Perceptions and judgement are, therefore, key elements in this process. Indeed, more than 20 years ago, Mark Casson (1982) identified ‘judgement’ as one of the qualities that distinguishes the successful entrepreneur from the much larger group of non-entrepreneurial SME owners. As mentioned before, business judgement can reflect an innate ability but most frequently it directly derives from experience (or, more accurately, learning from experience). However, past experience can also filter out our ability to spot new opportunities or threats. Cultural effects related to family, locality and friends can help us interpret the world but they can also colour what we see. The same may be true of the influences from various networks that business owners often belong to (ranging from business associations such as Chambers of Commerce, business clubs and so on, to more social links related to, say, sport or leisure activities). And, of course, our own expectations and motivations of what we hope for in life, at work and in terms of a career will affect both judgement and business behaviour. The Open University Business Schools (OUBS) has conducted research in this area over the years. The findings from many different entrepreneurial firms, which reveal various influences and feedback loops on the owner-manager's decision-making, are summarised in Figure 2. Apart from the effects of the various influences that can affect business judgements, the main points to note are:
- Business situations consist of real challenges, constraints and opportunities that directly impact on the business performance of a firm.
- However, it is how entrepreneurs perceive these that guide their judgments and actions (which is why accurate market information, the ability to learn and experience are so important).
- Business perceptions are also influenced by personal and business motivations, peer pressures and cultural influences (it could be argued that entrepreneur's perceptions are more closely aligned with reality).
- Entrepreneurial behaviour is guided by the entrepreneur's expectations rather than a rigid set of strategic objectives (again, it may be that the entrepreneur's expectations are more realistic and, maybe, more ambitious than those of other business managers).
- The process is not static but very dynamic with feedback and signals from the market consciously and indirectly affecting later decisions and actions.
The influences and processes depicted in the model are complex but so too is the reality of entrepreneurial business. To date, researchers have not been able to identify a core and necessary bundle of attributes, characteristics or qualities that mark out successful entrepreneurs unerringly from the large crowd of business owners. However, a commonly quoted empirical and desk research study of new venture start-ups, that has stood the test of time over the past quarter-century, was conducted through the Massachusetts Institute of Technology by Jeffrey Timmons and colleagues (Timmons et al. 1977). They identified 14 important entrepreneurial characteristics of successful enterprise owners (see Box 2) which still frequently crop up in entrepreneurship research.
Box 2 Behavioural charcteristics of entrepreneurs
- drive and energy
- self-confidence
- high initiative and personal responsibility
- internal locus of control
- tolerance of ambiguity
- low fear of failure
- moderate risk taking
- long-term involvement
- money as a measure not merely an end
- use of feedback
- continuous pragmatic problem solving
- use of resources
- self-imposed standards
- clear goal setting.
Activity 3
- How many of the entrepreneurial qualities listed in Box 2 do you feel already, in the main part, apply to you?
- Which ones do you feel a need to find out more about?
- Which ones have you already identified as needing more development?
Activity 4
- Do you feel you are highly motivated to achieve?
- Are you competitive and get above average satisfaction from success in non-business areas such as, say sport or academic studies?
- Are you able to take setbacks without becoming too discouraged?
Answer
There is a tendency for high nAch people to come from very supportive backgrounds and for them to be motivated to achieve in different areas. In contrast, high fear of failure people tend to come from disrupted or non-supportive backgrounds and focus more obsessively on areas where they are more likely to achieve their goals (Kets De Vries 1977) (though they often set goals well below their actual potential in relation to the decision-making model in Figure 2, high fear of failure people would have comparatively low perceived capabilities and expectations whereas high nAch people may be a bit over-confident about their own capabilities and stretch their expectations by setting challenging targets). However, these tendencies are not set in stone and the actual experience of business can have a big effect in inducing either more caution or more confidence. Still, if you are uncertain of your own drive to succeed or your ability to persist, the wisest course of action is to consider pushing your idea as part of a team. Small groups not only provide support, they also have a wider range of abilities and skills and often come up with more considered decisions.- the outcome of events and situations are susceptible to intervention
- individuals can intervene and influence the outcome of situations positively from their perspective
- they themselves have the skills and capacity to intervene effectively in certain situations or to influence certain events.
Most reasonably successful students at all levels realise that their own efforts in studying have a lot to do with passing. Most people for whom sport is more than just an occasional leisure activity know the value of expending their own efforts on training and the importance of self-confidence. And in business, most chief executives and reasonably able mid-level to senior managers will be accustomed to obtaining positive responses from their personal interventions. It seems clear that people who believe that outcomes basically depended on their own behaviour and that they can control their own behaviour will generally believe that the control of events of importance to them ultimately rested internally in themselves. This is clearly linked to self-confidence and the ability to self-motivate. However, people with internal locus of control beliefs are in the minority. For many people, their lives are deeply affected by the decisions of people in more powerful positions than themselves which, in business, can include strong partners, customers and suppliers (as Porter's five-forces model has identified). Even more pervasive than the belief that powerful others exert a determining control or influence are widespread beliefs that events are determined by chance or luck. Activity 5 provides you with an opportunity to see where you currently stand (but note that locus of control beliefs are also influenced by context and can vary over time, especially if success breeds success).
Activity 5
Complete the Entrepreneurial attributes: locus of control questionnaire (clicking on 'Launch in a separate player' will allow you to enlarge text). This will give you an estimate of your own locus of control belief profile and what dominates – internal, external or chance.
Click on one of the three choices, depending on whether you agree or disagree with each statement, and your scores for Internal, External and Chance will appear in the respective boxes.
Click on one of the three choices, depending on whether you agree or disagree with each statement, and your scores for Internal, External and Chance will appear in the respective boxes.
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