Psychological Determinants of Entrepreneurial Succ

Authors: Aneta M Przepiorka

Publish Date: 2016/02/15

Volume: 36, Issue: 2, Pages: 304-315

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Abstract

The presented study focused on different stages of the entrepreneurial process The first group comprised those starting a new business and the second group those who have been through the whole process of creating a new business and have now been operating in the market The general aim of the article was to examine the relationship between action orientation hope goal commitment entrepreneurial success and life satisfaction and to determine the role of psychological characteristics hope action orientation in the entrepreneurial process The hypotheses were tested on a sample of 344 potential entrepreneurs in the prelaunch stage and 127 actual entrepreneurs in the postlaunch stage To analyze these relationships multiplegroup analysis was conductedThere is an abundance of definitions and approaches concerning entrepreneurship The definition of entrepreneurship presented in the MerriamWebster Online Dictionary widely acknowledged see Shane 2008 highlights the act of starting up a new business and all the activities related to this process – organizing managing and taking risks inherent in the business Entrepreneurship is the creation of new enterprises providing goods and services Shane and Venkataraman 2000 and new employment opportunitiesStarting a business is preceded by the formation of intention its implementation collecting sufficient financial resources and dealing with bureaucracy The act of starting up a company is a result of thoroughness longterm determination in action and the investment of a great amount of energy and time in putting ideas into practice Gartner et al 1994 it may take a long time before the company becomes an active participant in the market Reynolds and Miller 1992 This process can be seen as goaldirected behavior aimed at starting up a business as well as maintaining and developing it in later stages Laguna 2013 So far in studies on entrepreneurship the goaldirected behavior approach has been used but in this approach only the intention to start up a business has usually been examined cf Moriano et al 2012The bulk of research shows that entrepreneurs make a great contribution to the economy and society However the knowledge about why some people fail to start a new company while others succeed in doing it is still not sufficient Reynolds et al 2004 Business startup is a process Baron 2007 Kessler and Frank 2009 Reynolds et al 2004 that has its dynamics order and requirements Different stages of the entrepreneurial process consist of various activities that need to be performed and at each stage entrepreneurs have various roles to fulfill eg accountant market researcher supplies officer cleaner assistant and a variety of duties to perform from forming a conception of the business through elaborating a business plan and implementing it to running the business As demands change the role of some characteristics and skills in the entrepreneurial process is not stable and changes over time depending on the entrepreneurs’ experience at the beginning of this process and later on Baron 2007 Korunka et al 2010 According to the psychological approach eg Rauch and Frese 2007 the personality approach may be more justifiable in the case of small businesses where the entrepreneur is the main decision maker and executor One possible explanation for this is Mischel’s theory of personality 1973 which states that personality traits are more salient in ‘weak’ situations ie in precarious conditions with unclear requirements unspecified structure and incomplete information as opposed to ‘strong’ situations This is because the former allow freedom of behavior and interpretation as well as providing few cuesThe main aim of the present study is twofold Firstly it examines whether psychological characteristics such as actionstate orientation hope and goal commitment taken from goal theory are relevant to entrepreneurs’ success and life satisfaction Secondly it investigates the role of specific personality characteristics at the beginning of the prelaunch phase and those who have already been running them for some time The focus of the present study was on the early stage of entrepreneurial activity when the probability of failure is quite high it is a stage fraught with adversities when poor decisions and inadequate resources may have particularly detrimental effects on business startup Aldrich and Martinez 2001 stress that due to selection forces transition from one phase into another might be quite complicated and demanding and only the daring few reach the finish line Identifying the psychological characteristics relevant to success at this stage examining the personalities of those who make progress towards goal achievement and comparing this initial stage with later ones may shed more light on success in entrepreneurship This approach should answer the question why some potential entrepreneurs make progress in launching their businesses and others do not see Johnson et al 2006 Moreover analyzing the psychological characteristics that can function as resources in coping with adversities stems from the practical need to design activities fostering the achievement of entrepreneurial goals in the beginning and later on The differences between the stages of the entrepreneurial process can be captured by studying individuals who are in the process of creating their businesses and have undertaken activities to that end and comparing them with entrepreneurs who are at a later stage in their activity This means that in this article we will deal with two groups of participants the first group is those who have taken explicit steps to start a new business and the second group consists of those who have gone through the whole process of creating a new business and have now been operating in the market for some time Referring to the term used in the subject literature cf Laguna 2006 2008 those individuals from the first group who have taken steps to start a business and are in the phase of doing this are called potential entrepreneurs They are still in the prelaunch phase consisting of several tasks to be accomplished namely recognizing opportunities developing an intention to start a business and accumulating the resources necessary for starting it Baron 2007 The second group was labeled entrepreneurs The group outside the scope of this study is ‘dreamers’ also called latent entrepreneurs who only think about being selfemployed and whose entire activity remains only in their minds without the business actually being initiated Blanchflower 2004 Learned 1992Why were these particular personality characteristics chosen As stated above in the literature on goaldirected behavior actionstate orientation eg Diefendorff et al 2000 and hope eg Peterson and Byron 2008 Uy et al 2009 Youssef and Luthans 2007 influence goal engagement and effectiveness in achieving goals in work and entrepreneurship According to Kuhl 1994 there are three dimensions of actionstate orientation decisionrelated action orientation AOD failurerelated action orientation AOF and performancerelated action orientation AOP Hope reduces the negative effect of a job and correlates positively with work satisfaction and negatively with work burden Hmieleski and Carr 2007 Individuals with a high level of hope displayed stronger entrepreneurial intention Jensen and Luthans 2006 Uy et al 2009 revealed that hope is a mediator between positive affect and effort Hope influences the value and probability of achieving entrepreneurial goals Laguna 2008 What is more hope is related to life satisfaction eg Bailey et al 2007Since broad personality traits are not directly related to business success cf Rauch and Frese 2007 goal commitment was introduced as a moderating variable between psychological characteristics and entrepreneurial success Although researchers stress the role of motivation in the process of achieving goals as a mediator between general psychological characteristics and performance Locke and Baum 2007 there is still a gap in the current literature on human agency in the process of achieving success that should be acknowledged more robustly Goal commitment can be an indicator of human motivation cf Koo and Fishbach 2008 and is defined as the amount of effort time and energy contributed in a longterm perspective to goal achievement while unwilling to decrease the level of goal difficulty Campion and Lord 1982 Wofford et al 1992 As a result of a metaanalysis of 60 articles on goal commitment Klein and colleagues 1999 confirmed that engagement in pursuing a goal enhances the probability of achieving that goal Being committed to the goal correlated with the final effect of the work r = 23 p  01 Moreover goal commitment had positive associations with the outcomes of one’s actions and a positive influence on life satisfaction Emmons 1986 Freund and Baltes 2002 As has been shown effort is related to progress in the process of starting a company Renko et al 2012 However the degree to which goal commitment interacts with entrepreneurial success has not been considered in the literature

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