The effects of perceptions of risk, environmental uncertainty, and growth aspirations on new venture creation success

This study extends Xu and Reuf (Strateg Organ 2:331?C355, 2004) by exploring the strategic and non-strategic risk-taking propensity perceptions of nascent entrepreneurs as it relates to the subsequent likelihood of venture formation success. In addition, the moderating influences of perceptions of environmental uncertainty and venture growth aspirations are also examined. Findings from an analysis of data from the Panel Study of Entrepreneurial Dynamics (PSED) I indicate that an entrepreneur??s risk-taking propensity has no relationship to the likelihood of successfully starting a business. Perceptions of environmental uncertainty and venture growth aspirations were positively related to non-strategic risk-taking propensity, yet none of these variables (strategic and non-strategic risk-taking propensity, environmental uncertainty and growth aspirations) had a significant effect on venture creation success. We suggest that risk-taking propensity, as measured in this study, does not play a significant role in differentiating between nascent entrepreneurs or others, or between those that are successful or unsuccessful at starting businesses.     

Using founder status,age of firm,and company growth rate as the basis for distinguishing entrepreneurs from managers of smaller businesses

This article examined the empirical implications of definitions that distinguish entrepreneurs from managers of smaller businesses based on their founder-nonfounder status, and their firms' ages, and growth rates. The best distinctions were created using: (1) founders, (2) younger companies, and (3) the combination of founders and younger companies. Growth indicators did not discriminate well. The two founder-based distinctions shared a profile of entrepreneurs as running smaller companies with higher return on assets (ROA) than nonentrepreneurial managers, having shorter tenure in their positions, having previous work experience in the same industry, and having higher risk-taking propensity. The distinction based on age of firm also showed strong ability to discriminate among respondents.The field of entrepreneurship has few longer standing controversies than the one surrounding the question of what distinguishes entrepreneurs from nonentrepreneurial managers. In trying to separate entrepreneurs from managers of smaller businesses in particular, questions exist concerning the key defining differences. Definitions of entrepreneurship have utilized founder versus nonfounder status, company age, and company growth rates as distinguishing elements. Entrepreneurs have been defined by one or more of the following elements: being a company founder, running a young company, and running or desiring to run a high growth company.This article tests these elements to see if they provide a clearly differentiated profile of entrepreneurs. It uses the founder-nonfounder distinction, for example, to see if this distinction functions well in identifying a number of company, financial, and personal attributes that associate with founders rather than nonfounders. The approach advocated here borrows from configurational theory as it has emerged in the fields of strategic management and organizational theory (Meyer, Tsui, and Hinings 1993) to look for a constellation of variables that group together in depicting entrepreneurs. If founder status, company age, and growth rate are useful definitions of entrepreneurship, they should point to a configuration of factors that together comprise a profile of an entrepreneur.In predicting what configuration of factors will emerge, this article adopts a strategic adaptation perspective (Low and MacMillan 1988) to argue that differences between entrepreneurs and nonentrepreneurs spring from divergent thought processes and personal attributes of individuals who face the question of whether and how to enter business for themselves. Using the founder-nonfounder distinction, we view individuals who decide to start a new business rather than buy or manage an existing one as more likely to have previously founded a business, have experience in the same industry, be higher in risk-taking, show more Type A behavior, and be more growth-oriented.Findings from a sample of CEOs in the Smaller Business Association of New England indicated that neither of the two tests based on high growth as a definition of entrepreneurial firms proved adept at creating a distinct entrepreneurial profile. Distinctions based on founder status, younger firm status, and founder of a younger firm status, on the other hand, proved effective in creating such profiles. Dimensions shared by the two founder-based definitions of entrepreneurship included company attributes of smaller size and higher ROA, and CEO attributes of shorter tenure on the job, previous experience in the same industry, and higher risk-taking propensity. Additional attributes showed in the younger company founder group, including company attributes of lower liquidity and higher sales growth, and personal attributes of having previously founded a business, ranking ROA as a high priority, and external locus of control. The distinction based on younger firm status performed well in discriminating among respondents in this study. In addition to sharing several variables with the founder-based distinctions, it alone identified younger firms' CEOs as having lower education and Type A tendencies and higher expectations of children succeeding them in the business.As one implication of these findings, knowledge of the profiles may help people who deal with these groups to have a better sense of how to interact with and respond to them. The young company founder profile, for example, presents a picture of a relatively small company experiencing high rates of sales growth squeezing all it can from its assets in the face of high comparative liabilities. Because the company is young, its founder has relatively short tenure but may well have had previous experience in the industry and have previously founded a company. Personally, the founder is a risk-taker who is external in locus of control and places high priority on ROA. If this configuration holds firm in future research, those who deal frequently with entrepreneurs, such as bankers, venture capitalists, consultants, accountants, and lawyers, will be able to use a few identifying factors such as founder status and age of firm to draw reasonable inferences about a host of other characteristics of their clients. The attempt to profile the entrepreneur, in recent years thought to be futile, may yet prove viable.     

Businessman or host? Individual differences between entrepreneurs and small business owners in the hospitality industry

Prior research has identified individual characteristics that distinguish business owners from non-business owners. The researchers tested their contention that not every successful business owner can be characterized by such typical ‘entrepreneurial’ characteristics. Multiple analysis of variance on a unique data set of 194 business owners in the hospitality industry revealed that several individual characteristics discriminated between entrepreneurs and small business owners. Entrepreneurs possessed higher levels of independence, tolerance of ambiguity, risk-taking propensity, innovativeness, and leadership qualities, but not of market orientation and self-efficacy. It is concluded that ‘entrepreneurial’ characteristics identified in the literature may be useful predicting a specific type of business ownership. However, other criteria need to be developed in order to describe other groups of business owners operating in the service industries.     

Novice,portfolio, and serial founders: are they different?

There is growing interest in entrepreneurs who have been involved in more than one venture, yet to date there has been relatively little theoretical development and systematic empirical examination of the topic. In particular, there has been little attention to the potential heterogeneity of habitual entrepreneurship. This study aims to contribute to this emerging area in two ways. First, it outlines a conceptual typology of habitual entrepreneurs who have founded, purchased, or inherited businesses. Second, the empirical part of the study focuses on owner-managers, providing an exploratory analysis of the characteristics and effects of independent business ownership by novice, portfolio, and serial founders. Novice founders are those that have no prior entrepreneurial experience as either a founder, an inheritor, or a purchaser of a business. Portfolio founders retain their original business and inherit, establish, and/or purchase another business. Serial founders are those who sell their original business but at a later date inherit, establish, and/or purchase another business.The study derives propositions suggesting differences among the three types of founders. At the individual founder level of analysis, similarities as well as differences in the personal background, work experiences, reasons leading to the start-up of businesses, and personal attitudes to entrepreneurship of these three types of entrepreneurs are explored. At the organizational level of analysis, finance, employment and performance differences among the businesses owned by the three types of entrepreneurs are presented.The issues are examined using a sample of entrepreneurs who were the principal owner-managers of independent businesses in Great Britain. The sample included 389 novice founders (62.6%), 75 portfolio founders (12.1%), and 157 serial founders (25.3%). No statistically significant differences were found among the three groups of entrepreneurs with regard to the main industrial activity, geographical location, and the age of their businesses. Univariate and multivariate tests were used to examine potential differences between the groups.The results of the study show significant differences between portfolio and serial founders with regard to their parental background, work experience, and their age when they started their first business. Differences were also found with respect to reasons leading to start-up, personal attitudes to entrepreneurship, and sources of funds used during the launch period of the surveyed business. These findings suggest that habitual entrepreneurs cannot be treated as a homogeneous group. The analysis, however, failed to find any significant differences between the performance of the surveyed firms owned by habitual founders and novice founders and between the two types of habitual founders.The findings of the study indicate for researchers that there is a need to carefully define the unit of analysis in any examination of entrepreneurs. In particular, there is a need to take note of the heterogeneity of types of entrepreneur and to consider the entrepreneur as the appropriate unit of analysis rather than simply the firm. Although this study focused on habitual founders of businesses, the theoretical section of the study also identified other types of habitual entrepreneurs, such as serial corporate entrepreneurs and serial management buy-out and buy-in cases. These other types of habitual entrepreneurs would appear to warrant further analysis.The findings of this study have a number of implications for practitioners, especially venture capitalists. The absence of significant performance differences between novice and habitual entrepreneurs, which is consistent with the results from other studies, emphasizes the need for venture capitalists screening potential investees not to rely solely on previous experience.The study also has implications for policy-makers, especially with respect to decisions concerning the allocation of resources to assist nascent entrepreneurs, novice entrepreneurs, and habitual entrepreneurs. The similarities in business performance among novice, serial, and portfolio entrepreneurs suggests that policy-makers need to be careful in targeting scarce resources. Most notably, targeting resources to encourage talented nascent entrepreneurs to become novice entrepreneurs may offer returns which are at least as good as targeting resources to more experienced entrepreneurs.     

Moderating effects of tolerance for ambiguity and risktaking propensity on the role conflict-perceived performance relationship: Evidence from singaporean entrepreneurs

This study investigates the effects of tolerance for ambiguity and risktaking propensity in mediating the relationships between role conflict and perceived performance among 70 entrepreneurs in small and medium-sized businesses in Singapore. Entrepreneurial activity has been widely recognized as a major factor driving Singapore's economic development. Further insights therefore can be gained by this study, which addresses the above issues from the perspective of Singaporean entrepreneurs. As founders of their enterprises, entrepreneurs are often involved with many aspects of activities that create a high potential for conflict, having to play multiple roles, coping with competing and conflicting demands, and overcoming or accommodating to constraints. Role conflict faced by the entrepreneur can impede the entrepreneur's ability to perform effectively. However, the relationship between role conflict and perceived performance is not direct.Many entrepreneurial decisions will also involve ambiguity, because these decisions result in actions that are innovative and original. As entrepreneurs, they will have a significantly greater capacity to tolerate ambiguity than managers have. This suggests that an entrepreneur's tolerance for ambiguity may be able to assist in dealing with, or to moderate, the adverse personal effects of role pressures generated by role conflict. Investigation into this is the thrust of the first part of this research.The literature on entrepreneurship has often portrayed the entrepreneur as a risk-taker with expectation of receiving a profit as reward for this risk-bearing. Many studies on risk-taking behavior among entrepreneurs are focused on the risk-profile of entrepreneurs, that is, whether entrepreneurs are decidedly more risk-taking than nonentrepreneurs. In this second part of research, the investigation examines whether the effects of role conflict on performance outcomes are tempered by the entrepreneur's risk-taking propensity. An entrepreneur with high risk-taking propensity is more likely to succeed in coping with uncertainty and minimizing role stress than one with low risk-taking propensity.Results indicate that Singaporean entrepreneurs higher on tolerance for ambiguity or in risk-taking propensity are better positioned to “neutralize” the effects of role stress in the entrepreneurial role, leading to better performance outcomes. The weaker interactive effects however could be explained by several constraining circumstances: “the stringent control and omnipresence of the government in most businesses” (Tan and Tay 1994); “dominance of MNCs in key industries, and the domination of government-linked businesses in various services” (Boey and Chiam-Lee 1994)—all of which are said to somewhat discourage risk-taking and uncertainty-bearing. Despite the small moderator effects, these findings should be of significance to practitioners, because they suggest that the examination of the relationship between role conflict and performance would be incomplete without also considering the moderating effects of tolerance for ambiguity and risk-taking propensity.     

A theory of serial entrepreneurship

The contribution of serial entrepreneurs to entrepreneurial activity is significant: in Europe, 18–30% of entrepreneurs are serial; in the US, their contribution is about one-eighth. Yet, theories of entrepreneurship and industry dynamics presume that all firms are launched by novice entrepreneurs and firm failure is synonymous with exit from entrepreneurship. We propose a theory of serial entrepreneurship in which an entrepreneur has three occupational choices: maintain his business in operation, shut it down to enter the labor market to earn an exogenous wage, or shut it down to launch a new venture while incurring a serial startup cost. In equilibrium, a high-skill entrepreneur shuts down a business of low quality to become a serial entrepreneur, launching and subsequently closing firms until a high quality business is found; a low-skill entrepreneur shuts down a business of low quality to enter the labor market, never to become a serial entrepreneur. A decrease in the wage or serial startup cost, or an increase in the startup capital, enhances the contribution of serial entrepreneurs to entrepreneurial activity and promotes new firm formation (by increasing entrepreneurship and the number of new firms that survive), but its effect on the exit rate of new firms is ambiguous. We show the model is consistent with evidence relating to the impact of an entrepreneur’s characteristics and prior experience in entrepreneurship on the survival of his firm and his entry into and survival in entrepreneurship.     

Understanding the relationships between online entrepreneurs’ personal innovativeness,risk taking,and satisfaction: Comparison of pure-play and click-and-mortar

The purpose of this study is to investigate the effects of personal innovativeness and risk taking on online entrepreneurs’ satisfaction. Two types of online entrepreneurs (pure-play and click-and-mortar) are compared and contrasted. Specifically, our study investigates the effect of personal innovativeness and risk-taking propensity on the satisfaction of online entrepreneurs, and compares the similarities and differences among varying types of online entrepreneurs. A survey of online entrepreneurs conducted in Taiwan, a country characterized as good for small and medium enterprises entrepreneurship and as having substantial e-commerce development, indicates that personal general innovativeness has a significant positive effect on personal information technology innovativeness (the entrepreneur’s level of innovation regarding information technology), entrepreneurial satisfaction, and life satisfaction. Entrepreneurs’ life satisfaction also determined by their degrees of entrepreneurial satisfaction. Finally, risk-taking propensity significantly influences entrepreneurial satisfaction for pure-play entrepreneurs only. The results can be referenced by other countries in general, and Chinese regions in particular.     

The entrepreneur: A capable executive and more

In the United States, entrepreneurs have been cussed and discussed, glorified and vilified, declared to be social misfits and bastions of the private enterprise system. Early in the life cycle of an entrepreneur, he or she may have been classified as being “unable to relate to family or peers,” later as “unwilling and unable to submit to or work with authority” to “jungle fighter” to “robber barron” to “philanthropist.” 5A common but incorrect assumption is that if one cannot adjust to the corporate environment, he or she should pursue an entrepreneurial career. Whether or not one can adjust does not preclude the necessity for the development of the skills and techniques required of a competent executive. The authors hypothesize that an entrepreneur must be a capable executive, and in addition, must possess a number of psychological characteristics to a greater or lesser degree than their corporate counterparts.This does not imply that all entrepreneurs are alike any more than all managers or executives are alike. Nor that the presence of a higher or lower level of a psychological trait or characteristic is itself sufficient for success. There are a number of sociological, psychological, demographic, and economic factors that appear to impact on the decision to enter entrepreneurial occupations. Although neither the absolute level of the impact of a psychological trait nor the interrelationship of the combined factors on the final decision-making process are known, research has indicated that significant differences in the intensity level of psychological traits or characteristics exist between entrepreneurs and managers or executives.This article discusses those traits that entrepreneurs exhibit at significantly different levels than do their corporate counterparts; how these factors may influence the decision to enter entrepreneurial occupations: and how these same traits have the propensity, if ignored, to have a negative influence on both the entrepreneur's organization and personal life-style.Entrepreneurs tend to be 1) tolerant of ambiguous situations, 2) prefer autonomy (autonomy may be described as self-reliance, dominance, and independence), 3) resist conformity, 4) be interpersonally aloof yet socially adroit, 5) enjoy risk-taking, 6) adapt readily to change, and 7) have a low need for support. These factors can lead to serious problems in delegation and communication, two factors of paramount importance to a growing concern. They may also cause intense stress or loneliness for the entrepreneur. Fortunately, the traits of willingness to accept change and ability to adapt to it will help the entrepreneur to accept and respond to problems that arise due to poor delegation or communication. Coping methods and a tolerance of ambiguity will assist the entrepreneur in dealing with stress and loneliness. The main problem is to alert the entrepreneur to the potentiality of these problems—which is what this article attempts to do.     

Identifying and Differentiating Key Employees from Owners and Other Employees in SMEs

This research examines how to identify and differentiate key employees from small and medium‐sized enterprises (SME) owners and other employees and how their characteristics influence firm success factors. Interviews are conducted with 14 matched pairs of entrepreneurs and key employees operating Canadian SMEs. The study develops a profile whereby the key employee typically (1) corresponds to the key success factors of the SME, (2) is willing to undertake a moderate amount of risk, and (3) differs in education and experience from the entrepreneur/owner. Although employees are important to firm strategy and culture, this is one of the first to examine key employees in small business.     

The role of risk-taking in Singapore

This study explores the differences between entrepreneurs and non-entrepreneurs in the city-state of Singapore with regard to the risks involved in the decision to become an entrepreneur. The sample is composed of 30 Chinese entrepreneurs and 44 Singaporean managers and engineers employed by six multinational corporations.Whether or not entrepreneurs are more risk-oriented than managers is not clear from this study but the data from this study demonstrate that entrepreneurs are able to give up job security and take specific kinds of risks related to launching a new venture because they have confidence that they will either succeed or be capable of carrying on a successful career. Whereas job security is a critical variable that holds non-entrepreneurs to the status quo in Singapore, the potential loss of self-respect and self-image, the fear of failure, appears to be a force that drives Chinese entrepreneurs in Singapore to succeed.Although the research for this study began from the widely held premise that risk was a psychological attribute, the research process revealed that risk is more productively seen as a decision-making variable. The research in this study, like previous studies on entrepreneurs and risk, also assumes that choice was the core of risk-taking. It is doubtful, however, that individuals have a generalized risk-propensity, for risk is highly contextual. Risk is most likely to be seen in specific kinds of entrepreneurial decisions such as the decision to become an entrepreneur, the decision to grow a new venture through new product development, international market entry or other strategic options, and decisions related to control issues. Risk should be viewed as part of a complex multivariate process and attention needs to be given in the future to the study of risk identification, risk assessment, formulation of risk strategies, and the management of risk.Risk is an inherent aspect of any opportunity and, consequently, is the darker side of the heart of entrepreneurship. In a Chinese entrepreneurial setting these factors and decisions are part of a complex social process.     

Do entrepreneurial goals matter? Resource allocation in new owner-managed firms

This paper focuses on how entrepreneurial goals affect the resource allocation of new firm owners. It connects research in psychology and management that examines the core motivations of entrepreneurs with research in economics that models the behavior of owner-managers as utility-maximizing rather than profit-maximizing. We hypothesize that new owners with nonmonetary goals allocate their resources differently than do owners with monetary goals and that the differences are meaningful in size. To test these hypotheses, we estimate firm level equations based on economic theories of input demand that show how input quantities depend on owner goals. Data come from a national survey of new U.S. business owners. We find owner goals have both a statistically and substantively significant effect on resource allocation for new firms. Owners with nonmonetary goals put in more of their own and family hours rather than hiring outside employees. Implications for research and policy are discussed.     

The ambitious entrepreneur: High growth strategies of women-owned enterprises

During the last two decades, researchers have sought to develop categories of entrepreneurs and their businesses along a variety of dimensions to better comprehend and analyze the entrepreneurial growth process. Some of this research has focused on differences related to industrial sectors, firm size, the geographical region in which a business is located, the use of high-technology or low-technology, and the life-cycle stage of the firm (i.e., start-up vs. more mature, formalized companies). Researchers have also considered ways in which entrepreneurs can be differentiated from small business managers. One of these classifications is based on the entrepreneur's desire to grow the business rapidly. This is the focus of our study.To date, the media have paid considerable attention to rapidly growing new ventures. However, still lacking are large-scale research studies guided by theory through which we can expand our knowledge of the underlying factors supporting ambitious expansion plans. Some research has identified factors that enhance or reduce the willingness of the entrepreneur to grow the business. Factors include the strategic origin of the business (i.e., the methods and paths through which the firm was founded); previous experience of the founder/owner; and the ability of the entrepreneur to set realistic, measurable goals and to manage conflict effectively.Our study attempted to identify the strategic paths chosen by entrepreneurs and the relation of those paths to the growth orientation of the firm. The entrepreneurs sampled in this study are women entrepreneurs across a wide range of industrial sectors. Recent reviews of entrepreneurship research have suggested the need for more studies comparing high-growth firms with slower-growth firms to better delineate their differences in strategic choices and behaviors.Our study sought to answer the following questions: What characterizes a “high growth-oriented entrepreneur?” Is this distinction associated with specific strategic intentions, prior experience, equity held in previous firms, the type of company structure in place, or success factors the entrepreneur perceives are important to the business? Do “high growth” entrepreneurs show greater entrepreneurial “intensity” (i.e., commitment to the firm's success)? Are they willing to “pay the price” for their own and their firm's success? (i.e., the “opportunity costs” associated with business success and growth). Other relationships under investigation included different patterns of financing the business' start-up and early growth. Do “high-growth” entrepreneurs use unique sources of funding compared with “lower-growth” entrepreneurs?Eight hundred thirty-two entrepreneurs responded to a survey in which they were asked to describe their growth intentions along nineteen strategic dimensions, as well as respond to the foregoing questions. Some of the strategic activity measures included adding a new product or service, expanding operations, selling to a new market, and applying for a loan to expand operations. Actual growth rates based on sales revenues were calculated, and average annualized growth rates of the industrial sectors represented in the sample were obtained. This study showed that high-growth-oriented entrepreneurs were clearly different from low-growth-oriented entrepreneurs along several dimensions. The former were much more likely to select strategies for their firms that permitted greater focus on market expansion and new technologies, to exhibit greater intensity towards business ownership (“my business is the most important activity in my life”), and to be willing to incur greater opportunity costs for the success of their firms (“I would rather own my own business than earn a higher salary while employed by someone else”).The high-growth–oriented entrepreneurs tended to have a more structured approach to organizing their businesses, which suggests a more disciplined perception of managing the firm. In summary, results showed the group of high-growth–oriented entrepreneurs, labeled “ambitious,” as having the following distinctions: strategic intentions that emphasize market growth and technological change, stronger commitment to the success of the business, greater willingness to sacrifice on behalf of the business, earlier planning for the growth of the business, utilization of a team-based form of organization design, concern for reputation and quality, adequate capitalization, strong leadership, and utilization of a wider range of financing sources for the expansion of the venture. The purpose in uncovering these differences is to enable entrepreneurs and researchers to identify more clearly the attributes of rapid-growth ventures and their founders and to move closer to a field-based model of the entrepreneurial growth process which will help delineate the alternative paths to venture growth and organizational change.     

International entrepreneurship in the network economy: Internationalization propensity and the role of entrepreneurial orientation

This study aims to analyze the conditions of the initial internationalization decision in the network economy. Based on the information systems, international entrepreneurship, and entrepreneurship literature, factors, which constitute the internationalization propensity, are elicited. The results of this study suggest that a holistic perspective including the founder, business model, and the firm should be considered when explaining the internationalization propensity of entrepreneurs. Our analysis also shows that, depending on the entrepreneur’s entrepreneurial orientation, the internationalization propensity varies. Data were obtained by conjoint analysis experiments conducted with German network economy entrepreneurs.     

Does entrepreneurial self-efficacy distinguish entrepreneurs from managers?

Previous research on the psychology of entrepreneurs found that personality traits such as locus of control failed to distinguish entrepreneurs from 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 1 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 and locus of control on the criteria of founders vs. nonfounders of current businesses. After controlling for individual and company background variables, the effect of ESE scores was significant, but the effect of locus of control was not. More specifically, it was found that business founders had higher self-efficacy in innovation and risk-taking than did nonfounders.The results of this study demonstrate the potential of entrepreneurial self-efficacy as a distinct characteristic of the entrepreneur. From these results, some important implications can be drawn on entrepreneurial assessment, education, counseling, and community intervention. First, ESE can be used to identify reasons for entrepreneurial avoidance. There may be many individuals who shun entrepreneurial activities not because they actually lack necessary skills but because they believe they do. This is especially true for sectors of the population such as women or those minority groups who are perceived as lacking entrepreneurial traditions. Communities 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 use 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 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 in 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 and continuous efforts to be changed. Two broad approaches can be taken toward desired change. One is the micro-approach that directly focuses on people’s beliefs. In 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 entrepreneurship courses in most management schools may fall short in both respects. Courses focus on commonly identified management skills, but often ignore entrepreneurial skills such as innovation and risk-taking. Furthermore, the teaching of entrepreneurial 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 resources, 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.     

Critical assumption planning: A practical tool for managing business development risk

Although much has been written about the practice of new business development, the authors continue to find corporate managers and entrepreneurs repeating the same mistakes and often reaching the conclusion that venturing in the corporate environment won't work. The problem stems from a mental model about how business should be managed and managers' performance assessed. Corporate managers of existing businesses are judged against meeting plan. In growing new businesses, however, strict adherence to “the plan” can lead to business failure. To manage business development risk, venture managers must learn to deal with uncertainty. Whereas managers of mature businesses practice the ethic of predictability, venture managers must follow a learning ethic.Working with Fortune 100 corporations, the authors have evolved a practical, disciplined process for business development risk management that focuses on learning. Titled critical assumption planning (CAP), the process maximizes learning about new markets at lowest cost. Major uncertainties in the business proposition are isolated as critical planning assumptions. Critical assumptions in the plan are then tested. The test sequence is determined by the potential reduction of uncertainty per dollar of test cost. Assessment of the assumption test results marks a milestone. At each milestone the business plan is revised to reflect what has been learned, and the venture is redirected or terminated. This process avoids the wasted effort and expense of pursuing the original plan until commercial failure becomes obvious.The key steps in this learning process are identification of critical assumptions and cost-effective testing of assumptions. Because these steps are unfamiliar to most corporate managers, effective use requires a new perspective and new planning tools. The study explains this perspective and introduces new tools for employing the process. Following are some planning innovations that have been effective in changing perspective and that also are of practical use:

1. 1. Differentiation between primary and derivative assumptions with focus on extracting and understanding the primary assumptions.

2. 2. Early construction of a model of the business plan that allows calculation of the impact of primary assumptions such as price or sales productivity factors on derivative assumptions such as revenues and income.

3. 3. Assignment of uncertainty ranges to the primary assumption values, not just the most likely values.

4. 4. Identification of the critical planning assumptions by determining the impact of their uncertainty ranges on venture net present value.

5. 5. Selection of the next venture milestone based on the test program that results in maximum reduction of uncertainty at least cost in least time for the most critical assumption(s).

Using CAP, managers can control risk despite the many uncertainties surrounding a new business proposition. Above all, decisions to stop or redirect ventures can be taken earlier, saving the corporation money and venture managers their career credibility.     

Women business owners in traditional and non-traditional industries

Small businesses continue to grow in importance to the national economy. According to the Small Business Administration, America's 22 million small businesses generate more than half of the nation's Gross Domestic Product and are the principal source of new jobs. The National Foundation for Women Business Owners reported that between 1987 and 1994, the number of women-owned businesses grew by 78% and women-owned firms accounted for 36% of all firms. Although the growth in the number of women-owned businesses is encouraging, the size of such businesses remains small in terms of both revenues and number of employees, especially in comparison to male-owned businesses. One explanation for this disparity is that female business ownership is concentrated primarily in the retail and service industries where businesses are relatively smaller in terms of employment and revenue as opposed to high technology, construction, and manufacturing.One of the most fruitful streams of research in women's occupational choice has been based on social learning theory. Specifically, self-efficacy has been found to relate to both type and number of occupations considered by college men and women, and with regard to traditional and non-traditional occupations. Entrepreneurship researchers have also used social learning theory to study entrepreneurial intentions. This study builds on that background of women's career development and entrepreneurial intentions to examine differences between traditional and non-traditional women business owners. We examine 170 women business owners in various traditional and non-traditional businesses in Utah and Illinois. Questionnaires were the primary method of collecting data, in addition to 11 in-depth interviews from a sample of the survey respondents. Using a careers perspective, based on social learning theory, we hypothesized that women in these two different categories of industries would differ on levels of self-efficacy toward entrepreneurship or venture efficacy, their career expectations and their perceived social support. A second analysis was also done that explored the relationship between the same independent variables and success or performance of the business. The results offer support for using this integrative model to understand differences between women in traditional and non-traditional industries. The first analysis revealed that significant differences exist between the two groups on several of the independent variables. Traditional business owners had higher venture efficacy for opportunity recognition, higher career expectations of life balance and security and they reported that the financial support received from others was more important to them than those in non-traditional businesses. On the other hand, the non-traditional owners had higher venture efficacy for planning and higher career expectations for money or wealth than the traditional group.The second analysis explored whether success, as measured by sales, was affected by differences in venture efficacies, career expectations, or perceived support received by women in traditional businesses as compared to those in non-traditional ones. This analysis revealed that traditional women business owners might have different factors that contribute to their success than non-traditional owners. Specifically, for the traditional owners, venture efficacies for opportunity recognition and economic management as well as the career expectation of autonomy and money (or wealth) were positively related to sales. For the same group efficacy toward planning and the need for security were negatively related to sales. For the non-traditional women, venture efficacy toward planning and the career expectation of autonomy were positively related to sales while the expectation of money or wealth was negatively related. Also for the same group, the perceived importance of the emotional and financial support was negatively related to sales.In the past, most of the entrepreneurial research has used predominantly male samples of entrepreneurs. Those that include women entrepreneurs generally are comparative, between men and women. This study's comparison of two groups of women entrepreneurs offers a unique contribution to the field.Future research is recommended to further understand how venture efficacy and career expectations affect the decision to start a new business in a particular industry. It would be particularly beneficial to study venture efficacy and career expectations of prospective women entrepreneurs prior to the start of the business. Similarly, greater attention should be given to understanding how venture efficacy develops in different individuals.     

Entrepreneurs' perceived chances for success

Entrepreneurs involved in planning or starting firms must engage in a continuing process of appraising prospects for success. These assessments presumably bear upon the preparations they make, as well as, at some later point, whether they decide to make major changes or even to discontinue the business. In this study, data from 2994 entrepreneurs who had recently become business owners were analyzed to determine their perceived changes of success.Although previous evidence on business survival led to the hypothesis that the entrepreneurs would only be cautiously optimistic, this was not the case. They perceived their prospects as very favorable, with 81% seeing odds of 7 out of 10 or better and a remarkable 33% seeing odds of success of 10 out of 10. In considering the prospects for other businesses like their own, they perceived odds which were significantly lower, but still moderately favorable.Based upon previous research on factors associated with new business success, it was hypothesized that those who were “more likely to succeed” (based upon their personal backgrounds and the nature of their new firms) would be more optimistic. However, this was not the case. Those who were poorly prepared were just as optimistic as those who were well prepared.At this point, shortly after having become business owners, the assessment by entrepreneurs of their own likelihood of success was dramatically detached from past macro statistics, from perceived prospects for peer businesses, and from characteristics typically associated with higher performing new firms.The psychological literature on “post-decisional bolstering” suggests that decision makers, in many settings, tend to bolster or exaggerate the attractiveness of an option after it has been chosen. This, coupled with the tendency of entrepreneurs to believe that they can control their own destinies, implies that the extreme optimism observed here is probably a typical occurrence.For entrepreneurs the findings suggest that it is probably natural to experience feelings of entrepreneurial euphoria when first becoming a business owner. With the available evidence, it is difficult to judge whether this leads to inadequate preparations or an inability to diagnose problems and make adjustments after the business is started. This extreme optimism probably does contribute to the heavy personal commitments observed here, in which the median entrepreneur devoted more than 60 hours per week to the business. The entrepreneur would seem well advised to form relationships with outsiders, such as board members and professional advisors, who can be objective and detached in diagnosing problems and assessing objectively the prospects for the business in its current form.     

A fresh start and the learning experience of ethnic minority entrepreneurs

This paper focuses on ethnic minority entrepreneurs whose businesses failed within the first 3 years of trading, but were starting afresh with the help of the Brent Business Venture Fresh Start in Business programme. The paper aims to identify why the entrepreneurs had previously failed; what prompted them to start again; what was different about their business approach and practices second time around; and how key lessons had been learned as a result of their previous experiences that can improve their prospects for success in the future. The resultant insight derives out of an evaluation study of the Fresh Start programme, the methodology for which included initial telephone interviews with 20 ethnic minority entrepreneurs spread across eight business sectors, during which profile data were collected. The second phase of the study involved in‐depth face‐to‐face and semi‐structured interviews with the 20 entrepreneurs. The main findings suggest that failed entrepreneurs learn from their mistakes and actions embedded in the development processes and activities underpinning their first business venture attempt and are more successful second time around. The key learning processes and activities include learning from customer feedback, from interface with suppliers, from interaction with peers and from the fostering and facilitating inputs of provision such as the Fresh Start programme. The ability to learn by doing, problem‐solving and opportunity‐taking is important. The study concludes by highlighting key identified management capabilities which can improve the likelihood of new venture success, and in particular the value of giving future focus to the nature and form of effective strategic learning processes and activities that successful owner managers undertake and how these could be nurtured as part of the would‐be entrepreneurs’‘management capabilities tool box’.     

Construction of owner–manager identity in corporate social responsibility discourse

This article examines the different discursive resources on which small business owner–managers draw when understanding their sense of self in relation to corporate social responsibility. In the small business context, identity provides a justifiable framework to study corporate social responsibility, as decisions regarding socially responsible activities are mainly taken by managers and stem from their sense of who they are in the world. On the basis of 25 thematic interviews with owner–managers, two broad discursive resources were found that describe how they actively seek to create and legitimise their sense of self within the discussion on corporate social responsibility. These discursive resources are called being altruistic and being instrumental. The findings emphasise that the essential and also the most challenging feature in small business owner–managers' identity work is the process of reconciling economic values with the social and ethical aspects of business life.     

Information Sources for New Ventures in the Turkish Clothing Export Industry

Recently "born global" firms have received considerable attention in the entrepreneurship and international business literature. Managers leading these new ventures typically face substantial resource constraints when seeking information critical to internationalization. This paper examines how the owner/operators of new ventures in the Turkish clothing export industry utilize their informal and formal social networks to acquire the information they need to export successfully. Field research and a survey of 250 Turkish clothing firm owners was conducted in Istanbul, Turkey to explore this issue. Findings indicate that informal social ties – particularly friends and family connections – are key sources of information for new-venture firm owners in this industry. Two formal organizations provide export information to entrepreneurs in the Turkish clothing industry, but only one was found to be easily accessible to new-venture firm owners: the Istanbul Textile and Clothing Exporters' Union (ITKIB). OLS regression results reveal that new venture firm owners' perceptions of ITKIB's importance can be explained by their perceived importance of various kinds of export-oriented information offered by this organization. In particular, perceived importance of export-law, market-research, and export-process information drive their perceptions of the importance of their ITKIB membership.