneurial self efficacy.

This hypothesis was supported (β=0.12, p ≤ . 05, [p=. 046]).

H3d Personality characteristics of risk-taking propensity is positively associated with

the implementing people-related capability dimension of entrepreneurial self-efficacy.

This hypothesis was supported (β=0.13, p ≤ .01, [p=.009]).

H4d Entrepreneurial information overload is negatively associated with the

implementing people-related capability dimension of entrepreneurial self-efficacy.

This hypothesis was supported (β=-.09, p ≤ 0.05, [p=.029]).

6.5.5 Effects of personality characteristics and entrepreneurial information overload on the implementing finance capability dimension of entrepreneurial self-efficacy (H1e, H2e, H3e, H4e)

Table 6.34 Testing of PC and EIO association with the implementing finance-

related capability dimension of ESE Dependent Variable: Implementing finance-related capability (Impfin) Model Summary: R2 = .22, F = 19.34, p <.001 Standardised beta


t p

constant 2.97*** .33 8.91 .000 EIO -.08NS .04 -1.91 .056 PCnAch .15* .07 2.22 .027 PCLoC .18* .07 2.50 .013 PCRisk .18** .06 2.98 .003

** p≤.01. *p≤.05. All the three personality characteristics, namely need for achievement (PCnAch:

β=0.15, p ≤ .05), locus of control (PCLoC: β=0.18, p ≤.05) and risk-taking propensity

(PCRisk: β=0.18, p ≤ .01) have been shown to have a direct and positive relationship to

the entrepreneur’s confidence level in implementing finance-related tasks (maintaining

financial records, understanding statements, and estimating financial requirements of

the firm). The results show that entrepreneurial information overload (EIO) does not

affect the implementing finance dimension of entrepreneurial self-efficacy. The

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hypothesis (H4e) was therefore rejected. The relevant hypotheses and results are shown

below:

H1e Personality characteristics of need for achievement is positively associated with

the implementing finance-related capability dimension of entrepreneurial self efficacy.


H2e Personality characteristics of locus of control is positively associated with the

implementing finance-related capability dimension of entrepreneurial self efficacy.

This hypothesis was supported (β=0.18, p ≤.05; [p=.013]).

H3e Personality characteristics of risk-taking propensity is positively associated with

the implementing finance-related capability dimension of entrepreneurial self efficacy.


H4e: Entrepreneurial information overload is negatively associated with the

implementing finance-related capability dimension of entrepreneurial self efficacy.

This hypothesis was not supported (β=-.08, not significant [p=.056]).

6.5.6 Effects of personality characteristics and entrepreneurial information overload on the coping with unexpected challenges capability dimension of entrepreneurial self-efficacy (H1f, H2f, H3f, H4f)

Table 6.35 Testing of PC and EIO association with the coping with unexpected

challenges capability dimension of ESE Dependent Variable: Coping with unexpected challenges (Copch) Model Summary: R2 = .23, F = 21.38, p < .001 Standardised beta


t p

constant 3.19*** .31 10.16 .000 EIO -.13* .04 -3.28 .001 PCnAch .15** .06 2.54 .011 PCLoC .16** .07 2.25 .025 PCRisk .20*** .06 3.52 .000

*** p ≤.000. ** p ≤.01. *p ≤.05

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All the three personality characteristics (need for achievement (PCnAch: β=0.15, p

≤.05), locus of control (PCLoC: β=0.16, p ≤ .05) and risk-taking propensity (PCRisk:

β=0.20, p ≤ .000)) have been shown to have a direct and positive relationship to the

entrepreneur’s confidence level in coping with challenges. When the entrepreneur has a

high need for achievement, high locus of control and a high risk-taking propensity, they

feel confident in their ability to cope with any challenge that comes their way. However,

we see that there is a strong negative relationship between EIO and the ESE dimension

of coping with challenges (EIO: β=-.13, p ≤ 0.01). This is expected, since the

entrepreneur does have to seek information when trying to cope with challenges and

therefore feels the negative impact of information overload on their self-efficacy in

coping with the challenges. The relevant hypotheses and results are shown below:

H1f: Personality characteristics of need for achievement is positively associated with

the coping with challenges capability dimension of entrepreneurial self efficacy.


H2f: Personality characteristics of locus of control is positively associated with the

coping with challenges capability dimension of entrepreneurial self efficacy.


H3f: Personality characteristics of risk-taking propensity is positively associated with

the coping with challenges capability dimension of entrepreneurial self efficacy.


H4f: Entrepreneurial information overload is negatively associated with the coping with challenges capability dimension of entrepreneurial self efficacy.

This hypothesis was supported (β=-0.13, p ≤.01, [p=.001]).

188

6.5.7 Effects of entrepreneurial self-efficacy, entrepreneurial information overload and personality characteristics on the planning dimension of entrepreneurial behavioural activities. (H5a, H6a, H7a, H8a, H9a, H10a, H11a, H12a, H13a, H14a)

Table 6.36 Relationship between ESE, EIO and PC and the planning dimension of EBA

Dependent Variable: Planning (BhvPlg) Model Summary : R2 = .24, F = 22.38, p < .001 Standardised beta


T p

constant 1.77** 0.53 3.35 .001 Search 0.16NS 0.09 1.65 .100 Plg -0.02 NS 0.08 -0.24 .814 Mrsh 0.11 NS 0.08 1.34 .182 Impple 0.17 NS 0.09 1.83 .067 Impfin 0.14 NS 0.07 1.93 .054 Copch -0.01 NS 0.08 -0.15 .883 EIO -0.08 NS 0.05 -1.65 .100 PCnAch 0.15* 0.06 2.47 .014 PCLoC 0.08 NS 0.07 1.09 .275 PCRisk -0.09 NS 0.07 -1.34 .182

** p ≤.01. *p ≤.05.

The table above shows the results of testing the association of all six dimensions of

entrepreneurial self-efficacy, entrepreneurial information overload, and the three

dimensions of personality characteristics on the planning variable of entrepreneurial

behavioural activities. As can be seen from the table, surprisingly, none of the items of

the entrepreneurial self-efficacy construct are associated with the planning dimension of

entrepreneurial behavioural activities. It was expected that the entrepreneurs’ self-

efficacy in searching, planning, marshalling, implementing people-related tasks,

implementing finance-related tasks and coping with unexpected challenges would be

related to the behavioural activity of planning, where the entrepreneur would formulate

objectives and decide on what to do to achieve those objectives. As hypothesised,

entrepreneurial information overload is also not associated with the planning dimension.

With regard to the personality characteristics, only one of the dimensions, namely need

for achievement, shows association with this dimension (PCnAch: β=0.15, p ≤.05). The

relevant hypotheses and results are shown below:

189

H5a: Entrepreneurial information overload is negatively associated with the planning

dimension of entrepreneurial behavioural activities.

This hypothesis was not supported (β=-0.09, not significant, [p = .182]).

H6a: Personality characteristics of need for achievement is positively associated with

the planning dimension of entrepreneurial behavioural activities.


H7a: Personality characteristics of locus of control is positively associated with the

planning dimension of entrepreneurial behavioural activities.

This hypothesis was not supported (β=0.08, not significant [p = .275]).

H8a: Personality characteristics of risk-taking propensity is positively associated with

the planning capability dimension of entrepreneurial behavioural activities.

This hypothesis was not supported (β= -0.09, not significant, [p =.182]).

H9a: The entrepreneurial self-efficacy dimension of searching is positively associated

with the planning dimension of entrepreneurial behavioural activities.

This hypothesis was not supported (β= 0.16, not significant, [p =.100]).

H10a: The entrepreneurial self-efficacy dimension of planning is positively associated

with the planning dimension of entrepreneurial behavioural activities.

This hypothesis was not supported (β=- 0.02, not significant, [p =.814]).

H11a: The entrepreneurial self-efficacy dimension of marshalling is positively

associated with the planning dimension of entrepreneurial behavioural activities.


H12a: The entrepreneurial self-efficacy dimension of implementing people-related

capability is positively associated with the planning dimension of entrepreneurial



190

H13a: The entrepreneurial self-efficacy dimension of implementing finance-related

capability is positively associated with the planning dimension of entrepreneurial



H14a: The entrepreneurial self-efficacy dimension of coping with challenges is

positively associated with the planning dimension of entrepreneurial behavioural

activities.


6.5.8 Effects of entrepreneurial self-efficacy, entrepreneurial information overload and personality characteristics on the controlling dimension of entrepreneurial behavioural activities. (H5b, H6b, H7b, H8b, H9b, H10b, H11b, H12b, H13b, H14b)

Table 6.37 Relationship between ESE, EIO and PC and the controlling dimension of EBA

Dependent Variable: Controlling (BhvCom) Model Summary : R2 = .38, F = 25.18, p <.001 Standardised beta


T p

constant 1.17** .40 2.90 .004 Search .03NS .06 .43 .666 Plg .09 NS .06 1.46 .145 Mrsh .00 NS .06 .02 .986 Impple .13* .06 1.98 .049 Impfin .32*** .06 5.22 .000 Copch .02 NS .07 .27 .785 EIO -.04 NS .04 -.87 .383 PCnAch .07 NS .05 1.30 .195 PCLoC .15* .07 2.24 .026 PCRisk -.01 NS .05 -.14 .885

*** p ≤.000. ** p ≤.01. *p ≤.05.

The table above shows the results of testing the association of all six dimensions of

entrepreneurial self-efficacy, entrepreneurial information overload and the three

dimensions of personality characteristics on the controlling variable of entrepreneurial

191

behavioural activities. As can be seen from the table, within the entrepreneurial self-

efficacy construct, two dimensions, implementing people related tasks (Impple: β=0.13,

p ≤ 0.05) and implementing finance related tasks (Impfin: β=0.32, p ≤ 0.000), are

positively associated with the controlling dimension of entrepreneurial behavioural

activities. Controlling is the process of monitoring the actual situation as well as the

performance in the firm and then ensuring that the desired results are achieved (Luthans

& Ibrayeva 2006, p.106). If the entrepreneurs’ self-efficacy in the implementing people

and finance related tasks is high, they will be able to undertake the controlling activity

very efficiently. Clearly, the findings in this study support this theory.

Among the personality characteristics, only one of the dimensions, namely internal

locus of control, shows a positive relationship with this dimension (PCLoC: β=0.15, p ≤

.05). The finding suggests that entrepreneurs with a high internal locus of control will

engage in controlling activities well. This is expected, because successful entrepreneurs

do believe that they have significant control over the outcomes of the firm (Brockhaus

1980a). These findings support Krueger’s (1993) identification of a close link between

an individual’s desire for control and the initiating and maintaining of goal-directed

behaviours. However, entrepreneurial information overload is not associated with the

controlling dimension. The relevant hypotheses and results are shown below:

H5b: Entrepreneurial information overload is negatively associated with the controlling



H6b: Personality characteristics of need for achievement are positively associated with

the controlling dimension of entrepreneurial behavioural activities.


H7b: Personality characteristics of locus of control is positively associated with the

controlling dimension of entrepreneurial behavioural activities.

This hypothesis was supported (β= 0.15, p≤ 0.05, [p =.026]).

192

H8b: Personality characteristics of risk-taking propensity is positively associated with

the controlling dimension of entrepreneurial behavioural activities.

This hypothesis was not supported (β= -0.01, not significant [p =.885).

H9b: The entrepreneurial self-efficacy dimension of searching is positively associated

with the controlling dimension of entrepreneurial behavioural activities.

This hypothesis was not supported (β= 0.03, not significant [p=.666]).

H10b: The entrepreneurial self-efficacy dimension of planning is positively associated

with the controlling dimension of entrepreneurial behavioural activities.


H11b: The entrepreneurial self-efficacy dimension of marshalling is positively

associated with the controlling dimension of entrepreneurial behavioural activities.


H12b: The entrepreneurial self-efficacy dimension of implementing people-related

capability is positively associated with the controlling dimension of entrepreneurial


This hypothesis was supported (β= 0.13, p≤0.05, [p =.049]).

H13b: The entrepreneurial self-efficacy dimension of implementing finance is positively

associated with the controlling dimension of entrepreneurial behavioural activities.

This hypothesis was supported (β= 0.32, p ≤.000).

H14b:The eEntrepreneurial self-efficacy dimension of coping with unexpected

challenges is positively associated with the controlling dimension of entrepreneurial



193

6.5.9 Effects of entrepreneurial self-efficacy, entrepreneurial information overload and personality characteristics on the internal communication dimension of entrepreneurial behavioural activities. (H5c, H6c, H7c, H8c, H9c, H10c, H11c, H12c, H13c, H14c)

Table 6.38 Relationship between ESE, EIO and PC and the internal communication dimension of EBA

Dependent Variable: Internal Communication (BhvCom) Model Summary: R2 = .38, F = 25.40, p < .001 Standardised beta


T p

constant 1.62*** .38 4.21 .000 Search .04NS .05 .84 .403 Plg .07 NS .05 1.29 .200 Mrsh .03 NS .06 .58 .565 Impple .30*** .06 4.98 .000 Impfin .08 NS .06 1.39 .167 Copch .05 NS .06 .84 .403 EIO -.08* .04 -1.95 .050 PCnAch .04 NS .05 .79 .432 PCLoC .11 NS .07 1.62 .106 PCRisk .05 NS .05 1.02 .309

*** p ≤.000. *p ≤.05

Table 6.38 above shows the results of testing the association of all six dimensions of

entrepreneurial self-efficacy, entrepreneurial information overload and the three

personality characteristics dimensions on the internal communication dimension of

entrepreneurial behavioural activities. As can be seen from the table, in the

entrepreneurial self-efficacy construct, the dimension implementing people related tasks

(Impple: β=0.30, p ≤ .000) is positively associated with the communication dimension

of entrepreneurial behavioural activities. Communication includes sending and

receiving information, and if the entrepreneur has a high level of self-efficacy in his or

her ability to deal with people (implementing people related task dimension), it can be

expected that they also engage in activities related to internal communication

effectively.

194

The results also show that entrepreneurial information overload is negatively impacting

on the entrepreneur’s ability to engage in sending and receiving information (EIO: β=-

0.08, p ≤ .050). Among the personality characteristics, none of the dimensions showed

any association with the behavioural activity of internal communication. The relevant


H5c: Entrepreneurial information overload is negatively associated with the internal

communication dimension of entrepreneurial behavioural activities.

This hypothesis was supported (β= -0.08, p ≤ .050).

H6c: Personality characteristics of need for achievement is positively associated with

the internal communication dimension of entrepreneurial behavioural activities.


H7c: Personality characteristics of locus of control is positively associated with the

internal communication dimension of entrepreneurial behavioural activities.


H8c: Personality characteristics of risk-taking propensity is positively associated with

the internal communication dimension of entrepreneurial behavioural activities.


H9c: The entrepreneurial self-efficacy dimension of searching is positively associated

with the internal communication dimension of entrepreneurial behavioural activities.

This hypothesis was not supported (β= 0.04, not significant, p =.403).

H10c: The entrepreneurial self-efficacy dimension of planning is positively associated

with the internal communication dimension of entrepreneurial behavioural activities.


H11c: The entrepreneurial self-efficacy dimension of marshalling is positively

associated with the internal communication dimension of entrepreneurial behavioural

activities.

195


H12c: The entrepreneurial self-efficacy dimension of implementing people-related

capability is positively associated with the internal communication dimension of

entrepreneurial behavioural activities.


H13c: The entrepreneurial self-efficacy dimension implementing finance-related

capability is positively associated with the internal communication dimension of



H14c: The entrepreneurial self-efficacy dimension of coping with unexpected

challenges is positively associated with the internal communication dimension of



6.5.10 Effects of entrepreneurial self-efficacy, entrepreneurial information overload and personality characteristics on the human resources management dimension of entrepreneurial behavioural activities. (H5d, H6d, H7d, H8d, H9d, H10d, H11d, H12d, H13d, H14d)

Table 6.39 Relationship between ESE, EIO and PC and the human resources management dimension of EBA

Dependent Variable: Human Resources Management (BhvHRM) Model Summary : R2 = .41, F = 26.06, p <.001 Standardised beta

Coefficient Standard error

T p

constant 1.02 ** .37 2.76 .006 Search .07NS .06 1.23 .219 Plg .08 NS .06 1.42 .156 Mrsh -.10 NS .06 -1.73 .084 Impple .39*** .06 6.58 .000 Impfin .04 NS .06 .65 .517 Copch .14* .06 2.54 .012 EIO -.01 NS .04 -.35 .726 PCnAch .06 NS .05 1.16 .248 PCLoC .08 NS .06 1.39 .164 PCRisk .04 NS .04 .85 .397

196

*** p ≤.000. ** p ≤.01. *p ≤.05.

The association of all six dimensions of entrepreneurial self-efficacy, entrepreneurial

information overload and the three personality characteristics dimensions on the human

resources management dimension of entrepreneurial behavioural activities was also

tested. As can be seen from Table 6.39, in the entrepreneurial self-efficacy construct,

there is a significant positive association between the dimensions of implementing

people-related tasks (Impple: β=0.39, p ≤ 0.000) and coping with unexpected challenges

(Copch: β=0.14, p ≤ 0.05) with the human resources management dimension of

entrepreneurial behavioural activities. This is an expected outcome. Entrepreneurs who

have a high self-efficacy in their ability to recruit, supervise, inspire and train

employees, as well as deal with problems faced by employees, will obviously be able to

engage very well in the activities relating to human resources management.

However, the results show no association between entrepreneurial information overload

and the human resource management dimension. Personality characteristics such as

need for achievement, internal locus of control and risk-taking propensity are also not

related to the human resources management of entrepreneurial behavioural activities.


H5d: Entrepreneurial information overload is negatively associated with the human

resources management dimension of entrepreneurial behavioural activities.


H6d: Personality characteristics of need for achievement is positively associated with

the human resources management dimension of entrepreneurial behavioural activities.


H7d: Personality characteristics of locus of control is positively associated with the

human resources management dimension of entrepreneurial behavioural activities.


H8d: Personality characteristics of risk-taking propensity is positively associated with

the human resources management dimension of entrepreneurial behavioural activities.

197


H9d: The entrepreneurial self-efficacy dimension of searching is positively associated

with the human resources management dimension of entrepreneurial behavioural

activities.


H10d: The entrepreneurial self-efficacy dimension of planning is positively associated

with the human resources management dimension of entrepreneurial behavioural

activities.


H11d: The entrepreneurial self-efficacy dimension of marshalling is positively

associated with the human resources management dimension of entrepreneurial



H12d: The entrepreneurial self-efficacy dimension of implementing people-related

capability is positively associated with the human resources management dimension of


This hypothesis was supported (β= 0.39, p ≤ .000).

H13d: The entrepreneurial self-efficacy dimension of implementing finance-related

capability is positively associated with the human resources management dimension of


This hypothesis was not supported (β= 0.04, p not significant, [p =.517]).

H14d: The entrepreneurial self-efficacy dimension coping with unexpected challenges is

positively associated with the human resources management dimension of


This hypothesis was supported (β= 0.14, p≤.05, [p =.012]).

198

6.5.11 Effects of entrepreneurial self-efficacy, entrepreneurial information overload and personality characteristics on the work-related tasks dimension of entrepreneurial behavioural activities. (H5e, H6e, H7e, H8e, H9e, H10e, H11e, H12e, H13e, H14e)

Table 6.40 Relationship between ESE, EIO and PC and the work-related tasks dimension of EBA

Dependent Variable: Work Related Tasks (BhvTas) Model Summary : R2 = .40, F = 27.72, p < .001 Standardised beta


T p

constant 1.68*** .38 4.42 .000 Search .12* .06 1.96 .050 Plg .01 NS .06 .12 .902 Mrsh .05 NS .06 .83 .408 Impple .18* .07 2.52 .012 Impfin .26*** .06 4.12 .000 Copch -.03 NS .07 -.37 .712 EIO -.11** .04 -2.76 .006 PCnAch .04 NS .05 .77 .444 PCLoC -.01 NS .06 -.16 .869 PCRisk .15** .05 2.94 .004

*** p ≤.000. ** p ≤.01. *p ≤.05


information overload and the three personality characteristics dimensions with the

entrepreneurs performing activities that are of central concern to the business itself

(work-related tasks) was tested. Table 6.40 presents the results of these tests.

As seen in Table 6.40, three dimensions of entrepreneurial self-efficacy, namely

searching (search: β=0.12, p ≤ .05), implementing people-related tasks(Impple: β=0.18,

p ≤ .05), and implementing finance-related tasks (Impfin: β=0.26, p ≤ .000) have a

positive association with work-related tasks. The personality characteristic of risk-

taking propensity is also positively related to work-related tasks. Entrepreneurial

information overload is negatively associated with work-related tasks ((EIO: β=-0.11, p

≤ 0.01). The entrepreneurial self-efficacy dimensions of planning, marshalling, coping

199

with unexpected challenges and the personality characteristics of need for achievement

and locus of control are not associated with the work-related tasks. The relevant


H5e: Entrepreneurial information overload is negatively associated with the work-

related tasks dimension of entrepreneurial behavioural activities.

This hypothesis was supported (β= 0.39, p ≤.01, [p=.006]).

H6e: Personality characteristics of need for achievement is positively associated with

the work-related tasks dimension of entrepreneurial behavioural activities.


H7e: Personality characteristics of locus of control is positively associated with the

work-related tasks dimension of entrepreneurial behavioural activities.


H8e: Personality characteristics of risk-taking propensity is positively associated with

the work-related tasks dimension of entrepreneurial behavioural activities.

This hypothesis was supported (β= 0.15, p ≤ .01, [p =.004]).

H9e: The entrepreneurial self-efficacy dimension of searching is positively associated

with the work-related task dimension of entrepreneurial behavioural activities.

This hypothesis was supported (β= 0.12, p≤.050).

H10e: The entrepreneurial self-efficacy dimension of planning is positively associated

with the work-related task dimension of entrepreneurial behavioural activities.

This hypothesis was not supported (β= 0.01, not significant [p =.902]).

H11e: The entrepreneurial self-efficacy dimension of marshalling is positively

associated with the work-related task dimension of entrepreneurial behavioural

activities.


200

H12e: The entrepreneurial self-efficacy dimension of implementing people-related

capability is positively associated with the work-related task dimension of


This hypothesis was supported (β= 0.18, p≤.05).

H13e: The entrepreneurial self-efficacy dimension of implementing finance-related

capability is positively associaedn with the work-related task dimension of


This hypothesis was supported (β= 0.26, p ≤ .000).

H14e: The entrepreneurial self-efficacy dimension of coping with unexpected

challenges is positively associated with the work-related task dimension of



6.5.12 Testing the effects of entrepreneurial self-efficacy, entrepreneurial information overload and personality characteristics on the customer service dimension of entrepreneurial behavioural activities. (H5f, H6f, H7f, H8f, H9f, H10f, H11f, H12f, H13f, H14f)

Table 6.41 Relationship between ESE, EIO and PC and the customer service dimension of EBA

Dependent Variable: Customer Service (BhvSer) Model Summary : R2 = .36, F = 26.66, p < .001 Standardised beta


T p

constant 1.39*** .40 3.52 .000 Search .05NS .06 .83 .410 Plg -.03 NS .07 -.41 .681 Mrsh .02 NS .06 .28 .776 Impple .35*** .08 4.60 .000 Impfin .14* .07 2.02 .044 Copch .01 NS .07 .19 .848 EIO -.05 NS .04 -1.12 .264 PCnAch .13* .06 2.11 .035 PCLoC .02 NS .07 .32 .750 PCRisk .09 NS .05 1.72 .086

*** p ≤.000. *p ≤.05.

201



customer service dimension of entrepreneurial behavioural activity was tested. Table

6.41 presents the results of these tests.

Of the six dimensions of entrepreneurial self-efficacy, two dimensions, i.e.,

implementing people-related tasks (Impple: β= 0.35, p ≤.000) and implementing

finance-related tasks (Impfin: β= 0.14, p ≤.05), have a positive association with the

customer service dimension of entrepreneurial behavioural activities. The other

entrepreneurial self-efficacy dimensions such as searching, planning, marshalling and

coping with unexpected challenges do not show any association with the customer

service dimension. Entrepreneurial information overload is also not associated with

customer service. Among the personality characteristics, only need for achievement

(PCnAch: β= 0.13, p ≤ .05) is positively associated with customer service, while

internal locus of control and risk-taking propensity are not. The relevant hypotheses

and results are shown below:

H5f: Entrepreneurial information overload is negatively associated with the customer service dimension of entrepreneurial behavioural activities.


H6f: Personality characteristics of need for achievement is positively associated with the customer service dimension of entrepreneurial behavioural activities.

This hypothesis was supported (β= 0.13, p≤ .05, [p =.035]).

H7f: Personality characteristics of locus of control is positively associated with the customer service dimension of entrepreneurial behavioural activities.


H8f: Personality characteristics of risk-taking propensity is positively associated with the customer service dimension of entrepreneurial behavioural activities.


202

H9f: The entrepreneurial self-efficacy dimension of searching is positively associated with the customer service dimension of entrepreneurial behavioural activities.


H10f: The entrepreneurial self-efficacy dimension of planning is positively associated with the customer service dimension of entrepreneurial behavioural activities.


H11f: The entrepreneurial self-efficacy dimension of marshalling is positively associated with the customer service dimension of entrepreneurial behavioural activities.


H12f: The entrepreneurial self-efficacy dimension of implementing people-related capability is positively associated with the customer service dimension of entrepreneurial behavioural activities.


H13f: The entrepreneurial self-efficacy dimension implementing finance-related capability is positively associated with the customer service dimension of entrepreneurial behavioural activities.

This hypothesis was supported (β= 0.14, p ≤ .05, [p =.044]).

H14f: The entrepreneurial self-efficacy dimension of coping with unexxpected challenges is positively associated with the customer service dimension of entrepreneurial behavioural activities.


203

6.5.13 Testing the effects of entrepreneurial self-efficacy, entrepreneurial information overload and personality characteristics on the socialising dimension of entrepreneurial behavioural activities. (H5g, H6g, H7g, H8g, H9g, H10g, H11g, H12g, H13g, H14g)

Table 6.42 Relationship between ESE, EIO and PC and the socialising dimension of EBA Dependent Variable: Socialising (BhvSoc) Model Summary : R2 = .05, F = 13.27, p < .001 Standardised beta

Coefficient Standard error T p

constant 1.42** .42 3.35 .001 Search -.01NS .07 -.17 .868 Plg .07 NS .09 .80 .423 Mrsh .11 NS .09 1.31 .192 Impple .15 NS .09 1.71 .088 Impfin .10 NS .08 1.29 .198 Copch .06 NS .07 .89 .386 EIO -.01 NS .05 -.14 .891 PCnAch .03 NS .07 .44 .660 PCLoC .18* .08 2.24 .026 PCRisk .03 NS .07 .41 .681

** p ≤.01. *p ≤.05.

The association of entrepreneurial self-efficacy, personality characteristics and

entrepreneurial information overload with the socialising dimension of entrepreneurial

behavioural activities was tested. Socialising includes networking and communicating

with outside parties. Interestingly, none of the dimensions of entrepreneurial self-

efficacy had an impact on the entrepreneurial behavioural activity of socialising. The

results also show that entrepreneurial information overload likewise has no effect on the

socialising activity. Only one personality characteristic, internal locus of control, (β=

0.18, p ≤. 05) has a significant positive relationship to the socialising activity, while the

other two characteristics, need for achievement and risk-taking propensity, had no

relationship. The relevant hypotheses and results are shown below:

H5g: Entrepreneurial information overload is negatively associated with the socialising



204

H6g: Personality characteristic of need for achievement is positively associated with

the socialising dimension of entrepreneurial behavioural activities.


H7g: Personality characteristic of locus of control is positively associated with the

socialising dimension of entrepreneurial behavioural activities.

This hypothesis was supported (β= 0.18, p ≤ .05, [p=.026]).

H8g: Personality characteristic of risk-taking propensity is positively associated with

the socialising dimension of entrepreneurial behavioural activities.


H9g: The entrepreneurial self-efficacy dimension of searching is positively associated

with the socialising dimension of entrepreneurial behavioural activities.

This hypothesis was not supported (β= -0.01, not significant [p =.868]).

H10g: The entrepreneurial self-efficacy dimension of planning is positively associated

with the socialising dimension of entrepreneurial behavioural activities.


H11g: The entrepreneurial self-efficacy dimension of marshalling is positively

associated with the socialising dimension of entrepreneurial behavioural activities.


H12g: The entrepreneurial self-efficacy dimension of implementing people-related

capability is positively associated with the socialising dimension of entrepreneurial



H13g: The entrepreneurial self-efficacy dimension of implementing finance-related

capability is positively associated with the socialising dimension of entrepreneurial


205


H14g: The entrepreneurial self-efficacy dimension of coping with unexpected

challenges is positively associated with the socialising dimension of entrepreneurial



6.5.14 Testing the effects of entrepreneurial self-efficacy, entrepreneurial information overload and personality characteristics on the politicking dimension of entrepreneurial behavioural activities. (H5h, H6h, H7h, H8h, H9h, H10h, H11h, H12h, H13h, H14h)

Table 6.43 Relationship between ESE, EIO and PC and the politicking dimension

of EBA Dependent Variable: Politicking (BhvPol) Model Summary : R2 = .19, F = 7.24, p < .001 Standardised beta


t p

constant .43NS .64 .67 .501 Search .08 NS .11 .72 .475 Plg .14 NS .11 1.20 .233 Mrsh .06 NS .11 .52 .602 Impple -.09 NS .14 -.62 .539 Impfin .20 NS .12 1.61 .108 Copch .09 NS .12 .79 .433 EIO .14 NS .07 1.96 .051 PCnAch -.23* .09 -2.57 .011 PCLoC .36** .13 2.82 .005 PCRisk .14 NS .10 1.37 .172

** p ≤.01. *p ≤.05



entrepreneurial behavioural activity of politicking was tested. Table 6.43 presents the

results of these tests. None of the entrepreneurial self-efficacy dimensions had any

association with the politicking activities that the entrepreneur engages in. However,

contrary to the hypothesis, entrepreneurial information overload was positively related

to the politicking activities (EIO: β= 0.14, p=.051) and therefore the hypothesis was not

206

supported. Two of the personality characteristic dimensions were also found to be

associated with the politicking dimension. Interestingly, need for achievement

(PCnAch: β= -0.23, p ≤.05) was negatively associated and locus of control (PCLoC: β=

0.36, p ≤. 01) was positively associated. The relevant hypotheses and results are shown

below:

H5h: Entrepreneurial information overload is negatively associated with the politicking



H6h: Personality characteristic of need for achievement is positively associated with

the politicking dimension of entrepreneurial behavioural activities.

This hypothesis was not supported (β= -0.23., p ≤.050 [p=.011]). A significant and

negative beta value confirms the relationship in the opposite way.

H7h: Personality characteristic of locus of control is positively associated with the

politicking dimension of entrepreneurial behavioural activities.

This hypothesis was supported (β= 0.36, p≤.01, [p =.005]).

H8h: Personality characteristic of risk-taking propensity is positively associated with

the politicking dimension of entrepreneurial behavioural activities.


H9h: The entrepreneurial self-efficacy dimension of searching is positively associated

with the politicking dimension of entrepreneurial behavioural activities.


H10h: The entrepreneurial self-efficacy dimension of planning is positively associated

with the politicking dimension of entrepreneurial behavioural activities.


H11h: The entrepreneurial self-efficacy dimension of marshalling is positively

associated with the politicking dimension of entrepreneurial behavioural activities.

207


H12h: The entrepreneurial self-efficacy dimension of implementing people-related

capability is positively associated with the politicking dimension of entrepreneurial


This hypothesis was not supported (β=-0.09, not significant, [p =.539]).

H13h: The entrepreneurial self-efficacy dimension of implementing finance-related

capability is positively associated with the politicking dimension of entrepreneurial



H14h: The entrepreneurial self-efficacy dimension of coping with unexpected

challenges is positively associated with the politicking dimension of entrepreneurial



208

6.5.15 Summary of findings for hypotheses tested Table 6.44 Summary findings for dependent variable: Entrepreneurial self-efficacy Entrepreneurial self-efficacy (ESE dimensions) a=searching (Search); b=planning (Plg); c=marshalling (Mrsh); d=implementing people (Impple); e=implementing finance (Impfin); f=coping with unexpected challenges (Copch) Personality characteristics (PC) 1= need for achievement (PCnAch) 2=internal locus of control (PCLoC); 3=risk-taking propensity Entrepreneurial information overload (EIO) 4= entrepreneurial information overload (EIO) Hypothesis Relationship

tested between Standardised Beta Coefficient

Std. Error

p value Results

Relationship between PCnAch and ESE dimensions H1a PCnAch –

Search .35 .04 .000 Supported

H1b PCnAch – Plg .16 .06 .010 Supported H1c PCnAch – Mrsh .14 .06 .020 Supported H1d PCnAch –

Impple .21 .06 .000 Supported

H1e PCnAch – Impfin

.15 .07 .027 Supported

H1f PCnAch – Copch .15 .06 .011 Supported Relationship between PCLoC and ESE dimensions

H2a PCLoC – Search .11 .06 .154 Not supported H2b PCLoC – Plg .10 .08 .177 Not supported H2c PCLoC – Mrsh .12 .07 .142 Not supported H2d PCLoC – Impple .12 .06 .046 Supported H2e PCLoC – Impfin .18 .07 .013 Supported H2f PCLoC – Copch .16 .07 .025 Supported

Relationship between PCRisk and ESE dimensions H3a PCRisk – Search .18 .06 .002 Supported H3b PCRisk – Plg .21 .06 .000 Supported H3c PCRisk – Mrsh .22 .06 .000 Supported H3d PCRisk – Impple .13 .05 .009 Supported H3e PCRisk – Impfin .18 .06 .003 Supported H3f PCRisk – Copch .20 .06 .000 Supported

Relationship between EIO and ESE dimensions H4a EIO – Search -.10 .04 .013 Supported H4b EIO – Plg -.05 .05 .290 Not supported H4c EIO – Mrsh -.11 .05 .018 Supported H4d EIO – Impple -.09 .04 .029 Supported H4e EIO – Impfin -.08 .04 .056 Not supported H4f EIO – Copch -.13 .04 .001 Supported

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Table 6.45 Summary findings for dependent variable: Entrepreneurial behavioural activities (Part A)

Entrepreneurial self-efficacy (ESE dimensions) 9 = searching (Search); 10=planning (Plg); 11=marshalling (Mrsh); 12=implementing people (Impple); 13=implementing finance (Impfin); 14=coping with unexpected challenges (Copch) Personality characteristics (PC) 6= need for achievement (PCnAch); 7=internal locus of control (PCLoC); 8=risk-taking propensity Entrepreneurial information overload (EIO) 5= entrepreneurial information overload (EIO) Entrepreneurial behavioural activities (EBA) a=planning (BehPlg); b=controlling (BehCon); c=internal communication (BehCom); d=human resources management (BehHRM); e=work-related tasks (BehTas); f=customer services (BehSer); g=socialising (BehSoc); h=politicking (BehPol) Hypothesis Relationship tested

between Standardised Beta Coefficient

Std. Error

p value Results

Relationship between EIO and EBA H5a EIO – BehPlg -0.08 0.05 .100 Not supported H5b EIO – BehCon -0.04 0.04 .383 Not supported H5c EIO – BehCom -0.08 0.04 .050 Supported H5d EIO – BehHRM -0.01 0.04 .726 Not supported H5e EIO – BehTas -0.11 0.04 .006 Supported H5f EIO – BehSer -0.05 0.04 .264 Not supported H5g EIO – BehSoc -0.01 0.05 .891 Not supported H5h EIO – BehPol 0.14 .07 .051 Not Supported

Relationship between PCnAch and EBA H6a PCnAch - BehPlg 0.15 0.06 .014 Supported H6b PCnAch - BehCon 0.07 0.05 .195 Not supported H6c PCnAch - BehCom 0.04 0.05 .432 Not supported H6d PCnAch- BehHRM 0.06 0.05 .248 Not supported H6e PCnAch - BehTas 0.04 0.05 .444 Not supported H6f PCnAch - BehSer 0.13 0.06 .035 Supported H6g PCnAch - BehSoc 0.03 0.07 .660 Not supported H6h PCnAch - BehPol -0.23 0.09 .011 Not supported

Relationship between PCLoC and EBA H7a PCLoC - BehPlg 0.08 0.07 .275 Not supported H7b PCLoC - BehCon 0.15 0.07 .026 Supported H7c PCLoC - BehCom 0.11 0.07 .106 Not supported H7d PCLoC - BehHRM 0.08 0.06 .164 Not supported H7e PCLoC - BehTas -0.01 0.06 .869 Not supported H7f PCLoC - BehSer 0.02 0.07 .750 Not supported H7g PCLoC - BehSoc 0.18 0.08 .026 Supported H7h PCLoC - BehPol 0.36 0.13 .005 Supported

Relationship between PCRisk and EBA H8a PCRisk - BehPlg -0.09 0.07 .182 Not supported H8b PCRisk - BehCon -0.01 .05 .885 Not supported H8c PCRisk - BehCom 0.05 0.05 .309 Not supported H8d PCRisk - BehHRM 0.04 0.04 .397 Not supported H8e PCRisk - BehTas 0.15 0.05 .004 Supported H8f PCRisk - BehSer 0.09 0.05 .086 Not supported H8g PCRisk - BehSoc 0.03 0.07 .681 Not supported H8h PCRisk - BehPol 0.14 0.10 .172 Not supported

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Table 6.45 Summary findings for dependent variable: Entrepreneurial behavioural activities (Part B)

Entrepreneurial self-efficacy (ESE dimensions) 9 = searching (Search); 10=planning (Plg); 11=marshalling (Mrsh); 12=implementing people (Impple); 13=implementing finance (Impfin); 14=coping with unexpected challenges (Copch) Personality characteristics (PC) 6= need for achievement (PCnAch); 7=internal locus of control (PCLoC); 8=risk-taking propensity Entrepreneurial information overload (EIO) 5= entrepreneurial information overload (EIO) Entrepreneurial behavioural activities (EBA) a=planning (BehPlg); b=controlling (BehCon); c=internal communication (BehCom); d=human resources management (BehHRM); e=work-related tasks (BehTas); f=customer services (BehSer); g=socialising (BehSoc); h=politicking (BehPol) Hypothesis Relationship tested

between Standardised Beta Coefficient

Std. Error

p value Results

Relationship between searching dimension of ESE and EBA H9a Search – BehPlg 0.16 0.09 .100 Not supported H9b Search - BehCon 0.03 0.06 .666 Not supported H9c Search - BehCom 0.04 0.05 .403 Not supported H9d Search - BehHRM 0.07 0.06 .219 Not supported H9e Search - BehTas 0.12 0.06 .050 Supported H9f Search - BehSer 0.05 0.06 .410 Not supported H9g Search - BehSoc -0.01 0.07 .868 Not supported H9h Search - BehPol 0.08 0.11 .475 Not supported

Relationship between planning dimension of ESE and EBA H10a Plg – BehPlg -0.02 0.08 .814 Not supported H10b Plg – BehCon 0.09 0.06 .145 Not supported H10c Plg – BehCom 0.07 0.05 .200 Not supported H10d Plg – BehHRM 0.08 0.06 .156 Not supported H10e Plg – BehTas 0.01 0.06 .902 Not supported H10f Plg – BehSer -0.03 0.07 .681 Not supported H10g Plg – BehSoc 0.07 0.09 .423 Not supported H10h Plg – BehPol 0.14 0.11 .233 Not supported

Relationship between marshalling dimension of ESE and EBA H11a Mrsh – BehPlg 0.11 0.08 .182 Not supported H11b Mrsh – BehCon 0.00 0.06 .986 Not supported H11c Mrsh – BehCom 0.03 0.06 .565 Not supported H11d Mrsh - BehHRM -0.10 0.06 .084 Not supported H11e Mrsh – BehTas 0.05 0.06 .408 Not supported H11f Mrsh – BehSer 0.02 0.06 .776 Not supported H11g Mrsh – BehSoc 0.11 0.09 .088 Not supported H11h Mrsh – BehPol 0.06 0.11 .602 Not supported

Relationship between implementing people dimension of ESE and EBA H12a Impple - BehPlg 0.17 0.09 .067 Not supported H12b Impple - BehCon 0.13 0.06 .049 Supported H12c Impple - BehCom 0.30 0.06 .000 Supported H12d Impple - BehHRM 0.39 0.06 .000 Supported H12e Impple - BehTas 0.18 0.07 .012 Supported H12f Impple - BehSer 0.35 0.08 .000 Supported H12g Impple - BehSoc 0.15 0.09 .088 Not supported H12h Impple - BehPol -0.09 0.14 .539 Not supported

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Table 6.45 Summary findings for dependent variable: Entrepreneurial behavioural activities (Part C)

Entrepreneurial self-efficacy (ESE dimensions) 9 = searching (Search); 10=planning (Plg); 11=marshalling (Mrsh); 12=implementing people (Impple); 13=implementing finance (Impfin); 14=coping with unexpected challenges (Copch) Personality characteristics (PC) 6= need for achievement (PCnAch); 7=internal locus of control (PCLoC); 8=risk-taking propensity Entrepreneurial information overload (EIO) 5= entrepreneurial information overload (EIO) Entrepreneurial behavioural activities (EBA) a=planning (BehPlg); b=controlling (BehCon); c=internal communication (BehCom); d=human resources management (BehHRM); e=work-related tasks (BehTas); f=customer services (BehSer); g=socialising (BehSoc); h=politicking (BehPol)

Relationship between implementing finance dimension of ESE and EBA H13a Impfin - BehPlg 0.14 0.07 .054 Not supported H13b Impfin - BehCon 0.32 0.06 .000 Supported H13c Impfin - BehCom 0.08 0.06 .167 Not supported H13d Impfin - BehHRM 0.04 0.06 .517 Not supported H13e Impfin - BehTas 0.26 0.06 .000 Supported H13f Impfin - BehSer 0.14 0.07 .044 Supported H13g Impfin - BehSoc 0.10 0.08 .198 Not supported H13h Impfin - BehPol 0.20 0.12 .108 Not supported

Relationship between coping with unexpected challenges dimension of ESE and EBA H14a Copch - BehPlg -0.01 0.08 .883 Not supported H14b Copch - BehCon 0.02 0.07 .785 Not supported H14c Copch - BehCom 0.05 0.06 .403 Not supported H14d Copch - BehHRM 0.14 0.06 .012 Supported H14e Copch - BehTas -0.03 0.07 .712 Not supported H14f Copch - BehSer 0.01 0.07 .848 Not supported H14g Copch - BehSoc 0.06 0.07 .386 Not supported H14h Copch - BehPol 0.09 0.12 .433 Not supported

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6.6 Discussion

The present study offers new insights into the various associations between the

variables identified in the conceptual framework proposed in my study. These

relationships are between: (i) personality characteristics and the various dimensions of

entrepreneurial self-efficacy, (ii) personality characteristics and the various dimensions

of entrepreneurial behavioural activities, and (iii) dimensions of self-efficacy and

entrepreneurial behavioural activities. The study also examined the impact of

entrepreneurial information overload on the various dimensions of the entrepreneurs’

self-efficacy, as well as on the behavioural activities they undertake. While some of

these relationships have been mostly studied in the developed countries, relatively fewer

studies were conducted in emerging economies (e.g., Ahmad 2004). The sample for my

study was drawn from India, which is a large emerging economy. Even in India,

research is relatively limited, but it appears that this field is finally receiving some

serious attention by researchers, given the spurt in studies recently as explained in

Chapter 3. Having approximately 36 million micro-, small and medium enterprises

which provide employment for more than 80 million people (Government of India,

2013), India provides a unique context for studying entrepreneurship. According to

Stewart, May and Kalia (2008), Indian entrepreneurs operate in a challenging

environment which is a “complex combination of culture and operating circumstances”

(p. 7). In a recent piece of research, Krishnan’s (2013) study of entrepreneurs in India

shows that entrepreneurial success is impacted by their personality characteristics and

competencies. My study shows how personality factors are linked to entrepreneurial

self-efficacy dimensions and also other variables. In this section, I discuss the results

from my study.

6.6.1 Relationship between personality characteristics and entrepreneurial self-

efficacy

In relation to the impact of personality characteristics such as need for achievement,

internal locus of control and risk-taking propensity on entrepreneurial self-efficacy, it is

found that need for achievement and risk-taking have a positive relationship with every

dimension of entrepreneurial self-efficacy (searching, planning, marshalling,

implementing people-related tasks, implementing finance-related tasks and coping with

unexpected challenges). As mentioned earlier in Chapter 4, this is the first time ESE

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was empirically tested for the effect of each dimension in the case of practicing

entrepreneurs. There was positive association between internal locus of control and

three dimensions of entrepreneurial self-efficacy, namely implementing-people-related

tasks, implementing-finance tasks and coping with unexpected challenges. These

results have demonstrated that overall, personality characteristics of Indian

entrepreneurs do have an impact on their entrepreneurial self-efficacy. This is in line

with previous studies done in other countries where personality characteristics have

been found to affect self-efficacy (Bandura 1986; Phillips & Gully 1997; Zhao, Seibert

& Hills 2005). In the Indian context, the results show that most of the entrepreneurs

possess these personality characteristics, and their importance is reiterated.

6.6.1.1 Personality characteristic of need for achievement and entrepreneurial self-

efficacy

In regard to the association of the need for achievement and entrepreneurial self-

efficacy, the results are as expected. For instance, Hansemark (2003) remarks that

individuals with a higher need for achievement feel that they should do something better

than others or even their own personal accomplishment. These individuals will

therefore take personal responsibility and find solutions to challenges and problems.

Their willingness to do so can be linked to their confidence in their ability to undertake

that responsibility. In previous studies, it is seen that there is a positive relationship

between achievement motivation and entrepreneurship (Johnson 1990), and more

entrepreneurs have a higher need for achievement than non-entrepreneurs (McClelland

1965; Langan-Fox & Roth 1995; Stewart & Roth 2007). It is also known that people

who have self-efficacy are the ones who will successfully perform the entrepreneurial

roles (Chen, Greene & Crick 1998). Building on these two lines of theory, we can infer

that individuals who are undertaking entrepreneurial roles are mainly the ones with a

higher need for achievement and a higher entrepreneurial self-efficacy. Thus it is not

surprising to note that the results from my study indicate a positive relationship between

entrepreneurs who had a higher need for achievement and all the dimensions of their

entrepreneurial self-efficacy.

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6.6.1.2 Personality characteristic of internal locus of control and entrepreneurial self-

efficacy dimensions

With regard to entrepreneurs who have a high internal locus of control, it is seen that

they have more confidence in their capabilities in three of the six dimensions of self-

efficacy. Past studies have shown a convergence between general self-efficacy and

internal-external locus of control (Sherer et al. 1982) and between specific self-efficacy

measures and general locus of control (Chen, Greene & Crick 1998). As also pointed

out by Phillips and Gully (1997), the perception of being able to control an event has a

positive effect on self-efficacy. However, locus of control is a generalised construct,

while self-efficacy refers to an individual’s conviction of his/her ability to perform a

more specific task in a given situation (Boyd & Voziki 1998; Gist 1987). Therefore,

Chen, Greene and Crick (1998) and Wilson, Kickul and Marlino (2007) believe that an

individual could have a strong internal locus of control covering a variety of situations,

but have low self-efficacy in undertaking certain tasks. In line with this argument, the

results of this study show that entrepreneurs who had a high internal locus of control

perceived a higher level of confidence in the entrepreneurial self-efficacy dimensions of

implementing people-related tasks, finance-related tasks and coping with unexpected

challenges. However, this characteristic did not show any influence on the dimensions

of searching, planning and marshalling. Perhaps the lack of relationships is because

undertaking these activities may require specific procedures and not dependent on an

entrepreneur’s internal locus of control.

While the results show that internal locus of control is not associated with all the

dimensions of self-efficacy, it is interesting to note that there is a positive association

between internal locus of control and the dimensions of implementing people-related

and implementing finance-related tasks. Believing in one’s capabilities to manage

investor relationships, and to attract, retain and manage personnel are important

dimensions of self-efficacy for growth-oriented entrepreneurs as identified by a number

of researchers (Eggers, Leahy & Churchill 1994; DeNoble, Jung & Ehrlich 1999;

McGee et al. 2009). Also in past studies, (see Boone, Brabander & van Witteloostuijn

1996) it has been suggested that individuals with high internal locus of control believe

that they can use their skills and efforts to control events. It is therefore reasonable to

expect that entrepreneurs who have a high internal locus of control would have a high

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self-efficacy in carrying out people-related and finance-related responsibilities. My

study shows a positive association in these relationships.

Not surprisingly, the results also show a relationship between internal locus of control

and coping with unexpected challenges. DeNoble, Jung and Ehrlich (1999) found that

entrepreneurs who spent more time preparing their own business had a stronger

perception of their capability to cope with unexpected challenges. In this study, the

entrepreneurs are owner-mangers, so it is expected that they will have more confidence

in their ability to cope with unexpected challenges. This is necessary in countries like

India, where the business environment is very volatile. Similarly, it would be expected

that if they have a high internal locus of control, the entrepreneurs would be more likely

to have more confidence in their ability to cope with externalities, rather than leave it to

chance or others.

6.6.1.3 Personality characteristic of risk-taking propensity and entrepreneurial self-

efficacy dimensions

Scholars have proposed that entrepreneurs have to have a high risk-taking propensity to

start a business venture and undertake entrepreneurial functions (e.g., Schumpeter 1934;

Carland III et al. 1995). Further, it is also suggested that individuals who have a high

risk-taking propensity will be more likely to pursue entrepreneurial activities because

they believe they have more confidence to undertake these activities (Zhao, Seibert &

Hills 2005). Other authors (Markman, Balkin & Baron 2002) also reiterate that such

individuals will be positively associated with entrepreneurial self-efficacy. The results

of my study suggest that practicing entrepreneurs with a high risk-taking propensity also

have a high entrepreneurial self-efficacy, as we can see that the association of risk-

taking propensity was positive with all the dimensions of entrepreneurial self-efficacy

tested in the analysis. In an emerging economy like India, many entrepreneurs do not

have adequate market knowledge and they learn as they go. For them, the personality

characteristic of risk-taking propensity is extremely useful, as it strengthens their

entrepreneurial self-efficacy, which in turn is important in India in the context of caste

and conservatism. Interestingly, a recent study (Krishnan 2013) of Indian entrepreneurs

shows a positive relationship between risk and entrepreneurial success.

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6.6.2 Relationship between entrepreneurial self-efficacy and entrepreneurial behavioural activities

Self-efficacy has been linked to predicting an individual’s behaviour (Bandura 1982)

and it has been seen as an important variable to predict an individual’s performance in a

given task (Shane, Locke & Collins 2003). Therefore, the relationship between six

dimensions of an entrepreneur’s self-efficacy and eight dimensions of entrepreneurial

behavioural activities was tested.

The relationship between entrepreneurial self-efficacy and entrepreneurial behavioural

activities indicated that entrepreneurs who were confident in their ability to implement

people-related activities also engaged in activities such as controlling, internal

communication, human resources management, work-related tasks and customer service

very efficiently. All these activities (with the exception of controlling) are

entrepreneurial activities that are concerned with dealing with people (i.e. employees

and customers). Bridge, O’Neill and Cromie (2003) note that self-efficacy perceptions

are linked to intentions which in turn lead to behaviour. Therefore, it would be expected

that if the entrepreneur has a high self-efficacy in people-related activities, he/she would

also be able to undertake behavioural activities closely related to people as found in the

study.

As regards entrepreneurs who had a high self-efficacy in the implementing finance

dimension, they reported their ability to perform three behavioural activities efficiently:

controlling, work-related tasks and customer service, but not planning, internal

communication, human resources management, socialising and politicking behaviours.

It would be expected that having confidence in managing finance-related activities

would mean that the entrepreneur would focus on behaviours where there is a

possibility of impacting on finance, such as controlling, work-related tasks, as well as

customer service, since these three activities have a stronger link to higher earnings.

For example, engaging in customer service efficiently or controlling costs can have

financial implications for some firms (see Zeithaml 2000; Brinkmann, Salomo &

Gemuenden 2011). Of the relationships between finance-related entrepreneurial self-

efficacy and the dimensions of entrepreneurial behavioural activities that were not

found to be related, it appears that most of these behavioural activities (excepting

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planning) are people-related. That could perhaps explain why the influence of finance-

related entrepreneurial self-efficacy did not manifest.

The results show that the entrepreneurs who had high self-efficacy in coping with

unexpected challenges were able to perform well in activities related to human

resources management. Previous studies in human resources management found that the

founder-managers use non-traditional methods of managing staff (Cardon and Stevens

2004). It is a challenge to attract employees, train and reward them well in a relatively

new and small business. Having the confidence to cope with unexpected challenges, as

found in my study, may mean that entrepreneurs are well positioned to allow their

ventures to grow into a large organisation by attracting professional talent. However,

this variable - coping with unexpected challenges - was not found to be related to other

dimensions of entrepreneurial behavioural activities namely, planning, controlling,

internal communication, work-related tasks, customer service, socialising and

politicking. Similarly, the searching capability was also not found to be related to the

behavioural dimensions excepting with work-related tasks. Perhaps further studies may

be required to examine these relationships.

Interestingly, no association was found between the planning and marshalling

dimensions of entrepreneurial self-efficacy and any of the eight entrepreneurial

behavioural activities. This is a quite unexpected result. One reason could be that they

may depend on professionals such as accountants and lawyers, or alternatively, it may

be related to contextual factors that require further investigation.

6.6.3 Relationship between personality characteristics and entrepreneurial

behavioural activities

Past research in the personality domain have observed that behaviour is inextricably

related to personality traits (Epstein & O’Brien 1985). Bird, Schjoedt and Baum (2012)

explain that entrepreneurs’ behaviour relates to the concrete and observable actions of

individuals. Because the focus is the individual, Bird, Schjoedt and Baum (2012) point

out that an entrepreneur’s behaviour is the “proximal outcome of traits, knowledge,

skills, abilities, cognition, ... motivation, and emotion” (p. 890). However, only

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personality characteristics that match work characteristics have been touted as

predicting entrepreneurial behaviour (Rauch & Frese 2007a). The current study throws

light on some of the associations found between the three personality characteristics

studied and the various entrepreneurial behavioural activities. The three personality

characteristics examined were need for achievement, internal locus of control and risk-

taking propensity. The entrepreneurial behavioural activities taken into consideration

for testing were related to planning, controlling, internal communication, human

resources management, work-related tasks, customer service, socialising and

politicking. To the best of my knowledge, these associations have not been empirically

tested in any studies so far. The results show that there is a relationship between the

personality characteristics and some entrepreneurial behavioural activities.

6.6.3.1 Personality characteristic of need for achievement and entrepreneurial


The tests examining the relationship between the need for achievement and

entrepreneurial behavioural activities found that there is a positive significant

relationship between need for achievement and two entrepreneurial behavioural

activities: planning and customer service. Consistent with the findings from a meta-

analysis conducted by Collins, Hanges and Locke (2004), need for achievement or

achievement motivation appears to be an important characteristic related to

entrepreneurial action because it affects an individual’s decisions and behaviour over

the lifetime of the individual. Collins, Hanges and Locke’s (2004) study prompted

additional exploration. The results of my study suggest that entrepreneurs who have a

high need for achievement engage more effectively in planning and customer services

activities. The literature also shows that entrepreneurs with a high need for achievement

will most likely engage in activities that help them to succeed in their entrepreneurial

efforts. The activities of planning and customer service are key to the success of any

entrepreneurial venture. In saying this, the other behavioural activities such as

controlling, internal communication, human resources management, work-related tasks,

socialising and politicking are also important behavioural activities that an entrepreneur

would be expected to engage effectively in, but the findings did not show any

association between an entrepreneur’s high need for achievement and these behavioural

219

activities. This may need further probing to gain insights into these relationships,

particularly if there are any other additional mediating or moderating effects.

As seen in the results section, entrepreneurs who have a high need for achievement do

not undertake politicking behavioural activities well. This may be because they may

view politicking behaviour as not contributing to the target they wish to achieve. These

people by definition are achievement-oriented and therefore they do not want to waste

their time engaging in a behaviour which is not a beneficial use of their time. Another

explanation could be that they realise that as individuals, they are not able to achieve

any benefit by politicking/lobbying. A recent study by Elg, Schaumann and Ghauri

(2012) found that some small firms found it more productive to lobby in collaboration

with other organisations rather than individually because it gave them more strength to

negotiate with pubic decision-makers in India. Therefore, these individual

entrepreneurs may wait for an opportune time to come together for this purpose,

particularly so as the group provides them with the necessary power of influence in a

hierarchical society like India.

Overall, we see the entrepreneurs with a high need for achievement performing

activities such as planning and customer service that are necessary to entrepreneurial

success, which is consistent with previous findings (Collins, Hanges & Locke 2004;

Tang & Tang 2007).

6.6.3.2 Personality characteristic of internal locus of control and entrepreneurial


Past studies have shown the concept of internal locus of control to encourage

entrepreneurial behaviour (Littunen 2000; Mueller & Thomas 2001). When empirically

tested with a range of entrepreneurial behavioural activities, the results show that there

is a positive significant relationship with three entrepreneurial behavioural activities:

controlling, socialising and politicking. It is expected that entrepreneurs with a high

internal locus of control have a higher perception of being in control (Boone, Brabander

& van Witteloostuijn 1996; Cromie & Johns 1983; Krueger 2009). This characteristic

clearly drives entrepreneurs to engage in entrepreneurial efforts and take responsibility

for their outcomes, rather than depending on others. Successful entrepreneurs are

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shown to believe that they have significant control over the outcomes of their firms

(Brockhaus 1980a). In this study, the findings show that entrepreneurs who have a high

internal locus of control are able to engage in controlling activities very efficiently.

Controlling activities entail activities that monitor the actual situation as well as the

performance in the firm, ensuring that the desired results are achieved (Luthans &

Ibrayeva 2006). This result also provides support for Krueger’s (1993) identification of

a close link between an individual’s desire for control and the initiating and maintaining

of goal-directed behaviour. This is an expected outcome, because it is typical for such

individuals to take responsibility for their actions, and for this purpose they must take

upon themselves those activities which can strongly determine the outcome.

The other behavioural activities that entrepreneurs with a high internal locus of control

engage effectively in are socialising and politicking. Socialising behavioural activity is

concerned with socialisation with outside entities such as suppliers, customers, bankers

and other business partners. Again, it seems that entrepreneurs who have a high internal

locus of control are engaging in activities where they would like to control the outcome.

With regard to politicking as well, these entrepreneurs have shown that they are

engaging in politicking activities effectively. The activities of socialisation and

politicking are not prescriptive or relevant in all situations. In some cases, they are

simply for relationship building. Therefore, these entrepreneurs are engaging in these

behaviours so that they have control of the outcome of these activities, rather than

leaving it to their employees or professional associations to manage.

Interestingly, the results show no association between internal locus of control and the

behavioural activities of planning, internal communication, human resources

management, work-related tasks and customer service. One explanation for this is based

on an educated guess that possibly these activities were considered to be mundane and

these entrepreneurs perhaps relied on their staff to carry out the functions, unlike

socialising and politicking as mentioned above.

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6.6.3.3 Personality characteristic of risk-taking propensity and entrepreneurial


As mentioned in the hypothesis development chapter, this study focuses on the need to

study the relationship of risk-taking propensity and the behavioural activities of the

entrepreneur that occur beyond the stage of starting a business. Risk-taking propensity

had a positive significant relationship with only the work-related tasks dimension of the

entrepreneurial behavioural activities. These entrepreneurs are able to carry out work-

related tasks very efficiently. It should be noted that in the literature since the early

definitions of entrepreneurs (Cantillon 1755/1931; Mill 1848), risk bearing has been a

major characteristic describing an entrepreneur. Risk-taking propensity is also argued

to be an important characteristic that leads an entrepreneur to undertake entrepreneurial

activities, since such activities have inherent risks associated with them (Carland III et

al. 1995; Stewart et al. 1999). However, as we see in this study, high risk-taking

propensity was positively associated with only one of the entrepreneurial behavioural

activities, i.e. work-related activity. The reason for this could be that this activity

includes dealing with decision-making and negotiation, which could perhaps have an

element of risk involved.

On the other hand, it is very surprising that risk-taking propensity was not associated

with any of the other behavioural activities. It could be expected that high risk-taking

propensity would be positively associated with entrepreneurial behaviours such as

planning and politicking, where a greater deal of uncertainty lies. One clue may lie in

some previous studies that have found a strong association between risk-taking

propensity and business intention and initiation, but not the continued existence of the

business or entrepreneurial performance (Frank, Lueger & Korunka 2007; Zhao, Seibert

& Lumpkin 2010). Since the entrepreneurs chosen for my sample were practising

entrepreneurs, it may not be that important for them compared to nascent entrepreneurs.

As such, the stages in a venture’s life may become important to our understanding of

the entrepreneurship process.

The result that not all the characteristics have a direct effect on entrepreneurial

behavioural activities could also suggest that there may be an indirect effect of these

characteristics on the activities. In previous studies, it is also found that the relationship

222

between personality traits and behaviour is stronger only in situations that do not

constrain the individual (Adler 1996). Perhaps there are other constraining or

moderating factors that have not been included in the model being examined.

6.6.4 Impact of entrepreneurial overload on entrepreneurial self-efficacy

The results from my study show that entrepreneurial information overload had a

negative significant relationship with the searching, marshalling, implementing people

related tasks and coping with unexpected challenges capabilities. However, there seems

to be no association between entrepreneurial information overload and the

entrepreneur’s self-efficacy in planning and implementing finance-related tasks.

The negative impact of information overload on most of the entrepreneurial self-

efficacy dimensions is an expected outcome. Information overload can cause the

entrepreneur to feel stressed and under pressure when undertaking these entrepreneurial

tasks. This can also lower their perception of their own ability to make decisions related

to these tasks such as searching, marshalling or in implementation tasks when faced

with information overload. They feel overwhelmed by the amount of information and

not in control, and may be prone to wasting time and/or making mistakes. Time

pressure and making mistakes can further reduce their self-efficacy. These findings are

similar to previous research which found that psychological variables such as anxiety or

stress (in this case caused by information overload) can lead to dysfunctional

consequences and poor decision quality (Eppler & Mengis 2004), as well as negatively

impact on self-efficacy (Conger & Kanungo 1988). We also see that there is a strong

negative relationship between entrepreneurial information overload and the

entrepreneurial self-efficacy dimension of coping with unexpected challenges. Coping

with unexpected challenges is a key issue for any business to thrive, and information is

necessary to reduce uncertainity (Schick, Gordon & Haka 1999). As expected,

entrepreneurs do have to seek information when trying to cope with new challenges, and

with the presence of entrepreneurial information overload, they will doubt their ability

to cope with the challenges of discharging entrepreneurship responsibilities.

With regard to planning and financing dimensions, there seems to be no negative impact

from entrepreneurial information overload. This is surprising because the planning and

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financing are considered to be much more complex tasks. One possible explanation is

that entrepreneurs realise their inability in these areas and seek help from external

professionals such as management consultants and accountants. In such a situation, it

could be inferred that entrepreneurial information overload faced by the entrepreneur is

less likely to have an impact on these dimensions if they are able to pass or delegate

these responsibility to others, including professionals or even employees.

Overall, the results show that entrepreneurial information overload does have a negative

impact on most of the dimensions of entrepreneurial self-efficacy. The results confirm

the findings of a study undertaken by Hunter (2004) showing a negative influence of

information overload on self-efficacy as expected. While Hunter’s (2004) study was

done in a sales context, the findings of my study provide evidence of a negative impact

of entrepreneurial information overload on entrepreneurial self-efficacy. These results

also place entrepreneurial information overload as an important antecedent to

entrepreneurial self-efficacy. If entrepreneurial information overload leads to lowering

of entrepreneurial self-efficacy, that will lead to such individuals harbouring images of

failure (Chen, Greene & Crick 1998). This, in turn, is likely to have an adverse impact

on the critical process of entrepreneurship consisting of intentions, behaviour and

venture performance.

6.6.5 Impact of entrepreneurial information overload on entrepreneurial


The impact of entrepreneurial information overload on entrepreneurial behavioural

activities was also tested. The findings indicated that the relationship between

entrepreneurial information overload and the communication and work-related tasks

was negative and significant. This means that entrepreneurs who are impacted by

entrepreneurial information overload are not able to carry out internal communication

and work-related tasks effectively.

Internal communication is a key to success for any organisation, and scholars have

shown that there is a positive relationship between internal communication and

organisational effectiveness (Tkalac Verčič, Verčič & Sriramesh, 2012). This implies

that information transmission within the organisation is important. As van Zandt (2004,

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p.542) observes, “human communication is not merely the transmission of bits from one

computer to another; information must go from brain to brain”. Entrepreneurs are

information seekers and therefore they have to disseminate information they receive to

their employees. With entrepreneurs feeling overloaded with information, their ability

to undertake activities like internal communication can be severely affected. A possible

explanation could be that entrepreneurs are limited in their ability or lack sufficient

tools to process all the information they receive due to the sheer volume of information,

and in the process, they do not have the time to filter relevant information. Such

problems may have an impact on their ability to communicate.

Similarly, information overload can also impact on their ability to undertake work-

related tasks effectively, as can be seen from the results of this study. Past studies in

other areas such as consumer information processing have shown decision efficiency to

decrease when information overload is increased (Jacoby 1975). The work-related tasks

are concerned with how the entrepreneur participated in activities such as pricing

decisions for key customers, negotiating with suppliers, or dealing with invoices which

require decision making on the part of the entrepreneur. This is in line with past

research. For example, it was found that information overload impacted on a manager’s

task accomplishment negatively (Klausegger, Sinkovics & Zou 2007), reduced an

individual’s ability to make good decisions (Speier, Valacich & Vessey 1999), and

reduced the overall effectiveness of the management operations (Allen & Wilson 2003).

Interestingly, the hypothesis for the association of entrepreneurial information overload

to the politicking dimension of entrepreneurial behavioural activities was rejected. In

this situation, it could perhaps be attributed to the case where the entrepreneurs could be

stressed due to entrepreneurial information overload and they then resort to politicking

to rescue themselves. Further, contrary to my expectations, my results indicate that

entrepreneurial information overload has no influence on the other behavioural

dimensions such as planning, controlling, human resources management, customer

services and socialising. There could be two possible explanations for this. The

entrepreneurs may delegate their responsibilities to professionals or their own

employees. Alternatively, they may establish structured or robust decision systems to

mitigate the negative effects of entrepreneurial information overload. In a recent study,

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Stewart, May and Kalia (2008) observed that Indian entrepreneurs scan the environment

more frequently than their US counterparts. This could be an attempt to overcome the

‘institutional voids’ that were identified by Khanna and Palepu (1997). India, being one

of the leading economies in the area of information technology and the use of mobile

phones, provides a rich platform for further investigation of these issues.

6.7 Chapter summary

This chapter presented the sample characteristics, measurement properties, the results of

the path analysis used to test the hypotheses, and a discussion of the results. Each path

identified in the conceptual model has been tested using regression-based path analysis.

Path one examined the association between the personality traits and entrepreneurial

self-efficacy. Path two examined the association between entrepreneurial self-efficacy

and entrepreneurial behaviour. Path three examined the association between personality

traits and entrepreneurial behaviour. Paths four and five examined the association

between entrepreneurial information overload and dimensions of entrepreneurial self-

efficacy and entrepreneurial behavioural activities respectively. The results of each of

the paths are reported and analysed. The above results contribute to theoretical and

practical implications, which are discussed in the last section in the light of the existing

literature.

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CHAPTER 7

CONCLUSION

This chapter has five sections. First, I have summarised the purpose of the study, the

research context, the research methods employed and the main results of my research.

Second, I outline the theoretical contribution made by this study to entrepreneurship,

including the generalisibility of the conceptual model used in my study. Third, I have

highlighted the practical contributions that stem from the findings of the study. Fourth,

I point out the limitations of my study. Finally, I make recommendations for future

research in this field.

7.1 Summary of the study

7.1.1 Purpose of the study

Given that entrepreneurship is an integral part of the economic development for any

country, this domain has received, in recent decades, an increased amount of interest

from a variety of stakeholders such as entrepreneurs, business owners, government

agencies, and policy makers. Similarly, academic research relating to this domain has

also intensified as evidenced by the number of articles being published, and an increase

in the number of journals concentrating on entrepreneurship (32 journals as per the

ABDC Journal Quality List, 2013). Despite the growth of research in entrepreneurship,

some scholars (Bird, Schjoedt & Baum 2012; Davidsson, Low & Wright 2001) have

pointed out that there is still much to discover about the role of practicing entrepreneurs

and their behaviour. Based on a thorough literature review, I have identified some

important gaps that need researchers’ attention and which could lead to beneficial

theoretical developments in this field. These are as follows:

a) Previous studies have found ESE to be a reliable and important predictor of

entrepreneurial competence and behaviour. They also found that the construct of

ESE consisted of different dimensions. However, there were no studies that

empirically tested each of these dimensions separately for their effect on practicing

entrepreneurs who were managing real businesses in the field.

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b) Bird and Schjoedt (2009) pointed out that many studies have used students as

respondents for studies on ‘nascent entrepreneurs’ who may not have become actual

entrepreneurs. While this stream of research is useful to understand entrepreneurial

intention to some extent, it cannot be a substitute for the richness required in the

understanding of practicing entrepreneurs who confront real challenges and who

make entrepreneurial decisions that affect their venture’s performance.

c) An area that has not received much scholarly attention is entrepreneurial behaviour

(Bird, Schjoedt & Baum 2012; Gartner, Carter & Reynolds 2010). To understand

what entrepreneurs actually do, a few studies (e.g., Luthans & Ibrayeva 2006;

Mueller, Volery & Siemens 2012) have collated a list of entrepreneurial behavioural

activities by observing what practicing entrepreneurs do. However, none of these

studies have empirically examined entrepreneurial behavioural activities or linked

them with other entrepreneurship variables.

d) Most of the studies in the area of entrepreneurship have been undertaken in

developed countries, and entrepreneurship theory was developed based on such an

understanding. Therefore, Zahra (2007) recommends adapting existing

entrepreneurship theories to emerging economies. For example, India is a large

economy with a large number of micro- and small businesses, but the amount of

research done in the area of entrepreneurship does not fairly represent the

entrepreneurial activity (Bruton, Ahlstrom & Obloj 2008). Therefore, India, as an

example of an emerging economy, offers an important context to undertake this

entrepreneurship research.

e) Entrepreneurs have been referred to as ‘avid information gatherers’ (Kaish & Gilad

1991) and they seek information right from the start of seeking opportunities. While

gathering information and the importance of information for decision-making have

been examined, the problem of information overload caused by the recent explosion

of information and communication technologies has not been examined in the area

of entrepreneurship, although it has been examined in other areas.

My study sought to address the above mentioned gaps identified in the literature.

Specifically, the purpose of my study was to examine the relationship between various

factors such as an entrepreneur’s personality characteristics, entrepreneurial self-

efficacy, entrepreneurial behavioural activities and entrepreneurial information overload

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in the context of an emerging market. The exact relationships examined empirically

were as follows:

i) the impact of personality characteristics on entrepreneurial self-efficacy;

ii) the impact of entrepreneurial self-efficacy on entrepreneurial behavioural

activities;

iii) the impact of personality characteristics on entrepreneurial behavioural

activities;

iv) the impact of entrepreneurial information overload on entrepreneurial self-

efficacy; and

v) the impact of entrepreneurial information overload on entrepreneurial


7.1.2 Research context

Emerging economies are characterised by the rapid pace of economic development and

an environment where government policies lean towards economic liberalisation and the

adoption of a free-market system (Hoskisson et al. 2000, p. 249). These economies

have also been experiencing significant socio-economic changes, resulting in changes to

the demographic characteristics such as fertility rates and education status. More

importantly, there is a huge development in the business sector where private firms are

on the rise, showcasing entrepreneurial talent and positioning such countries as

important economies in the global scenario. But entrepreneurship research is relatively

limited and many areas are left unexplored in emerging economies. Due to their large

population and high growth rates of their economies, emerging economies are attractive

global markets. India is one such important emerging economy with a population of

nearly 1.3 billion and a growing economy consisting of numerous micro-, small and

medium enterprises, in addition to large corporations. My study allowed me to consider

the application of existing entrepreneurship theories developed in advanced economies

to an emerging economy like India. For this purpose, I have examined a conceptual

model that consisted of variables such as entrepreneurs’ personality characteristics, their

self-efficacy, behavioural activities and information overload.

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7.1.3 Research methods and results

This study used a positivist approach, using the deductive process of theory testing.

Based on the literature review, a conceptual model was developed and a set of

hypotheses was presented. The concepts identified in the conceptual model were

operationalised based on the past studies. The sample for the current study was drawn

from practicing entrepreneurs in India. Data were collected from these entrepreneurs

using surveys. The tests of reliability and validity of the measurement scale used in the

study established the psychometric rigour of the conceptual model put forward for

empirical testing. Each path identified in the conceptual model has been tested using

regression-based path analysis. The results of the hypotheses are summarised below:

1. I have examined the relationship between three personality characteristics of

entrepreneurs, namely the need for achievement, internal locus of control and risk-

taking propensity, and six dimensions of entrepreneurial self-efficacy. I found that

the need for achievement and risk-taking propensity have a positive relationship

with every dimension of entrepreneurial self-efficacy. With regard to the impact of

internal locus of control, I found that it is positively related to three dimensions of

entrepreneurial self-efficacy, namely implementing-people, implementing-finance

and coping with unexpected challenges, but not for the other three dimensions.

2. Next, I have examined the relationship between the entrepreneurs’ personality

characteristics and entrepreneurial behavioural activities. I found that there is a

positive relationship between the personality characteristic of need for achievement

and the entrepreneurial behavioural activities of planning and customer service

activities. With regards to the personality characteristic of internal locus of control,

I found a positive relationship with three entrepreneurial behavioural activities,

namely controlling, socialising and politicking. On the other hand, the personality

characteristic of risk-taking propensity had a positive relationship with only the

work-related tasks of entrepreneurial behaviour.

3. The relationship between entrepreneurial self-efficacy and entrepreneurial

behavioural activities was also examined. It is pertinent to note that there are six

dimensions in the construct of entrepreneurial self-efficacy and eight dimensions in

the construct of entrepreneurial behavioural activities. My examination of these

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relationships shows that not all dimensions of entrepreneurial self-efficacy and

activities of entrepreneurial behavioural activities are related significantly. The

entrepreneurial self-efficacy dimension of searching capability was positively

associated with entrepreneurial behaviours of the work-related tasks dimension.

The entrepreneurial self-efficacy dimensions of planning and marshalling were not

associated with any of the entrepreneurial behavioural activities. The entrepreneurial

self-efficacy dimension of implementing-people was positively associated with five

dimensions of entrepreneurial behavioural activities, namely controlling, internal

communication, human resources management, work-related tasks, and customer

services. The implementing-finance dimension of entrepreneurial self-efficacy was

positively related with three entrepreneurial behaviours, namely controlling, work-

related tasks and customer services. The entrepreneurial self-efficacy dimension of

coping with unexpected challenges was found to be positively associated with the

entrepreneurial behaviour activity of human resources management.

4. The results examining the impact of entrepreneurial information overload on six

dimensions of entrepreneurial self-efficacy revealed that it had a negatively

significant relationship with four dimensions of entrepreneurial self-efficacy,

namely searching, marshalling, implementing people and coping with unexpected

challenges capabilities. The two dimensions not found to be significantly related

were planning and implementing finances.

5. The impact of entrepreneurial information overload on eight entrepreneurial

behavioural activities was also tested. The results indicated that entrepreneurial

information overload was negatively related to two entrepreneurial behavioural

activities, namely the communication and the work-related tasks.

7.2 Contribution to theory

After a comprehensive literature review of key factors that affect entrepreneurship, a

conceptual model was developed which showed potential relationships between

personality characteristics of entrepreneurs, their self-efficacy and entrepreneurial

behaviour. It also included the impact of information overload, which, although

recognised as an issue, has not been empirically tested in the discipline of

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entrepreneurship. All of these key proposed relationships were empirically tested in my

study in an emerging economy context making a significant contribution to the

literature. The main contributions to theory are mentioned below:

1. Zahra (2007) suggested that existing theories developed in the West should be

tested in the emerging economies. Taking a cue from that suggestion, I was able to

develop a model and test that in an emerging economy. The results in the area of

personality traits and entrepreneurial self-efficacy were on the lines predicted based

on existing theory (Philips & Gully 1997; Zhao, Seibert & Hills 2005). With regard

to entrepreneurial behaviour, I was able to convert observed behaviour into

objective constructs and test the relationship with entrepreneurs’ personality

characteristics and entrepreneurial self-efficacy. The results indicated some positive

relationships. This provides a basis for further research.

2. By studying the Indian entrepreneurs, this research has added value to the

entrepreneurship studies undertaken in the emerging economies. While India has a

growing population of entrepreneurs, the quantity of published research in this area

is not a fair representation of the magnitude of the entrepreneurial activity. Thus

this study contributes to gaining a better understanding of practicing Indian

entrepreneurs.

3. While previous studies have recognised the multi-dimentionality of the concept of

entrepreneurial self-efficacy, they used a composite score to measure its effect and

thereby were not in a position to capture the effect of individual dimensions. One

prominent exception has been McGee et al. (2009), who identified five different

dimensions within entrepreneurial self-efficacy. I have used these five multi-

dimensions along wth another dimension of ‘coping with challenges’ identified by

DeNoble et al. (1999). The results from my study confirm the need to treat the self-

efficacy dimensions separately, even in an emerging economy.

4. Bird et al. (2012) called for more studies to test entrepreneurial behavioural

activities using well constructed multi-item measures. Following this call, I have

developed a scale to operationalise the entrepreneurial behaviours based on the

observed activities by Luthans and Ibreyeva (2006) in a transitional economy. The

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results from my study show how entrepreneurial behaviours are impacted by other

factors of entrepreneurship, and lay the ground for further research in this area.

5. The concept of information overload has been extensively applied in fields such as

psychology, organistion science, marketing, accounting and management

information system (Eppler & Mengis 2004). However, its application in the

entrepreneurship domain is not that visible. To the best of my knowledge, my study

is the first of its kind where the concept of information overload has been

empirically tested for its impact on entrepreneurship. Results indicate the negative

influence on some dimensions of self-efficacy and entrepreneurial behaviours, as

hypothesised, and confirm the relevance of information overload to entrepreneurship

literature.

7.3 Practical implication of the results

The results from this study have several implications for educators, practitioners and

policy makers. I discuss them below:

7.3.1 Implications for educators of entrepreneurship

i) My study shows that the theories of entrepreneurship developed in the mature

economies can be applied to emerging economy contexts as recommended by Zahra

(2007). However, these concepts have to be suitably modified and adapted after

thoroughly examining the local socio-economic environment.

ii) Entrepreneurial self-efficacy was identified as a multi-dimensional construct in

recent studies. My study considered six dimensions in entrepreneurial self-efficacy and

examined each of them empirically for their impact on other variables, for example on

personality characteristics and entrepreneurial behavioural activities. Educators can

now design entrepreneurship courses to train students in specific competences that can

help build their entrepreneurial self-efficacy and improve behavioural outcomes.

Furthermore, as careers and professions become more specialised, it will be useful to

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identify industry-specific entrepreneurial self-efficacy dimensions and match them with

the industry-specific tasks.

iii) Traditionally, the focus of educators was on developing entrepreneurship skills in

nascent or potential entrepreneurs to start a new venture, but my study identified and

tested specific entrepreneurial behavioural activities of practicing entrepreneurs who are

managing real businesses. This identification of entrepreneurial behavioural activities

can guide educators to also design curricula to train practicing entrepreneurs in

important behavioural activities that are relevant to an industry and / or region.

iv) By identifying and empirically examining the role of entrepreneurial information

overload in my study, I have brought this concept into the entrepreneurship domain.

My results showed that information overload has adversely impacted on some

dimensions of entrepreneurial self-efficacy and entrepreneurial behavioural activities.

Educators can bring this aspect of information overload into the mainstream of the

entrepreneurship curriculum and prepare students with appropriate tools to meet this

new environmental challenge.

7.3.2 Implications for entrepreneurship practitioners

i) Personality characteristics of entrepreneurs were found to impact on entrepreneurial

self-efficacy dimensions. Practicing entrepreneurs should recognise the importance of

the variables that are relevant to industry and gain competence in them.

ii) My study has empirically tested eight specific activities of entrepreneurial

behavioural activities for their relationship with three characteristics of personality and

six dimensions of entrepreneurial self-efficacy. Using this approach, practicing

entrepreneurs in emerging economies can identify important behaviours that help them

to perform effectively in their ventures. They can even prioritise these behaviours based

on the needs of their venture or local business environment.

iii) As a corollary to the above point, entrepreneurial behavioural activities were found

to have certain antecedents in the form of personality characteristics, entrepreneurial

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self-efficacy and entrepreneurial information overload. It will be useful for

entrepreneurs to introspect and assess their cognitive abilities and competences.

iv) Information overload was found to adversely impact on many dimensions of

entrepreneurial self-efficacy and some activities of entrepreneurial behavioural

activities. Hence, it becomes necessary, even in an emerging economy like India, to

reduce information overload by applying heuristics and other time management tools

and techniques.

7.3.3 Implications for policy makers

i) Many government agencies offer entrepreneurship training programmes. However,

they mainly focus on writing a business plan or starting a new venture. The results from

my study provide some practical input for designing programmes that focus not only on

how to start new ventures, but also how to manage them by learning behaviours

required in the field.

ii) Results from my study show that entrepreneurs in India possess competences

relevant for entrepreneurship. Using my study’s approach, governments and other non-

governmental bodies can identify the deficient competences among entrepreneurs and

train them by designing policies and establishing appropriate infrastructure.

iii) Since we know that a large part of India’s workforce is engaged in the informal

economy, and that the average number of employees, even in registered firms, is low (3

to 5 employees based on different studies), it is important for government to channel

efforts and resources to improve the productivity and scalability of the small business

entrepreneurs. Therefore, the creation of a supportive culture to improve entrepreneurs’

cognitive and behavioural capabilities through multiple government agencies is

necessary in order to leverage economic gains through entrepreneurship.

iv) Given the increased impact of information overload on the modern-day

entrepreneurs and business owners, it is necessary that they be provided with support

through appropriate institutions. For example, this could take the form of a one-stop

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centre where relevant and commonly required information is made available to

entrepreneurs or online resource and support centres could be developed.

7.4 Limitations of the study

Although my study has some significant contributions to make to the literature and

practicing entrepreneurs, I recognise that there are quite a few limitations to it.

First, the main limitation is the generalisability of the results, due to the fact that my

sample is drawn from India only. While India is an advanced and large emerging

economy which shares many common characteristics with other emerging economies,

the contextual factors vary across countries. Therefore, care should be taken before

these results are applied directly to another emerging economy, or even mature

economies, without further testing of this model in those countries.

Second, the sample was drawn from cities that are quite dispersed in India, and which

may not be homogenous in their characteristics. Hence the findings of this study may

not be generalisable to all the entrepreneurs in India, and particularly to those in the

rural areas.

Third, due to time and travel constraints, the questionnaires were self-administered.

There could have been some issues relating to language or conceptual clarity. A

significant proportion of responses (about 30 percent) had to be discarded for various

reasons, and some of them could be due to this factor.

Fourth, there could be a bias from self-reporting. Carr and Sequeira (2007) highlighted

the possibility that respondents may overstate their perceived ability. This bias may

have occurred in my study if some respondents overstated their perceived ability on

certain variables.

7.5 Directions for future research

The results from my study can lead to several research initiatives. I briefly discuss each

of them below:

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First, further research could be undertaken so as to determine the generalisability of the

results of this study. Since the multidimensionality of the entrepreneurial self-efficacy

was empirically tested and the results showed that each dimension had a different

influence, it is important to do more research both in developed and emerging

economies on each of these dimensions of entrepreneurial self-efficacy. Further, there

may be additional dimensions that could be identified.

Second, although the study was done in India as a whole, the sample did not cover all

areas to adequately represent the country fully. In a large country like India, there are

several regional variations based on cultural and religious practices. Hence, future

research could include replicating this study for the various regions in India to gain

insights into what is relevant to a localised context.

Third, this study provides insights into the impact of entrepreneurial information

overload on entrepreneurial self-efficacy and entrepreneurial behavioural activities.

Future research adopting the construct of entrepreneurial information overload should

employ a more extensive measure for this construct to ensure adequate domain

coverage. An exploration of the causes of entrepreneurial information overload will

help to better understand when and how entrepreneurs are impacted. It will also be

interesting to find out the impact of entrepreneurial information overload on the

different stages of the entrepreneurial venture i.e., opportunity identification, starting the

venture and growing the venture. Such a study would help understand the information

needs of entrepreneurs and how such information-seeking behaviour is impacted by

entrepreneurial information overload.

Fourth, my study in an emerging economy found an adverse impact of entrepreneurial

information overload on entrepreneurship. Given this finding, it is likely that

entrepreneurial information overload will impact on entrepreneurs in mature economies

even more. Therefore, similar studies could be undertaken in future in other emerging

economies as well as in developed countries. The findings of such research would be

helpful in offering important extensions to the entrepreneurial information overload

construct used in my study.

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Fifth, the conceptual framework of my study has not included venture performance.

Future research, therefore, can examine how personality characteristics, entrepreneurial

self-efficacy and entrepreneurial behavioural activities can impact on the performance

of a venture in terms of both financial and non-financial measures.

Sixth, using my conceptual framework to examine entrepreneurs industry-wise may

reveal the competences and cognitive abilities that are industry-specific. For example,

fast growing service industries such as software and tourism may need a different set of

capabilities compared to those from traditional industries such as mining or handicrafts,

some of which are still large contributors to the rural economy.

Finally, entrepreneurship is generally recognised as a process that can be divided into

three stages: pre-launch (the period prior to starting a venture), launch (the start-up

phase) and the post-launch (the period of development beyond the start-up phase).

Perhaps a longitudinal study could be done to capture the impact of the constructs at

different points in the process of the venture. It would be interesting to compare the

four dimensions used in this study in the early stages of the venture development as

opposed to the more mature enterprise.

7.6 Concluding remarks

Overall, my study extends previous research in the area of personality characteristics,

entrepreneurial self-efficacy and entrepreneurial behavioural activities, and it created a

new conceptual model for empirical testing. It also included a new variable in the form

of entrepreneurial information overload. Although the importance of personality

characteristics, entrepreneurial self-efficacy and entrepreneurial behavioural activities

are widely acknowledged, there is still a dearth of such studies, particularly so in

emerging economies. The results suggest that the personality characteristics of need for

achievement, internal locus of control, and risk-taking propensity are positively related

to entrepreneurial self-efficacy, even in India, an emerging economy, which is similar to

the relationships found in previous studies conducted in mature economies. It is also

seen that entrepreneurs from emerging economies are adversely affected by information

overload. If that is the case in an emerging economy, it is very likely to have an adverse

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impact on entrepreneurs in mature economies. Overall, my study takes an important

step towards understanding entrepreneurs in a large emerging economy such as India,

and also establishes a robust research platform for future research that can be used both

in emerging and mature economies.

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APPENDICES Appendix A.1

Ethics Approval from the Swinburne’s Human Research Ethics Committee (SUHREC), Swinburne University of Technology

SUHREC Project 2012/005 Ethics Clearance

From: Kaye Goldenberg <[email protected]> To: [email protected] Cc: Nadine White <[email protected]> Date: 2/7/2012 2:00 PM To: Dr Malcolm Abbott, FHEL/ Ms Manisha Karia [BC: Ms Manisha Karia] CC: Ms Nadine, White, Research Admin. Co-ordinator, FHEL Dear Dr Abbott, SUHREC Project 2012/005 Entrepreneurial self-efficacy and entrepreneurial performance: The moderating role of Information Overload Dr Malcolm Abbott, FHEL/ Ms Manisha Karia Approved Duration: 07/02/2012 To 07/02/2013 [Adjusted] I refer to the ethical review of the above project protocol undertaken on behalf of Swinburne's Human Research Ethics Committee (SUHREC) by SUHREC Subcommittee (SHESC4) at a meeting held on 20 January 2012. Your response to the review as e-mailed on 6 February 2012 was reviewed by a SHESC4 delegate. I am pleased to advise that, as submitted to date, the project has approval to proceed in line with standard on-going ethics clearance conditions here outlined. - All human research activity undertaken under Swinburne auspices must conform to Swinburne and external regulatory standards, including the National Statement on Ethical Conduct in Human Research and with respect to secure data use, retention and disposal. - The named Swinburne Chief Investigator/Supervisor remains responsible for any personnel appointed to or associated with the project being made aware of ethics clearance conditions, including research and consent procedures or instruments approved. Any change in chief investigator/supervisor requires timely notification and SUHREC endorsement.

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- The above project has been approved as submitted for ethical review by or on behalf of SUHREC. Amendments to approved procedures or instruments ordinarily require prior ethical appraisal/ clearance. SUHREC must be notified immediately or as soon as possible thereafter of (a) any serious or unexpected adverse effects on participants and any redress measures; (b) proposed changes in protocols; and (c) unforeseen events which might affect continued ethical acceptability of the project. - At a minimum, an annual report on the progress of the project is required as well as at the conclusion (or abandonment) of the project. - A duly authorised external or internal audit of the project may be undertaken at any time. Please contact me if you have any queries about on-going ethics clearance. The SUHREC project number should be quoted in communication. Chief Investigators/Supervisors and Student Researchers should retain a copy of this e-mail as part of project record-keeping. Best wishes for the project. Yours sincerely Kaye Goldenberg Secretary, SHESC4 ******************************************* Kaye Goldenberg Administrative Officer (Research Ethics) Swinburne Research (H68) Swinburne University of Technology P O Box 218 HAWTHORN VIC 3122 Tel +61 3 9214 8468

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Appendix A.2

SUHREC Project 2012/005 Final Report Acknowledgment

Keith Wilkins <[email protected]> Tue, Jul 22, 2014 at 4:39 PM

To: "[email protected]" <[email protected]> Cc: Malcolm Abbott <[email protected]>, Robyn Watson <[email protected]>, RES Ethics <[email protected]>, Anne Cain <[email protected]>

To: Ms Manisha Karia cc Assoc Prof Malcolm Abbott, FBE Dear Manisha SUHREC Project 2012/005 Entrepreneurial self-efficacy and entrepreneurial performance: The moderating role of Information Overload Revised Project Title: The Influence of Entrepreneur Personality and Self-Efficacy on Behavioural Activities in the Presence of Information Overload Dr Malcolm Abbott, FHEL/FBE; Ms Manisha Karia Approved Duration for Human Research Activity: 07/02/2012 To 07/02/2013 I confirm receipt of progress/final reports on the human research activity conducted for the above project in line with ethics clearance conditions issued. Best wishes for your higher degree submission. Yours sincerely Keith --------------------------------------------------------------------- Keith Wilkins Secretary, SUHREC & Research Ethics Officer Swinburne Research (H68) Swinburne University of Technology P O Box 218 HAWTHORN VIC 3122 Tel +61 3 9214 5218 Fax +61 3 9214 5267

tel:%2B61%203%209214%205218

tel:%2B61%203%209214%205267

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APPENDIX A.3 QUESTIONNAIRE PARTICIPANT CONSENT INFORMATION SHEET

FACULTY OF BUSINESS AND ENTERPRISE SWINBURNE UNIVERSITY OF TECHNOLOGY

Consent Information Statement

PROJECT TITLE: Entrepreneurial self-efficacy and entrepreneurial performance: The moderating role of Information Overload PRINCIPAL INVESTIGATOR(S): Ms.Manisha Karia, Doctoral student, Swinburne University of Technology, under the supervision of Associate Professor Malcolm Abbott, Associate Dean (Research), Swinburne University of Technology. WHAT IS THE STUDY ABOUT? The aim of the study is to identify how the performance of entrepreneurs is influenced by various factors such as personality characteristics, their self-confidence, and information availability. The study is particularly focused on entrepreneurs from emerging countries. You are invited to participate in this study by filling in the questionnaire enclosed with the consent information statement. WHY IS THE STUDY IMPORTANT? The current study focuses on entrepreneurial self-efficacy, entrepreneurial personality and will examine its relationship on entrepreneurial behavioural activities in the context of emerging markets. This study is important because: a) the focus is on understanding practicing entrepreneurs, b) theories developed in mature economies are examined for their relevance and application in emerging markets, and c) it helps in understanding the role of entrepreneurial information overload in the entrepreneur’s ability to perform their activities. WHAT IS THE RESEARCHER’S INTERESTS? This study is undertaken to wholly satisfy the requirements for my doctoral studies. In the process, I would share my findings through publication in journals and other forums relating to academic and professional bodies. WHAT DOES THE STUDY INVOLVE? Participation in the study involves filling in a questionnaire. This questionnaire has seven sections. For the most part, you will be required to tick or circle the options provided. Further, there is an opportunity, at the end of the questionnaire, to make any comment that you feel is relevant to the study. WHAT IS THE TIME COMMITMENT? Should you agree to participate, the completion of this questionnaire would take approximately 30 minutes of your time. There is no other commitment involved. WHAT ARE THE PARTICIPANT’S RIGHTS AND INTERESTS Your participation in this survey is voluntary. You are free to not answer any question that you feel uncomfortable about, and you may withdraw from the study at any time. Your

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identity will be kept confidential and anonymous. The data collected through this survey will be kept secure. You may seek clarification on any of the questions mentioned in the survey instrument. A summary of the research results will be made available to you, should you wish to see it. If you would like a copy of these findings, you can email me on [email protected]. By completing the questionnaire it will be deemed that you have given consent to participate in this research. WILL ALL DATA PROVIDED BE CONFIDENTIAL? You will not be required to give your name or identify yourself in the questionnaire. Data will be stored separately in a locked filing cabinet. No information about any individual will be given to Swinburne University of Technology, or to any other individual or organisation. All processed data will be stored electronically with password protection. Only the researcher Manisha Karia and her supervisors will have access to the data. The purpose of the study is to better understand entrepreneurs as a population and therefore you will not be identified individually. Data will be analysed and reported on an aggregate (group-level) basis only. Individual responses will not be analysed or reported, therefore individuals will not be identifiable. WHAT WILL BE THE RESEARCH OUTCOMES? This research is undertaken as part of the requirement for completion of the degree of PhD, hence will lead to publication of thesis. Findings from this project may also be shared with other academics through presentations in professional and academic bodies. They may also be published in academic journals. Your anonymity will be preserved and will not be identified in publications. HOW DO I TAKE PART IN THE STUDY? If you would like to participate in this research, please complete the questionnaire. Further information about the project – who to contact If you would like further information about the project, please do not hesitate to contact my supervisor: Dr Malcolm Abbott, Associate Dean (Research), Faculty of Higher Education Swinburne University of Technology, Lilydale Campus on 00 61 3 9215 7306 or at [email protected] Concerns/complaints about the project – who to contact: This project has been approved by or on behalf of Swinburne’s Human Research Ethics Committee (SUHREC) in line with the National Statement on Ethical Conduct in Human Research. If you have any concerns or complaints about the conduct of this project, you can contact:

Research Ethics Officer, Swinburne Research (H68), Swinburne University of Technology, P O Box 218, HAWTHORN VIC 3122.

Tel (03) 9214 5218 or +61 3 9214 5218 or [email protected] Please retain this sheet for your records.

mailto:[email protected]



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The influence of entrepreneur personality and self-efficacy on … · 2017. 5. 10. · entrepreneurial self-efficacy, but the internal locus of control was related positively only