Risk Propensity Differences Between Managers and Entrepreneurs and Between Low- and High-Growth Entrepreneurs: A Reply in a More Conservative Vein

A Carnegie perspective on intermittent risk taking in entrepreneurship

Varying risk-taking tendency is an important area of inquiry for the Carnegie perspective. Drawing on organizational learning literature, we develop a model to illuminate the mechanisms that can underlie time-varying risk taking tendency in entrepreneurship. In particular, we delineate conditions under which abrupt risk taking punctuates periods of risk-avoiding behaviors, a pattern that we call "intermittent risk taking." We use serial entrepreneurs whose bouts with risk taking are often depicted as driven by an entrepreneurial itch to illustrate our model. In our conceptualization, decision makers engage in an interplay of experiential and vicarious learning as they move into and out of higher-risk self-employment (i.e., venture creation) with in-between stints in lower-risk wage-employment. Using a computational model to simulate the dynamics of this conceptualization, we find that vicarious learning from satisfied risk-avoiding peers can exert a pull that draws disappointed entrepreneurs into periods of risk avoidance (i.e., wage-employment). However, the moment that the satisfaction of these peers fails to convince, this pull wanes. In effect, the entrepreneur vicariously learns that the grass may not be greener on the other side which then leads them to return into self-employment. The itch for risk taking then recurs not necessarily because risky venture creation offers higher payoffs than risk-avoiding options but because decision makers come to see that risk avoidance may not be a satisfactory alternative either - a conceptualization that adds nuance to prior notions of varying risk tendencies and serial entrepreneurship.

Linking managerial capital with explorative strategy and growth in China

Purpose

This study aims to consider the effect of managerial capital (psychological, intellectual and social) on business strategy and growth. Per upper echelon theory, managerial capital enables high-level managers to drive firm performance in uniquely personal ways. The authors test the effects of managerial capital on a manager’s dominant regulatory focus (promotion and prevention balance) and whether having an explorative strategy mediates the relationship between dominant regulatory focus and the percentage of business unit growth expected from new lines of business.

Design/methodology/approach

Survey data from a sample of 211 Chinese executives were used to assess measurement and test hypotheses by means of structural equation modeling.

Findings

Results indicate that the direction of business strategy is influenced by the balance between promotion and prevention focus, which is shaped by managers’ risk propensity, product-market familiarity and bonding tie diversity. Explorative strategy, in turn, mediates the relationship between dominant regulatory focus and expectations of innovative growth.

Originality/value

Examining the effects of managerial capital on innovative firm strategy reveals the role of psychosocial traits of decision-makers.

Intergenerational Entrepreneurship to Foster Sustainable Development: A Methodological Training Proposal

Intergenerational entrepreneurial initiatives are aimed at addressing the needs and opportunities of certain social groups and have the potential of becoming successful business projects. Moreover, they are a key to undertake sustainability practices that may represent a competitive advantage for the companies and an example to imitate when creating businesses. The objective of the study is to propose an intergenerational training methodology so that young people and seniors can create companies together, generating social cohesion and sustainable development in response to generational challenges. Intergenerational entrepreneurship seems to be a novel research area, especially when referring to developing methodologies of collaborative entrepreneurship projects. For this purpose, our literature review focuses on, first, the matching theories and experiences applied for intergenerational cooperation; then, literature about training methodologies for entrepreneurship is reviewed; finally, the main theories on training skills for entrepreneurship are approached. Focus groups were conducted as they serve as the main sources of data and are very appropriate for the generation of new ideas within a social context. In general, results show that, for achieving a successful intergenerational cooperation, some specific training is needed for both generations. This paper is a starting point for future research approaching intergenerational entrepreneurship, or entrepreneurial initiatives with singular characteristics, such as rural contexts or people with disabilities.

Personal Values in Relation to Risk Intelligence: Evidence from a Multi-Mediation Model

In a risk society, personal values can be important resources, useful for managing uncertainty and guiding people in the perception of risk. The goal of this article is to explore the relationship between risk intelligence and personal values. The participants were 731 Italian adults aged between 18 and 65 years (M = 30.25; DS = 10.71). The survey was composed of the following measures: Subjective Risk Intelligence Scale and Portrait Values Questionnaire. Data analyses have found significant relationships between some types of personal values and risk intelligence: subjective risk intelligence is negatively related to conservation and positively related to openness to change and self-transcendence, but it was not related to self-enhancement. Furthermore, values of openness to change and self-transcendence mediate the relationship between age and subjective risk intelligence, while conservation values and self-enhancement values did not mediate the same relationship. Implication for practice and future research will be discussed.

Acceptance and Strategic Resilience: An Application of Conservation of Resources Theory

The definition of individual resilience remains ambiguous. This article responds to that ambiguity by first deriving a definition of individual resilience from conservation of resources (COR) theory. Accordingly, to the extent individuals have sufficient resources and behave according to two key principles of COR theory, they will exhibit resilience in response to significant adversity. A second development builds upon the COR distinction between resources deployed in response to adversity which are resource-preserving as distinct from resource-enhancing, which generate what are here labeled acceptance resilience and strategic resilience, respectively. It is proposed that behaviors associated with acceptance resilience support relative continuity of environments, relationships, and life goals, with strategic resilience behaviors often involving changing environments, relationships, or life goals. Acceptance resilience is related to earlier COR understandings of resilience and relevant resources, while strategic resilience requires distinct or additional resources. Individuals demonstrating the two types of resilience will diverge in terms of openness to new experiences, persistence, loss aversion, and the valuation of future resources. It is further proposed that acceptance resilience is more common than strategic resilience and that organizations which find resilience valuable will tend to support acceptance resilience, in part because strategic resilience may generate turnover in response to adversity. The analysis addresses related issues, including coping, career change, burnout, as well as teams and organizations. Implications for theory, practice, and future research conclude the work.

Personality trait differences across types of entrepreneurs: a systematic literature review

The personality traits that define entrepreneurs have been of significant interest to academic research for several decades. However, previous studies have used vastly different definitions of the term “entrepreneur”, meaning their subjects have ranged from rural farmers to tech-industry start-up founders. Consequently, most research has investigated disparate sub-types of entrepreneurs, which may not allow for inferences to be made regarding the general entrepreneurial population. Despite this, studies have frequently extrapolated results from narrow sub-types to entrepreneurs in general. This variation in entrepreneur samples reduces the comparability of empirical studies and calls into question the reviews that pool results without systematic differentiation between sub-types. The present study offers a novel account by differentiating between the definitions of “entrepreneur” used in studies on entrepreneurs’ personality traits. We conduct a systematic literature review across 95 studies from 1985 to 2020. We uncover three main themes across the previous studies. First, previous research applied a wide range of definitions of the term “entrepreneur”. Second, we identify several inconsistent findings across studies, which may at least partially be due to the use of heterogeneous entrepreneur samples. Third, the few studies that distinguished between various types of entrepreneurs revealed differences between them. Our systematic differentiation between entrepreneur sub-types and our research integration offer a novel perspective that has, to date, been widely neglected in academic research. Future research should use clearly defined entrepreneurial samples and conduct more systematic investigations into the differences between entrepreneur sub-types.

Entrepreneurship Education in the Transformation of Incarcerated Individuals: A Review of the Literature and Future Research Directions

This article draws upon the theories of entrepreneurial cognition, planned behavior, and criminal desistance to understand the role of entrepreneurship education in the behavioral and cognitive transformation of incarcerated individuals. Specifically, this article considers how participation in an entrepreneurship education program should influence entrepreneurial opportunity recognition, cognitive transformation, and institutional misconduct. It suggests these changes are more likely to influence an incarcerated person's entrepreneurial intentions and criminal desistance. The six propositions presented shed light on how an incarcerated individual's willingness to change his or her attitudes and develop an entrepreneurial mind-set influence his or her behavior in prison and prepares him or her to prosper in a dynamic and complex world after release. This article argues that the study of one's transformation while incarcerated through the discovery, evaluation, and exploitation of opportunities is likely to advance empirical and theoretical perspectives of the fields of entrepreneurship. The examination of how incarcerated persons deal with fear of failure, risk aversion, and identity, in particular, presents great opportunities for future research.

Entrepreneurial risk taking: themes from the literature and pointers for future research

Purpose

Given the critical mass of literature on entrepreneurial risk-taking, the purpose of this paper is to assess the contribution to the knowledge so far by exploring important themes in the literature on entrepreneurial risk-taking.

Design/methodology/approach

The review is organized around four themes: nature of entrepreneurial risk-taking; antecedents of entrepreneurial risk-taking; context of entrepreneurial risk-taking; and outcomes of entrepreneurial risk-taking. The author critically evaluates the literature on each theme and presents the pointers for future research.

Findings

Literature does provide a holistic view encapsulating different dimensions of entrepreneurial risk-taking, but it has produced largely inconsistent findings in terms of risk and gender, risk propensity of entrepreneurs in comparison to non-entrepreneurs and the outcomes of entrepreneurial risk-taking. Organizational antecedents, non-financial measures and ethical- and health-related consequences of entrepreneurial risk are underexplored. Inconclusive literature also implies that the risk may not be a distinguishing or important factor for undertaking an entrepreneurial endeavor. Therefore, it is pertinent to explore the critical factors entrepreneurs consider (or not consider) while marshalling their resources to embark on an entrepreneurial journey. This posits the need to explore an entrepreneur’s informal approach toward risk-taking.

Originality/value

Suggested pointers of future research will potentially enhance the theoretical understanding of entrepreneurial risk-taking.

Corporate Entrepreneurship: An Empirical Look at Individual Characteristics, Context, and Process

Using a sample of 151 employees from three government organizations, we tested a model of corporate entrepreneurship that is influenced by individual characteristics (represented by the five factor model of personality), context (represented by the firm's memory and learning orientation), and process (represented by the facets of the Corporate Entrepreneurship Assessment Instrument). Our results indicated that contextual and process variables influenced corporate entrepreneurship while the individual characteristics did not. Moreover, corporate entrepreneurship did mediate the relationship between these antecedents and job satisfaction, affective commitment, and performance.

Identifying high growth firms: Where are we?

The article reviews the literature for the key markers of high growth firms, which create the majority of new jobs. From the review, a template is developed comprising the key markers. They include: training and experience in entrepreneurship and management; and strategies that emphasise innovation, marketing and employee and organisational learning. High growth firm owners take steps to access management skills that complement theirs through employment of a management team, outsourcing management tasks or making decisions with oversight from an informal board. Good reward structures, which may include ownership interests, are essential to performance of the management team. Access to resources, especially finance and human capital is critical to growth but abundant resources could compromise efficiency. The article finds that personality characteristics of owners and postgraduate education in management are not effective identifiers of high growth firms. Some of the barriers to identifying high growth firms are presented and suggestions made to overcome them.

The Psychology of Entrepreneurship

In this review of the psychology of entrepreneurship, we first present meta-analytic findings showing that personality dimensions, such as (general) self-efficacy and need for achievement, and entrepreneurial orientation are highly associated with entrepreneurship (business creation and business success). We then discuss constructs that were developed within entrepreneurship research, such as entrepreneurial alertness, business planning, financial capital as resources, and entrepreneurial orientation, and how they can be better understood by taking a psychological perspective. Next, we elaborate how traditional psychological constructs have been utilized in entrepreneurship and how this may enhance our knowledge in industrial and organizational psychology (with respect to, for example, knowledge, practical intelligence, cognitive biases, goals and visions, personal initiative, passion, and positive and negative affect). Finally, we provide an overall framework useful for the psychology of entrepreneurship, and implications for future research.

A Meta-Analysis of Interviews and Cognitive Ability

The topic of what interviews measure has received a great deal of attention over the years. One line of research has investigated the relationship between interviews and the construct of cognitive ability. A previous meta-analysis reported an overall corrected correlation of .40 ( Huffcutt, Roth, & McDaniel, 1996 ). A more recent meta-analysis reported a noticeably lower corrected correlation of .27 ( Berry, Sackett, & Landers, 2007 ). After reviewing both meta-analyses, it appears that the two studies posed different research questions. Further, there were a number of coding judgments in Berry et al. that merit review, and there was no moderator analysis for educational versus employment interviews. As a result, we reanalyzed the work by Berry et al. and found a corrected correlation of .42 for employment interviews (.15 higher than Berry et al., a 56% increase). Further, educational interviews were associated with a corrected correlation of .21, supporting their influence as a moderator. We suggest a better estimate of the correlation between employment interviews and cognitive ability is .42, and this takes us “back to the future” in that the better overall estimate of the employment interviews – cognitive ability relationship is roughly .40. This difference has implications for what is being measured by interviews and their incremental validity.

Enhancing Entrepreneurship: The Role of Goal Orientation and Self-Efficacy

Entrepreneurship has become increasingly important in the workplace. Research suggests motivational traits are important in pursuing entrepreneurial activities. Yet, the extent to which factors influencing entrepreneurial versus managerial goals differ remains unclear. This study assessed the influence of goal orientation and self-efficacy in predicting entrepreneurial and managerial career anchors development. Data from 158 college students indicated learning goal orientation (LGO) and performance-prove goal orientation (PPGO) predicted entrepreneurial career anchors when coupled with high self-efficacy. For managerial goals, self-efficacy did not influence these relationships. Findings suggest providing opportunities for increased self-efficacy and adaptive goal orientations may affect entrepreneurial development.

The big five personality dimensions and entrepreneurial status: a meta-analytical review

In this study, the authors used meta-analytical techniques to examine the relationship between personality and entrepreneurial status. Personality variables used in previous studies were categorized according to the five-factor model of personality. Results indicate significant differences between entrepreneurs and managers on 4 personality dimensions such that entrepreneurs scored higher on Conscientiousness and Openness to Experience and lower on Neuroticism and Agreeableness. No difference was found for Extraversion. Effect sizes for each personality dimension were small, although the multivariate relationship for the full set of personality variables was moderate (R = .37). Considerable heterogeneity existed for all of the personality variables except Agreeableness, suggesting that future research should explore possible moderators of the personality-entrepreneurial status relationship.

The mediating role of self-efficacy in the development of entrepreneurial intentions

The purpose of this study was to investigate the mediating role of self-efficacy in the development of students' intentions to become entrepreneurs. The authors used structural equation modeling with a sample of 265 master of business administration students across 5 universities to test their hypotheses. The results showed that the effects of perceived learning from entrepreneurship-related courses, previous entrepreneurial experience, and risk propensity on entrepreneurial intentions were fully mediated by entrepreneurial self-efficacy. Contrary to expectations, gender was not mediated by self-efficacy but had a direct effect such that women reported lower entrepreneurial career intentions. The authors discuss practical implications and directions for future research.

Data Quality Affects Meta-Analytic Conclusions: A Response to Miner and Raju (2004) Concerning Entrepreneurial Risk Propensity

J. B. Miner and N. S. Raju (2004) contended that there are additional studies that compare the risk propensity of entrepreneurs and managers, which, when added to the data from W. H. Stewart and P. L. Roth (2001) and meta-analyzed, produce relationships between risk propensity and entrepreneurial status that are substantially weaker than previously believed. This conclusion was evaluated by identifying and examining methodological problems associated with their inclusion of effect sizes (i.e., ds) from studies with variables not relevant to research questions, dependent samples, extraneous variance in outcome variables, and confusion of constructs. When these methodological issues were addressed, a new meta-analysis indicated an overall conclusion consistent with that of Stewart and Roth, but the results varied according to instrumentation, particularly objective instrumentation (observed d = 0.31) versus the Miner Sentence Completion Scale-Form T (observed d = -0.35).