Entrepreneurial orientation and p...
Journal of Behavioral Studies in Business Entrepreneurial orientation, Page 1 Entrepreneurial orientation and psychological traits: the moderating influence of supportive environment Donatus Okhomina Fayetteville State University ABSTRACT Positive environmental influences are important factors in the success of an entrepreneurial venture. Environmental factor such as supportive environment may have a moderating influence on the relationship between psychological traits and entrepreneurial orientation. A cross-sectional study was conducted among entrepreneurs in a capitol city situated in a Southern Metropolitan Statistical Area (SMSA). Results of the study support significant positive relationships between psychological traits and entrepreneurial orientation. Findings also suggest that supportive environment moderate the relationships of psychological traits and entrepreneurial orientation. Overall, research findings have a number of theoretical and managerial implications. For example, venture capitalists, management practitioners, and other business professionals who are involved in high risk ventures may employ this entrepreneurial orientation model as a useful tool to assess entrepreneurial capabilities, managerial tendencies that may improve return on investment relative to human capital. Also, it may be a useful tool for selecting team members for new business start ups, and evaluating applicants for intrapreneurship positions in the corporate world. Another implication is in the area of entrepreneurship pedagogy, linking the relationship between psychological traits and entrepreneurial orientation could be used as a technique for identifying students for entrepreneurial careers. In addition, this study was conducted with actual entrepreneurs in the service sector. Prior studies have drawn their samples from mostly students, managers and non-entrepreneurs and the service sector has received very little attention in previous entrepreneurship research, yet it represents one of the fastest growing sectors in the global economy. Entrepreneurial Orientation: Achievement, Locus, Supportive Environment
Journal of Behavioral Studies in Business Entrepreneurial orientation, Page 2 INTRODUCTION The study of entrepreneurship is a multidimensional process that calls for further and continuing research studies. Prior research studies have been filled with inconsistency and controversy relative to the appropriate definition of an entrepreneur and the relevance of personality traits study in entrepreneurship (Beugelsdijk 2007 Jaafar & Abdul-Aziz 2005 Aldrich and Martinez 2001 Gartner 2001 Lee and Peterson 2000 Lyon, Lumpkin & Dess 2000 Shane & Venkataraman 2000 Aldrich and Kenworthy 1999 Busenitz & Barney 1997 Lumpkin & Dess 1996 Gartner 1988, Carland et al. 1984 Cole 1969 Knight 1921). The personality traits approach to entrepreneurship has been criticized by a number of researchers as unsatisfactory and questionable (Gartner, 1988 Aldrich & Zimmer, 1986, Low & Macmillan, 1988) in explaining entrepreneurial behavior and performance. They concluded that there are no personality characteristics that predict who will attempt to, or be, a successful entrepreneur. As Low and MacMillan (1988, p. 148) stressed, entrepreneurs tend to defy aggregation. They reside in the tails of the population distribution and though they are expected to differ from the mean of the society, the nature of their differences is not predictable. As a result, it seems that any attempt to profile entrepreneurs solely along the personality characteristics may be overly simplistic. In light of the aforementioned criticism including the suggestion made by Gartner (1988, p. 57) and Vesper (1980) that entrepreneurship should be analyzed from the perspective of what an entrepreneur does and not what he is, and that creation of an organization is a complex process and the outcome of many influences. Thus, this research revisits the question of whether psychological traits ���need for achievement, locus of control, and tolerance for ambiguity -- are useful predictors by investigating their relationship to entrepreneurial orientation whether supportive environments moderate the relationships between entrepreneurial orientation and psychological traits. LITERATURE REVIEW Carland et al. (1984), in an attempt to provide answers to the questions that: 1) if entrepreneurs exist as entities distinct from small and large organizations and 2) if entrepreneurial activity is a fundamental contributor to economic development, on what basis may entrepreneurs be separated from non-entrepreneurial managers in order for the phenomenon of entrepreneurship to be studied and understood? After reviewing literature of small business and entrepreneurship and using Schumpeter���s work (1934), they defined an entrepreneur ���as an individual who establishes and manages a business for the principal purposes of profit and growth. The entrepreneur is characterized principally by innovative behavior and will employ strategic management practices in the business��� (p. 158). This theoretical piece distinguished the entrepreneur from a small business owner. Carland et al. also defined a small business owner as ���an individual who establishes and manages a business for the principal purpose of furthering personal goals. The business must be the primary source of income and will consume the majority of one���s time and resources. The owner perceives the business as an extension of his or her personality, intricately bound with family needs and desires���. This definition recognized the overlap between small business owner and entrepreneur but provided additional support to Schumpeter���s characterization of entrepreneurship as innovation oriented.
Journal of Behavioral Studies in Business Entrepreneurial orientation, Page 3 Lumpkin and Dess (1996) further clarified the definitional issue in entrepreneurship in their 1996 seminal work by making a distinction between entrepreneurship and entrepreneurial orientation. They suggested that an entrepreneurial orientation (EO) represents entrepreneurial processes that address the question of how new ventures are undertaken, whereas the term entrepreneurship refers to the content of entrepreneurial decisions by addressing what is undertaken. Five dimensions of EO -- autonomy, innovativeness, risk taking, proactiveness, and competitive aggressiveness -- were identified. These dimensions represent distinct constructs that may vary independently of each other in a given context. Linking the relationship between psychological traits and entrepreneurial orientation is imperative for theoretical and empirical reasons, because entrepreneurs with a certain psychological traits may have a tendency to exhibit certain degree of entrepreneurial orientation and showing this tendency may provide benefits to the organization. In prior research studies, achievement need, tolerance for ambiguity, risk taking and locus of control were analyzed with respect to entrepreneurial characteristics and were identified as correlates of being or desiring to be an entrepreneur (Ahmed, 1985 Begley& Boyd, 1987 Bonnett & Furnham, 1991). Prior research findings related to psychological traits have been corroborative and thus this research is aimed at providing additional insights and understanding to the relationship between psychological traits and entrepreneurial orientation. In the subsections that follow, some of the most researched psychological traits will be discussed and how they are related to entrepreneurial orientation. Need for Achievement In McClelland���s (1961), The Achieving Society, the need for achievement trait has been empirically linked to entrepreneurial activity. The need for achievement is defined as a tendency to choose and persist at activities that hold a moderate chance of success or a maximum opportunity of personal achievement satisfaction without the undue risk of failure. From diverse samples of business executives, the author���s findings revealed that senior marketing managers have the highest need for achievement. He posited that needs are learned and therefore culturally, not biologically determined and some cultures produced more entrepreneurs because of the socialization process that creates a high need for achievement. In a longitudinal analysis of the need for achievement scores of college freshmen, McClelland (1965) concluded that a high need for achievement is a predictor of entrepreneurship and is based on influences of childhood and adult training and experiences. McClelland���s work was initially influenced by Murray���s (1938) studies in the development of his Need for Achievement Theory (Fineman, 1977). McClelland shared with Murray the belief that analysis of fantasy is the best way to assess motives, which are primarily based on unconscious state. Through the usage of the Thematic Appreception Test (TAT), which requires the writing of imaginative stories by subjects in response to a set of pictures, the stories were content analyzed for achievement imagery to obtain an n Ach score by the author. Through the correlation studies in the laboratory, McClelland determined that those high in n Ach, as measured by the TAT, tended to exhibit an original five behavioral traits and was reduced to three: (1) Takes personal responsibility for finding solutions to problems (2) Sets moderate achievement goals and takes calculated risks and (3) Wants concrete feedback regarding performance. McClelland conducted a number of studies demonstrating that high n Ach and the subsequent manifestation