Self-Efficacy
Introduction
The creation of successful enterprise and the state of becoming successful are some of the factors
that determine the success rates of entrepreneurs. (Low & MacMillan 1988) Entrepreneurship
involves creating a new item with value or additional value by devoting and spending some time
and effort on it in conditions where there are financial, social and psychic risks that may result in
rewards in terms of monetary for personal satisfaction and ultimate independence. (Kirzner
1979) Identifying the characteristics of an entrepreneur generally from the population instead of
using elaborate process oriented methods (Low & MacMillan 1988) The needs for an
entrepreneur to develop and achieve personal goals, risk taking propensity (Brockhaus 1980)
tolerance of ambiguity, locus of control are the possible traits that an entrepreneur may require to
be successful. These unique characteristics isolate and identify the entrepreneurs who are
successful. Personality traits have been identified as non-consequential when it comes to
determining and predicting reliable behavior of entrepreneurs. (Ajzen 1988; Gartner 1989) The
contextual factors that determine the success rate of entrepreneurs are the cultural ,social,
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economic and political factors that literally encourage new ideas and venture development like
work experience in similar trade, job displacement (Shapero & Sokol 1982) urban life and ethnic
background ( Greenfield & Strickon 1981) Other factors like availability of initial venture
capital, political and governmental influences, customers availability, adequate transportation
and suppliers information, skilled labor, land and other related facilities also contribute largely to
the success rate of entrepreneurs.
Literature Review
Entrepreneurship and Self-Efficacy
To explain entrepreneurial activities certain theories and models have been developed. The
planned behavior theory focuses on the role intentions and power play when predicting focal
behavior. This theory believes that attitudes, perceived control also known as efficacy and
subjective norms are crucial when predicting intentions while perceived control and intentions
predict behavior.(Fini 2009;Ajzen 1991) Kruger’s (1993) model of entrepreneurial intention
suggests that perceived desirability and perceived feasibility predict intentions to make or
become an entrepreneur. The perceived self-efficacy and also the perceived social norms
backgrounds to perceived feasibility and durability (Kruger & Brazeal 1994)
According to several studies that have been conducted the determinants of entrepreneurial
intention reveal that several there are several factors that can be traced to particular individual ‘s
characteristics like age, employment, gender, marital status (Reynolds, Carter, Gartner, Green
and Cox 2002) Personality (Crant 1996) attitude (Wu & Wu, 2008), Locus of Control, goal
setting, self-efficacy (Zhao, Seibert & Hills 2005) and finally environmental factors (Lowe 2002)
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are directly responsible for entrepreneurial intention. The major factors however are self-
efficacy, personality traits and familial traits that affect entrepreneurial intentions directly.
Entrepreneurial Domains of Self-Efficacy
The ESE multidimensional construct suggest that Self-Efficacy should be used in all
entrepreneurial studies. The beliefs and the expected success rate are most likely to differ
depending on one’s goal either to start up a business or continue from an existing business.
Research has showed that very successful entrepreneurs who have started their own business
may not be very successful when expanding and growing it into a large successful business, in
the same way those who are very good in developing, expanding and growing a business may
not be very successful during the startup processes. (Ucbasaran 2000) By separating business
growth and startups, the scope of self-efficacy can be discussed in more substantive content.
Self-efficacy venture growth focuses on the beliefs of the entrepreneur in exploiting successfully
the current market value of the services or the products being manufactured while in business
startup processes the entrepreneurs successful beliefs would be in recognizing technological
innovations that may do well in the market or as a marketable product.
Pedagogical Implications
The nature of an entrepreneur self-efficacy it affects the effectiveness of business start-ups which
eventually determines success rates of the businesses. ESE requires that entrepreneurs develop
some beliefs to control and eradicate negative thinking. Many years of research has revealed that
entrepreneur training ignore many factors which are essential in facilitating the learning
processes of an entrepreneur. (Katz 2003)
Birds Model of the Intentions of an entrepreneur
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Bird’s model concept of entrepreneur intentions is anchored on the cognitive theory in
psychology. Cognitive theory attempts to find explanation for human behavior and also to
predict the future behavior. Intentions have been taken as the extensions and functions of beliefs
that connect beliefs and the eventual behavior. (Fishbein and Ajzen 1975) People generally form
attitudes towards the performance of certain behaviors and which results in specific
consequences just as much as the normative beliefs on such behaviors. Attitudes are mostly the
sources of most intentional behaviors. Fishbein and Ajzen (1975) illustrates these relationship as
Beliefs Attitudes Intentions Behavior
Other factors that also affect the relationship that exists between intention and behavior include
the rate at which the intention and behavior is measured and whether it’s with similar specificity,
volitional control, stability of intention or the rate or distance at which the person is ready to
carry his intention. Other factors that affect also influence this relationship are skills, willpower,
environmental factors and the influence of social behavior.
Bird (1988 1992) describes intention as the condition or state of mind or its ability to focus a
person’s attention, his experience or behavior that’s directed towards a particular object or even
the method of behavior. Bird suggests further that entrepreneurial intention is responsible for
direct key strategic thinking and major decisions while operating as a screen for viewing other
relationships, exchanges and resources.
Figure 1 Birds Contexts of Entrepreneurs and Intention relationships Abilities, Personality and Abilities Economic, Social & Political context
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Self-Efficacy and Bird’s Model
Recent research that have been carried out in social psychology have suggested the need to
modify the Birds entrepreneurial intentionality model so as to incorporate all the factors that
determine the strength between intentions and behaviors and the relationship that exist between
them. The critical determinant is the perceived behavior control. Intentions represent a person’s
willingness to pursue particular behaviors which in most instances reflect past experiences and
other future obstacles. (Ajzen 1987)The concept or theory of perceived control is related very
closely with the self-efficacy concept (Bandura 1977a) They both relate to particular perceptual
factors that are critical towards the achievement of specified behavior or goal. The degree or the
rate at which a person feels that he may is capable of successfully starting a particular business is
an important element of entrepreneurial intentions. Self-efficacy is suggests as a critical variable
when determining entrepreneurs strength of intentions and the chances that the intentions will
result into actions. Integrating self-efficacy into Birds concept adds some insight and
understanding of the cognitive process where entrepreneurial intentions have developed and are
manifested through specific behaviors.
Intuitive, Holistic Thinking Rational Analytic Thinking
Intentionality
Actions
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In the figure below, the perceived self-efficacy moderates the relationship that exists between the
entrepreneur intentions development and the chances that these likely hood will evolve or change
and result into entrepreneurial behaviors or actions. The intentions of the entrepreneurs will not
always create new ventures. An individual will only activate entrepreneurial activities when self-
efficacy is high when compared to the perceived needs of a particular opportunity. Most people
assess and calculate the psychological costs of failure like personal embarrassment, fear of
seeking employment again and the general loss of personal esteem (Campbell 1992) It’s possible
to positively identify potential entrepreneurs from general entrepreneurs, (those with good
entrepreneurial intentions but cannot implement them) by aligning the venture concept with their
current career, work, risks and family. Self-efficacy is the basis that underlies the construct that
gathers this psychological alignment. The relationship that exists between self-efficacy and
behavior (performance) has profound implications on the general development and growth of
entrepreneurial intentions and their actions. The entrepreneurial activities and the operating
environment that may translate the intentions of the entrepreneurs into action are essential to the
development of potential entrepreneurs.
Figure 2 Revised Birds Model (1988) in Context to the Entrepreneurial Intentionality
Personal History, Abilities and
Personality
Economic, Social and political
context.
Stored Information and beliefs
Intuitive and
Holistic
Thinking
Rational and
Analytical
Thinking
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The personal perception of self-efficacy influences the environment and entrepreneurial activities
selected by the entrepreneurs. Self-efficacy also affects the acquisition of skills acquired,
expenditure of effort, persistence and the determination levels. Self-efficacy contributes to the
Bird’s model as it determines motivation levels and the required efforts that most individuals will
exert when persevering to achieve their goals or targets. It has also been noted that people with
low self-efficacy are susceptible to stress and depression which impairs or limits their mental
functions. (Wood & Bandura 1989)
The Big Five Inventory
John and Srivastava (1999) designed the Big Five Inventory to measure five different
personalities and evaluate their rate or degree of effectiveness.
Fig 3 The Big Five Inventory Model
Coefficients Coefficients
Model B Std
Error
Beta t Sig
Constant 1.073 1.562 – 0.69 0.492
Family Income –
0.092
0.101 –
0.022
-0.9 0.363
Parental Occupation 0.378 0.154 0.06 2.45 0.015
Attitudes
and
Perceptions
Self-
Efficacy
Intentions
Actions
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Extraversion 0.067 0.027 0.06 2.44 0.015
Agreeableness 0.077 0.028 0.072 2.77 0.006
Conscientiousness 0.115 0.035 0.09 3.3 0.001
Neroticism –
0.122
0.033 –
0.096
-3.6 0
Openness 0.701 0.03 0.678 23.7 0
Self-efficacy 0.096 0.024 0.107 3.99 0
The 44-item instrument scale was adopted to measure the domains of extraversion, openness,
agreeableness, conscientiousness and Neuroticism. The response ranged from Agree strongly to
disagree strongly in a five format response range.
Parental occupation affects and significantly contributes to entrepreneurship prediction.
According to Carr and Sequeira (2007), studies that have been carried out suggests that children
from families that have entrepreneur parents had a higher propensity of becoming self employed
much earlier as compared with families whose parents are employed.
Fig 4
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-10
-5
0
5
10
15
20
25
30
Prediction of Entrepreneur
intention
B
t
The Big Five inventory discovered that personality traits that were examined during the sturdy
were in agreement with the initial studies of Zhao & Seibert (2006) that personality traits
predicted significantly entrepreneur intentions. However the studies were in direct disagreement
with the conclusions reached by Gartner (1989) that personality traits had very little significance
in entrepreneur predictions. Only neuroticism had negative effects on the entrepreneur intentions
during the study. These can be explained by the reason that personality attributes are mostly
against intra and the interpersonal relationship that exists between individuals and which the
potential entrepreneur would require to set up his business. The study concluded that personality
attributes, when applying the Big Five personality concept or taxonomy, only neurotic persons
have no intention of becoming self employed but with counseling people with neurotic
personality can overcome anti-entrepreneurship behavior. Counseling can also help to build self-
efficacy in individuals which is connected with entrepreneurial intention.
Among the psychological variables studied by researchers, the causal factors that influence
entrepreneurship, the most widely explored is the personality trait. Synchronization of the
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Holland’s career choice theory which asserts that the choice of a profession or vocation training
is ideally an expression of the personality trait. Whereas some researchers have reached the same
conclusion on the personality trait and the entrepreneurial intentions (Zhao & Seibert 2006) some
other researchers have reported some inconsistencies between the personality traits as a
determinant of intention which ultimately affects entrepreneurship. According to Gulruz and
Aykol (2008) application of Personality trait to analyze and predict the intentions of the
entrepreneur. People who opt for self employment have different personalities to those who opt
for organizational employment (Kolvereid 1996)
Conclusion
Finally, most researchers have concluded that a very strong relationship exists between
personality traits and entrepreneurial intention. The basic need for achievement, innovativeness,
risk taking propensity and locus of control are the major attributes that that influence the
entrepreneurial characteristics and aspirations of most people. The other attributes that are
personal in nature and which also relate to the entrepreneurial intention are optimism,
overconfidence, passion and tenacity. The Big Five Inventory measures five different
personalities and attempts to analyze and evaluate their rate or degree of effectiveness. Utilizing
the Big Five Scale to measure the rates or degrees of extraversion, openness, agreeableness,
conscientiousness, openness to experience and Neuroticism, Jing and Sung (2012) discovered
that extraversion, openness, agreeableness, conscientiousness, openness to experience influenced
positively the element of entrepreneurship in most people while neuroticism acted negatively
and instead discouraged it. The big five theory of personality also measured the level of
personality trait. The perceived control which is also known as efficacy and the subjective norms
that are crucial when predicting intentions while perceived control and intentions predict
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behavior. The concepts of entrepreneurial intention notes that perceived desirability and
perceived feasibility predict intentions to make or become an entrepreneur. The perceived self-
efficacy and also the perceived social norms are the foundations of perceived feasibility and
durability.
Relevant studies have demonstrated that the relationship that exists in most people in relation to
self-efficacy and entrepreneurial intention is that people with higher levels of entrepreneurial
self-efficacy also exhibit higher levels of entrepreneurial intensions. It’s also relevant to note that
individuals with greater degrees of entrepreneurial self-efficacy during their early years in career
development tend also to have greater entrepreneurial intentions while those with higher
intentions and also higher self-efficacy have a greater or higher probability of engaging in
entrepreneurial activities in his career growth.
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