Does Entrepreneurial Self-Efficacy Distinguish Entrepreneurs from Managers?

Previous research on the psychology of entrepreneurs is found that personality traits such as locus of control failed to distinguish entrepreneurs front managers. In search of an individual characteristic that is distinctively entrepreneurial, we proposed an entrepreneurial self-efficacy construct (ESE) to predict the likelihood of an individual being an entrepreneur ESE refers to the strength of a person's belief that he or she is capable of successfully performing the various roles and tasks of entrepreneurship. It consists of five factors: marketing, innovation, management, risk-taking and financial control.We conducted two studies, one on students and the other on small business executives. Study I found that the total ESE score differentiated entrepreneurship students from students of both management and organizational psychology, and that across the three types of students, ESE was positively related to the intention to set up one's own business. We also found the entrepreneurship students to have higher self-efficacy in marketing, management, and financial control than the management and psychology students. In study 2, we simultaneously tested effects of ESE cad locus of control on the criteria of founders vs. nonfounders of current current businesses. After controlling for individual and company background variables, the effect of ESE scores was significant, but the effect of locus of control IL ns not. More specifically, it was found that business for founders had higher self-efficacy in innovation and risk-taking than did nonfounders.The results of this study demonstrate rile potential of entrepreneurial self-efficacy as a distinct characteristic of the entrepreneur Front these results, some important implications can he drawn non entrepreneurial assessment, education, counselling, and community intervention. First, ESE can be used to identify reasons for mtr entrepreneurial avoidance. There may be many individuals who shun entrepreneurial activities not because they, actually lack necessary skills brit because they believe they do. Tills is especially true for sectors of the population such Irs women or those minority groups who nle perceived as lacking entrepreneurial traditions. Communications and individuals could benefit from identifying sources of entrepreneurial avoidance by targeting their efforts toward enhancing ESE of particular groups or individuals for specific aspects of entrepreneurship.An additional rise of ESE is to identify areas of strength and weakness to assess the entrepreneurial potential of both an individual and a community. Once entrepreneurial potential is identified, resources can be channeled and more effectively used to promote entrepreneurship. Finally,, diagnosis and treatment of ESE can be performed on real entrepreneurs. The entrepreneur may be completely avoiding, or performing forming less frequently: certain critical entrepreneurial activities because s/he lacks self-efficacy. For example the entrepreneur may be avoiding company growth for fear of losing control. Identification and removal of self-doubt will enable the entrepreneur to be actively engaged ill entrepreneurial tasks, more persistent in the face of difficulty and setbacks, and more confident in meeting challenges.Overall, ESE is a moderately stable belief and requires systematic miti continuous efforts to be changed Two broad approaches call be taken toward desired change. One is the micro-approach that directly focuses or people's beliefs. fn designing and conducting entrepreneurship courses, training institutions should not just train students in critical entrepreneurial skills and capabilities but also strengthen their entrepreneurial self-efficacy. The current state of entrepreneurial, courses in most management schools may fall short in both respects. Courses focus on commonly identified management skills, brit of the ignore entrepreneurial skills such as innovation and risk-taking. Furthermore, the teaching of entrepreneurial skills skills tends to be technical, with insufficient attention paid to the cognition and belief systems of the entrepreneur. Educators should take into account entrepreneurial attitudes and perceptions when designing or assessing their. course objectives Conscious efforts could be made to enhance ESE by involving the students in "real-life" business design or community small business assistance by inviting successful entrepreneurs to lecture, and by verbal persuasion from the instructor and renowned entrepreneurs.The second approach to enhancing ESE is to work on the environment of potential and actual entrepreneurs. According to the reciprocal causation model, the environment may affect self-efficacy not only directly but also indirectly through performance. An environment perceived to be more supportive will increase entrepreneurial self-efficacy because individuals assess their entrepreneurial capacities in reference to perceived results opportunities, and obstacles existing in the environment. Personal efficacy is more likely to be developed and sustained in a supportive environment than in an adverse one. A supportive environment is also more likely to breed entrepreneurial success, which in turn further enhances entrepreneurial self-efficacy. Communities can work toward creating an efficacy enhancing environment by making resources both available and visible, publicizing entrepreneurial successes, increasing the diversity of opportunities, and avoiding policies that create real or perceived obstacles. (C) 1998 Elsevier Science Inc.