Introduction:
The report is prepared to conduct analysis of literature review for examining the characteristics, traits and qualities that is required by individual to become successful entrepreneur. Critical analysis of statement has been done by making reference to several literature reviews sourced from articles, press release, company information and their annual report. Growing number of studies on intentions, motivation and behavior of entrepreneur include the explanatory variable such as entrepreneurial self efficacy is indicated by literature review. The understanding of how the entrepreneurial orientation is influenced by strong self efficacy would help in identification of ways for improving business performance. Self efficacy is defined as the belief and confidence of individual about her or her abilities to mobilize the course of action, cognitive resources and motivation for successful execution of task in a given context. Definition of self efficacy very clearly states the importance of self efficacy to the managers and entrepreneurs. Entrepreneur self efficacy is about the belief of individual concerning their capabilities for controlling cognition and attaining success so that challenging goals are tackled during the start up process of business. There are three domains included in the definition of self efficacy which comprise of outcome goals that are focused by self efficacy, domain of self efficacy and valence of beliefs (Ahlin et al. 2014).
Literature review and critical analysis:
The concept of self efficacy has emerged as an important concept for understanding the success of entrepreneur and its influence on growth process of business start ups is supported by evident from substantial body. Entrepreneurial self efficacy notion is grounded in socio cognitive approach that helps in dynamic interaction between environment and individual along with simultaneously explaining is implicated by motivational, cognitive and affective process in an individual decision to engage in entrepreneurial activities. Literature has identified different approaches to define self efficacy of entrepreneur. It is defined by one stream of research that self efficacy as self confidence of entrepreneur that is task specific.
Contrary to this, self efficacy has been defined by some other researchers as the ability of entrepreneur to master their memory processing, cognitive and behavioral facilities that would assist them in effectively dealing with the environment. Perhaps, the advancement of knowledge of process of entrepreneurship is undermined by due to lack of definitional consensus of what self efficacy of entrepreneur in literature. This is so because there is likelihood that researcher would either commit error of inclusion or exclusion.
For the study of entrepreneurship, the construct of self efficacy is appropriate and it is essential to have a robust definition of because of nature. Self efficacy is regarded as task specific construct that include assessment of individual confident beliefs about internal and external possibilities and constraints. In a study conducted for determining the entrepreneurial outcome of a group of workers in an architectural woodworking industry, self efficacy was regarded as the single best predictor in an entire array of variables. The role of self efficacy is explored by entrepreneurs in the decision making heuristics and moderate role on satisfaction of entrepreneur and performance of new venture. There exists a strong view that self efficacy is regarded as good thing for entrepreneur and this is so because entrepreneurs who are high in self efficacy exert more effort for greater length of time, develop better strategies and plan and persist through setbacks (McGee and Peterson 2017). Furthermore, the construct of self efficacy leads to some important entrepreneurial outcomes such as new venture growth; start up intentions and entrepreneurs personal success. In entrepreneurial research, self efficacy is considered as an important construct. However, the concept of self efficacy posses’ challenge because of lack of agreement on how to conceptualize and what self efficacy encompasses.
In the literature, there are two interrelated and distinct streams of research on self efficacy of entrepreneur. In the first stream, the role of self efficacy is examined during the start up process of business and the role of self is examined during the growth phase of business in the second stream of research. In the domain of startup process of business, individual differences is understood in self efficacy for sub groups including female and male, unsuccessful and successful entrepreneurs, managers, inventors and technological entrepreneurs. Literature is reviewed for examination of direct and indirect effects of self efficacy that is involved in activities for staring new business. In research, the first contribution on entrepreneurial self efficacy is about its role in the formation of entrepreneurial intention. In model of entrepreneurial intentions, self efficacy was proposed as an important mediator in determining the likelihood of intentions that would result in entrepreneurial dealings. When the effect of self efficacy has been analyzed on the entrepreneur intentions on nascent entrepreneur population, it was found that development of attributes of nascent entrepreneurs is influenced by self efficacy in business creation. For starting new business or increasing the likelihood of starting activities of new business, one of the crucial factors is self efficacy.
In another research cluster, the effects of self efficacy are related to gender specific when researching on intention formation and entrepreneurial self efficacy. The relationship between formation of career intention, entrepreneurial self efficacy and gender specific effect is empirically suggested by findings generated from earlier research activities. Furthermore, it was also evident that the development of self efficacy beliefs is significantly impacted by entrepreneurial education. It has been found by further studies that the powerful factors for development of self efficacy among males is prior work experience and gender related differences. On other hand, entrepreneurial intentions of women, self efficacy had a stronger effect.
Role orientation and personality traits form the basis of differences between the self efficacy. For demonstrating that there is instrumental relationship between close self support and self efficacy for enhancing entrepreneurial activities, some other research have examined social, normative and cognitive effects of self efficacy.
A research paper on entrepreneurial self efficacy found that the personality traits such as locus of control failed to distinguish managers from entrepreneurs. It is demonstrated by the result of this particular study conducted that one of the distinct characteristics of self efficacy is entrepreneurial self efficacy. The research has helped in drawing some implications on education, entrepreneurial assessment, community intervention and counseling (Austin, M.J. and Nauta, 2016). Reasons for entrepreneurial avoidance are identified by entrepreneurial self efficacy. Many individuals might shun entrepreneurial activities because it is believed by them that they lack necessary skills. It is considered true for sectors dominated by population of women who are perceived to lack entrepreneurial traditions.
Potential of entrepreneurs can be assessed in terms of identifying areas of strength and weakness by additional use of entrepreneurial self efficacy. An entrepreneur lacking self efficacy may be performing less frequently and might avoid certain critical entrepreneur activities. Entrepreneurial self efficacy is about belief that is moderately stable requiring continuous and systematic efforts to be changed. In order to bring desired change, there are two broad approaches that can be taken. One approach is to focus on beliefs of people. Training institutions in conducting and designing entrepreneurial course should train along with strengthening entrepreneurial self efficacy (Zhang et al. 2014).
Second approach is about enhancement of entrepreneurial self efficacy that is intended to work on actual and potential environment. Self efficacy of entrepreneur will increase if an environment is perceived to be supportive. This is so because entrepreneurial capacities are assessed by individuals in reference to opportunities, perceived resources and obstacles that exist in environment. Supportive environment will help in development and sustaining of personal efficacy. Self efficacy of entrepreneur is further enhanced by supportive environment that has the likelihood of breeding entrepreneur success. An environment of efficacy can be created by communities by making resources visible and available, increasing the opportunities to diversify, avoiding the policies creating perceived and real obstacles and publicizing the success of entrepreneur.
In an article titled, “Self efficacy and adoption of entrepreneurs for unattainable goals” highlights that the high self control of entrepreneurs leads to restraining of unattainable goals set by the tendency of entrepreneur. It is suggested by goal theory that the performance on many tasks is enhanced by goal setting theory. Performance of entrepreneur decreases when the goals become difficult to attain and thereby it generates reduced motivation and discouragement. It is indicated by research that entrepreneurs that have higher self efficacy may tend to set difficult goals that is not possible to achieve realistically. One important aspect of self regulation is self control that would enable entrepreneurs to set goals that are difficult but attainable. A positive relationship between performance and goal difficulty is predicted by goal setting theory which depicts that performance of firm is positively related to increase in goal difficulty (Wang et al. 2014). However, performance of firm is negatively related to any further increase in difficulty.
A great number of studies are generated by two decades of empirical research that demonstrate positive relationship between different behavioral and motivational outcomes in educational, organizational and clinical settings and self efficacy. Development of self efficacy can be done through modeling and training unlike personality traits development. Judgment concerning efficacy are task specific and behavior is regulated by determination of effort, task choice and persistence. The task performance and learning is facilitated by self efficacy and there can be change in self efficacy due to experience, learning and feedback.
Information extracted from article titled “Does entrepreneurial investment is impacted by self efficacy” depicts that the likelihood of creating an operating business and a nascent entrepreneur is increased by self efficacy. It also tends to increase the wealth proportion that is invested and the amount of hour per week that is devoted by entrepreneur. Self efficacy has been shown as a factor that influences the broad range of individual behavior and cognition. Entrepreneurs have better and improved work performance, increased goals and expectations, better academic performance, greater activity related to job search and health related choice. The main focus of this study is to focus on entrepreneurial self efficacy which is the individual confidence in accomplishment of task in entrepreneurship domain.
The investigation on how the specific actions and choices of entrepreneur during entrepreneurship are affected by entrepreneurial self efficacy. It has been found that an increase in percentile of entrepreneurial self efficacy of nascent entrepreneur is associated with increase in hours per week devoted by entrepreneur and amount of personal wealth invested. It is determined on empirical basis that high entrepreneurial self efficacy forms the basis of extent of entrepreneur investment (Mortan et al. 2014).
Level of specificity is one of the important aspects of self efficacy and there can be completion of self efficacy at the broadest level in general. One important issue affecting investment choices is how entrepreneurial self efficacy is distinct from or related to other than psychological construct. Domain specificity brings about the main differences that help in distinguishing entrepreneurial self efficacy from other construct. The main focus of constructs such as self esteem, core self evaluation, locus of control and dispositional optimism is related to overall disposition of person while entrepreneurship being the main focus of entrepreneurial self efficacy. There is difference between locus of control because former refers to beliefs about behavior and performance that are achievable and later is belief about the performance levels along with achievement of outcome.
It has been found from evidence of survey that amongst students, entrepreneurial self efficacy is related to entrepreneurial intentions. Furthermore, it has also been found that managers who founded small business have higher entrepreneurial self efficacy compared to managers who did not found similar business. Nevertheless, this evidence cannot make clear distinction between whether mangers have high entrepreneurial self efficacy because they have founded business successfully or they have started their venture because of high self efficacy. The possibility that entrepreneurial self efficacy is influenced by performance of current venture is mitigated by measuring such self efficacy at the entrepreneurial process beginning. The concept of self efficacy has been investigated in entrepreneurial setting because there is a stronger nexus between action of new venture and decision of entrepreneur (Wang et al. 2014).
Self efficacy influence on entrepreneurial intention- The social learning theory recognize self efficacy as key construct that regards it as judgment of people concerning the ability of individual to perform activity. Self efficacy is a consideration of perceived fitness that is task specific for performing particular activity. Entrepreneurial self efficacy is the intention of development and initiation of new venture. Clarification of entrepreneurial self efficacy can be done using other approach that is associated with broadening competencies of human related to development of new venture (Shinnar et al. 2014). In tertiary institutions of Nigeria, the entrepreneurial intention of students is determined by self efficacy. In addition to this, a positive correlation between entrepreneurial intention and self efficacy among student who took introductory to course of entrepreneurship is revealed.
It has been presented by author that there exist positive relationship between entrepreneurial intention and self efficacy. Meanwhile, a study conducted in Poland on entrepreneurial intention evident that compared to women men had higher intention toward creation of venture and therefore intentions of entrepreneur is dependent upon gender. This has been deduced because no significant connection has been found between the association of self efficacy and lower intention of entrepreneur (Mortan et al. 2014).
The mediating function of gender in the relationship between individual intention development and self efficacy has been investigated by conducting study on a group of people in Barranquilla Colombia intending to become entrepreneur. Gender was used as a mediator in determining the influence of entrepreneurial intentions due to self efficacy (Bullough et al. 2014). Nonetheless, it was not evident from the result that the development between the development of individual intentions to become entrepreneur and self efficacy is not influenced by gender.
Students are provided with clear career path by identification of weakness and strength of students mainly the self efficacy factors toward intention of entrepreneurs. This had helped institution in identifying the angles that would help students to increase their self efficacy level that would help in shaping their intention in determination of entrepreneur as career. In relation to new venture creation, self efficacy is enhanced with the help of education that serve as preparatory function in transferring of relevant skills and knowledge (McGee and Peterson 2017). Therefore, the effectiveness of future entrepreneurs is predicted by self efficacy.
Another article on self efficacy and entrepreneurial intention found that entrepreneurial self efficacy is not related to gender and there is a direct relation to intentions of entrepreneur such that lower intentions was reported by women to become entrepreneur compared to men. The results do not provide evidence to consider gender as mediator in determining relationship between individual intention development to become entrepreneur and self efficacy. As predicted from self efficacy, equal intentions was reported by women and men and this equal intention has been reported in terms of confidence in searching new idea concerning service and product that will help in satisfying needs of customers. It is widely view that intentional behavior is the crucial factor influencing individual to become entrepreneur (Jiang et al. 2017).
It is indicated by previous research work that people partially become entrepreneur because of high self efficacy which gives rise to question whether the success of an entrepreneur venture is affected by high self efficacy. Recent study has proved that the performance of an entrepreneur in a dynamic environment is improved by high self efficacy. Now, it is required to evaluate whether the development of opportunities are impacted by self efficacy and a positive relationship was found between recognition of opportunity and self efficacy. Recognition of opportunities is positively influenced by self efficacy. Research on self efficacy of entrepreneur at the start up of business has found that development of new ventures is considerably influenced by self efficacy (Liñán and Fayolle 2015). However, success is not directly implied by high level of self efficacy as for entrepreneurial success, it is required by individual entrepreneur to have right set of skills of self efficacy. Therefore, it can be inferred that the course of new venture is influenced by having strong self efficacy and the success of any venture is dependent upon nature of opportunity and aspect of self efficacy.
Conclusion:
The current study has identified relationship between self efficacy and entrepreneurship by referring to numerous numbers of research papers and journal articles. Few studies have depicted that gender is the influential factor in determining relationship between self efficacy and entrepreneur intention. It was ascertained that gender forms the differentiating factor in determining entrepreneurial self efficacy with females’ typically scoring lower perceived self efficacy than males. In addition to this, there exist positive relationship between self efficacy and recognition of opportunity. Entrepreneurial self efficacy is high among the managers who are the founder of venture.
References list:
Ahlin, B., Drnovšek, M. and Hisrich, R.D., 2014. Entrepreneurs’ creativity and firm innovation: the moderating role of entrepreneurial self-efficacy. Small Business Economics, 43(1), pp.101-117.
Austin, M.J. and Nauta, M.M., 2016. Entrepreneurial role-model exposure, self-efficacy, and women’s entrepreneurial intentions. Journal of Career Development, 43(3), pp.260-272.
Bullough, A., Renko, M. and Myatt, T., 2014. Danger zone entrepreneurs: The importance of resilience and self?efficacy for entrepreneurial intentions. Entrepreneurship Theory and Practice, 38(3), pp.473-499.
Jiang, H., Xiong, W. and Cao, Y., 2017. Research on the mechanism of entrepreneurial education quality, entrepreneurial self-efficacy and entrepreneurial intention in social sciences, engineering and science education. Eurasia Journal of Mathematics, Science & Technology Education, 13(7), pp.3709-3721.
Liñán, F. and Fayolle, A., 2015. A systematic literature review on entrepreneurial intentions: citation, thematic analyses, and research agenda. International Entrepreneurship and Management Journal, 11(4), pp.907-933.
McGee, J.E. and Peterson, M., 2017. The Long?Term Impact of Entrepreneurial Self?Efficacy and Entrepreneurial Orientation on Venture Performance. Journal of Small Business Management.
Mortan, R.A., Ripoll, P., Carvalho, C. and Bernal, M.C., 2014. Effects of emotional intelligence on entrepreneurial intention and self-efficacy. Revista de Psicología del Trabajo y de las Organizaciones, 30(3).
Shinnar, R.S., Hsu, D.K. and Powell, B.C., 2014. Self-efficacy, entrepreneurial intentions, and gender: Assessing the impact of entrepreneurship education longitudinally. The International Journal of Management Education, 12(3), pp.561-570.
Wang, J.H., Chang, C.C., Yao, S.N. and Liang, C., 2016. The contribution of self-efficacy to the relationship between personality traits and entrepreneurial intention. Higher Education, 72(2), pp.209-224.
Zhang, Y., Duysters, G. and Cloodt, M., 2014. The role of entrepreneurship education as a predictor of university students’ entrepreneurial intention. International entrepreneurship and management journal, 10(3), pp.623-641.
