Psychological Interventions for Effective Entrepreneurial Mindsets Michael Frese NUS, Business School, Dept. of Management and Organization, Singapore and Leuphana, Univ. of Lueneburg, Germany World Bank: Impact Evaluation Workshop: Trade up and Compete, Istanbul May, 2015
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Psychological Interventions for Effective Entrepreneurial Mindsets Michael Frese NUS, Business School, Dept. of Management and Organization, Singapore.
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Psychological Interventions for Effective Entrepreneurial Mindsets
Michael Frese
NUS, Business School, Dept. of Management and Organization,
Singaporeand Leuphana, Univ. of Lueneburg,
Germany
World Bank: Impact Evaluation Workshop: Trade up and Compete,
Istanbul May, 2015
Outline1) Action perspective in entrepreneurship2) Training from an action perspective3) Training for entrepreneurial success 4)Training for non-entrepreneurs (BA students) to develop an entrepreneurial mindset and higher start-up rates
Action characteristics
•Personal initiative•Goals/visions•Search for opportunities•Information search•Planning•Feedback processing•Social networking•Develop niche•Develop resources•Deliberate practice
Entrepreneurial success•Phase I: opportunity identification•Phase II: refinement of business concept and resource acquisition – starting an organization•Phase III: survival and growth• Exit
Intellectual Resoures•Education (school, occupational)•Mental abilities•Models in family or environment
Cognitive antecedents•General and specific knowledge•Tacit knowledge•Entrepreneurial orientation•Expertise (practical intelligence)•Heuristics/biases
National culture
The action-characteristics-model of entrepreneurship - modified The action-characteristics-model of entrepreneurship - modified Frese, M., & Gielnik, M. M. (2014). The psychology of entrepreneurship. Annual
Review of Industrial and Organizational Psychology, 1,
413–438.
Action characteristics
•Personal initiative•Goals/visions•Search for opportunities•Information search•Planning•Feedback processing•Social networking•Develop niche•Develop resources•Deliberate practice
Intellectual Resoures•Education (school, occupational)•Mental abilities•Models in family or environment
Cognitive antecedents•General and specific knowledge•Tacit knowledge•Entrepreneurial orientation•Expertise (practical intelligence)•Heuristics/biases
National culture
The action-characteristics-model of entrepreneurship - modified The action-characteristics-model of entrepreneurship - modified Frese, M., & Gielnik, M. M. (2014). The psychology of entrepreneurship. Annual
Review of Industrial and Organizational Psychology, 1,
413–438.
Actions in Entrepreneurship
Mindset:
Set the mind for action
At first sight trivial, when examined in some detail, quite interesting
Frese, M. (2009). Towards a psychology of entrepreneurship: An action theory perspective. Foundations and Trends in Entrepreneurship, 5, 435–494.
Active Mindset = Personal Initiative
• Self-starting• Pro-active (future oriented)• Overcoming barriers• Changing the environment
The Opposite of Personal Initiative Is the Reactive Approach:• Does what one is told• Is oriented towards now, not future• Stops when difficulties arise• Reacts to environment
Meaning of Self-Starting
• Self-starting is different from the “normal” or obvious approaches (social comparison approach) • Doing the obvious self-starting is low• If an entrepreneur takes up an innovation that is “in the air”, that they see others do or talk about, it is not self-starting
Meaning of Pro-Active
• Scanning for opportunities and problems that may appear in the future
• Preparing now for dealing with future problems and exploiting future opportunities
Meaning of Overcoming Barriers
• Protecting one’s goals and adapting one’s plans to overcome problems on the way towards the
goal • Actively dealing with problems instead of giving
up• Dealing with own anxieties and frustrations – self-regulation
Empirical Research: Personal Initiative has been shown to be related to better performance on
several levels:
1)Personal Initiative of Owner and Entrepreneurial Success
2)Personal intiative of the employees leads to higher employee performance
3)Personal intiative of the employees leads to higher firm success
Relationship Between Personal Initiative and Entrepreneurial Success in Uganda (Correlation)
r with Success
Initiative .42**
Replicated several times
(Koop, S., De Reu, T., & Frese, M. (2000). Sociodemographic factors, entrepreneurial orientation, personal initiative, and environmental problems in Uganda. In M. Frese (Ed.), Success and failure of microbusiness owners in Africa: A psychological approach (pp. 55-76). Westport, Ct.: Quorum.Replicated e.g., in Utsch, A., & Rauch, A. (2000). Innovativeness and initiative as mediators between achievement orientation and venture performance. European Journal of Work and Organizational Psychology, 9, 45-62.)
Relationship Between Employee Personal Initiative and Employee Performance (Meta-Analysis of 6-20
Studies; Corrected Correlation)
Correlation of Personal Initiative with Individual Performance
Corrected meta-analytic correlations: .20 ** to .26**
(Tornau, K., & Frese, M. (2013). Construct clean-up in proactivity research: A meta-analysis on the nomological net of work-related proactivity concepts and their incremental validities. Applied Psychology: An International Review, 62, 44–96.Performance measured by objective performance, e.g., sales or performance evaluation by supervisor)
Personal Initiative of Employees (as Organizational Culture/Climate) Causes Changes in
Entrepreneurial Success (small to mid-sized firms in Germany)
Baer, M. & Frese, M. (2003) Innovation is not enough: Climates for initiative and psychological safety,process innovations, and firm performance; Journal of Organizational Behavior, 24, 45-68
Company Level: Climate for Initiative Items
• People in our company actively attack problems.
• Whenever something goes wrong, people in our company search for a solution immediately.
• Whenever there is a chance to get actively involved, people in our company take it.
• People in our company take initiative immediately – more often than in other companies.
• People in our company use opportunities quickly in order to attain goals.
Climate for Initiative and Return on Assets of Medium-Sized
German Firms Holding constant Process Innovativeness, Size, and Industry codes, prior Return on Assets predicting future Return on Assets: R .30**
Baer, M. & Frese, M. (2003) Innovation is not enough: Climates for initiative and psychological safety, process innovations, and firm performance; Journal of Organizational Behavior, 24, 45-68
The Opposite of Personal Initiative: Reactive Action Strategy of Business
Owner- Little active preplanning - Low level of personal initiative- Low level of active search for opportunities- Strong amount of mimicking others- Often rather helpless: I do what others do as well
0
10
20
30
40
50
High Low
Reactive strategy
% o
f hi
ghly
suc
cess
ful
owne
rs
Reactive Strategy in South Africa
6%
39%
Reactive Approach and Entrepreneurial Failures: Vicious Cycle (Spiral)(Netherlands and Zimbabwe)
Reactive
Reactive NonSuccess
NonSuccess
Time
Van Gelderen, Frese, Thurik (2000) Strategies, uncertainty and Performance of small business startups. Small Business Economics, 15, 165-181. Zimbabwe data not yet published
Outline1) Action perspective in entrepreneurship2) Training from an action perspective3) Training for entrepreneurial success 4)Training for non-entrepreneurs (BA students) to develop an entrepreneurial mindset and higher start-up rates
Facets of Action Training (Action Regulation Theory)
1) Developing an action-oriented mental model - cognitive representation is based on ”rules of thumbs” (principles of actions)
2) Learning by doing: Active and exploratory approach to learning from action, BUT not blind and mindless action (science helps here to develop better mental models)
3) Cognitive apparatus is built for action; exercises have to be connected to principles of actions which can only be learnt, when connected to actions
4) Feedback: Both positive and negative feedback is provided by the trainer.
Facets of Action Training – 2 – 5) Negative feedback is given in contrast to
classical learning theory; negative feedback has a positive motivational and cognitive effect (understanding, how not to do certain things and being motivated that one still needs to improve skills)
6) Supporting transfer: Principles of actions can be adjusted to real life tasks. Connection to real life tasks is drawn continuously during the training (thinking about how principles can be used in everyday actions and by asking participants to say when they use the newly acquired skills; application contract
Facets of Action Training – 3 –
7) Necessity to routinize behavior: New skills developed during the training compete with old skills that have been routinized. Therefore, routinization of the new behavior needs to be encouraged both in the exercises and afterwards
Frese, M., Beimel, S., & Schoenborn, S. (2003). Action training for charismatic leadership: Two evaluation studies of a commercial training module on inspirational communication of a vision. Personnel Psychology, 56, 671-697
The Action Sequence
Goal
Information search
Planning
Monitoringof execution
Feedback
Frese, M., & Zapf, D. (1994). Action as the core of work psychology: A German approach. In H. C. Triandis, M. D. Dunnette, & L. M. Hough (Eds.), Handbook of industrial and organizational psychology (2 ed., Vol. 4, pp. 271-340). Palo Alto, CA: Consulting Psychologists Press
What does an active mindset mean for
-Setting goals-Information search
-Planning-Feedback development and processing
Outline1) Action perspective in entrepreneurship2) Training from an action perspective3) Training for entrepreneurial success 4)Training for non-entrepreneurs (BA students) to develop an entrepreneurial mindset and higher start-up rates
Identifying self-starting and reactive behavior in your daily routine
Part 1 – Instruction:
Work in teams of two. Please write down the business activities of your last working day (write down even small activities like cleaning up your shop/your desk). Tell your partner about your working day.
26
Exercise: Daily routine WS 3
27
Example: Daily routine of the owner of a small grocery store
Time Business activity
8.00 Open store and put up the usual advertisement outside the store.
Waiting for the first customer to come.
Phone call from supplier: he is not able to deliver fresh fruits today. This happens already for the third time within the last two weeks. Hope it will get better soon.
Serving the customers. Some leave the store without buying anything because they were only looking for fresh fruits. Sending these customers to competitor next street.
Not many customers today, thus calling some friends by phone to use the time for chatting.
Cleaning the outside-advertisement and the display.
Serving customers.
Closing the store.
Counting sales and calculating the turnover for today – not a good day…
- 8.45
9.00
9.30
11.00
13.00
14.30
- 20.20
20.00
Exercise: Daily routine
Identifying self-starting and reactive behavior in your daily routine
Part 2 – Instruction:
Look at your daily plan: What was not good? Where have you been passive and reactive? Where did you not act self-starting?
Write down alternative good and self-starting behavior you could have shown.
28
Exercise: Daily routine WS 3
Frese, M., & Fay, D. (2001). Personal Initiative (PI): A concept for work in the 21st century. Research in Organizational Behavior, 23, 133-188.
Action sequence
Goals / redefinition of tasks
Information collection and prognosis
Self-starting
-Active goal redefinition
-Active search, i.e. explora- tion, active scanning
Proactive
-Future problems and opportunitiesconverted into goals
-Consider future prob- lem areas and opportunities
Overcome barriers
-Protect goals when frustrated or taxed by complexity
-Keep search up in spite of complexity and negative emotions
Facets of Active Performance
Action sequence
Plan and execution
Feedback
Self-starting
-Active plan
-Self-developed feedback and active search for feedback
Proactive
-Back-up plans (action plans for oppor-tunities ready)
-Develop pre- signals for potential problems and oppor- tunities
Overcome barriers
-Overcome barriers Quick return to plan when disturbed
-Protect feedback search
Facets of Active Performance -2-
Action Principles, e.g., in the Area of Planning • Self-starting: your plan must imply that you can execute it without waiting for things to happen. Make an active plan!• Proactive: future thinking! What opportunities may occur in the future? Make a plan for future opportunities and problems! Develop a back-up plan.• Overcoming barriers: anticipate possible problems and return to plan quickly when disrupted • consider what you need to reach the goal • Write down actions • Weekly plans with next steps•While doing this, also practice the use of creativity techniques on own business problems (DeTienne & Chandler, 2004)•Participants develop the plans or practice the techniques on their own, before sharing it with a partner, and subsequently within the group.• Developing a 6 months plan to change something significantly in the business and start that change now
PI Training Results Before/1 Year After Training – Uganda
Measures M(before) M(after) d Sign.
Behavior Based Measures:
Personal Initiative TG -.22 .55 1.53 **
control group .19 -.48
Sales TG 2.67 M 3.39M (.30) ** control group lower with time
Number of employees TG 7.88 10.67 (.56) **control group 6.64 4.98
Personal Initiative proved to be a Mediator for success--------------------------------------------------------------------------TG= Training group, CG= Control Group, d= group differences after training; z-standardized scales
Glaub, M., Frese, M., Fischer, S., & Hoppe, M. (2014). Increasing personal initiative in small business managers/owners leads to entrepreneurial success: A theory-based controlled randomized field intervention for evidence based management. Academy of Management Learning & Education, 13, 354-379.
Personal Initiative, TG= Training Group CG= Control Group – Randomized Controlled
Experiment
Glaub, M., Frese, M., Fischer, S., & Hoppe, M. (2014). Increasing personal initiative in small business managers/owners leads to entrepreneurial success: A theory-based controlled randomized field intervention for evidence based management. Academy of Management Learning & Education, 13, 354-379.
Glaub, M., Frese, M., Fischer, S., & Hoppe, M. (2014). Increasing personal initiative in small business managers/owners leads to entrepreneurial success: A theory-based controlled randomized field intervention for evidence based management. Academy of Management Learning & Education, 13, 354-379.
Overall Business Success (TG= Training Group, CG= Control Group) – Randomized Controlled Experiment
The Mediation Steps of Baron and Kenny and Preacher
TrainingPersonal
Initiative T3Success
Step 1: Effect of Training on Post Training Overall Personal Initiative Scale (T3)
The Mediation Steps
TrainingPersonal Initiative
Success T4
Step 2: Effect of Training on the Post Training Overall Success Scale (T3/T4)
The Mediation Steps
TrainingPersonal
Initiative T3Success T4
Step 3: Effect of the Post Training Overall Personal Initiative Scale (T3/T4) on the Post Training Overall Success Scale (T3/T4)
The Mediation Steps
TrainingPersonal
Initiative T3Success T4
Step Analysis 4: Effect of Training on the Post-Training Overall Success Scale (T3/T4) when controlling for Post-Training Overall Personal Initiative Scale (T3/T4)
Success Cases1) One participant produced cheap aluminum saucepans of low quality - a highly competitive market in Kampala. Due to his participation in the training, he decided to switch to higher quality production to target a better paying customer group and to differentiate his business from his competition. He invested in testing his products at the National Bureau of Standard (NBS). Based on detailed feedback of quality deficiencies, he managed to improve the production process (e.g., by applying special tools) and finally was certified by the NBS. With the quality certificate, he approached a wholesaler for household articles and succeeded in securing a large order that was worth about 10 million Ugandan Schillings and that kept him and three cooperating firms busy for more than one year.
Success Cases2) A second participant produced and sold pastries in her small bakery located in a sparsely inhabited and relatively poor neighborhood about three kilometers outside of Kampala center. After taking part in the training program, she decided to extend her customer base outside her neighborhood in order to gain independence from the local market and to increase profit. She wanted to reach these goals by displaying her pastries in a big supermarket in the town center. She started out by checking the product range of various supermarkets and found one displaying only a few varieties of cakes. She baked cakes that differed by form, color, and ingredients from those offered by the supermarket and approached the manager with samples. She managed to convince him of the attractiveness of her cakes to potential customers and was permitted to display the cakes in the supermarket on a commission basis. Her plan worked out and both her turnover and profit increased.
Success Cases3) The third participant owned a successful, nationwide funeral service; she had already thought about expanding her services to neighboring countries before participating in the training program. What had kept her from realizing this idea were her worries about facing an uncontrollable business environment in these countries. Her participation in the PI training made her realize how important it is to shape the environment. This was the initial spark for exporting her products to Sudan and Kenya. This led, indeed, to a strong enhancement of success. In addition, one of the participants in the training group received an entrepreneurship award by the Uganda Investment Authority for this entrepreneur’s expansion of the business after participating in the training.
Training Study in South Africa
0.5 Mill
1 Mill
1.5 Mill
2 Mill
2.5 Mill
3 Mill
3.5 Mill3.56 Mill
2.13 Mill
0.61 Mill 0.56 Mill
Sales - Rand
Beforetraining
2 yearsafter training
Experimental
Control
(p<.10)
1 year after Training
(p<.05)
Outline1) Action perspective in entrepreneurship2) Training from an action perspective3) Training for entrepreneurial success 4)Training for non-entrepreneurs (BA students) to develop an entrepreneurial mindset and higher start-up rates
The STEP training concentrates on Action Knowledge (Principles of Action)
STEP= Student Training for Entrepreneurial Promotion
• Action Knowledge: Instructions for how-to-do things to be successful in entrepreneurship
• “Rules-of-thumb”, “heuristics”, or “know-how”
• Trainees are divided into groups to form start-up teams.
• In the start-up teams the trainees engage in the start-up process of a real venture.
• Teaching entrepreneurial skills requires an interdisciplinary approach from business science, entrepreneurship and psychology, including Personal Initiative
Entrepreneurial failure may happen but it can enhance future entrepreneurial success
– Ideas, projects, new products or whole businesses may fail – it’s good if they fail in a safe environment
– The STEP training deals with how to overcome negative emotions after failure
– Failure can lead to learning under certain circumstances – most important to reduce the negative emotions
– “What can be learned from failures?” and “What can be made better next time?”
The study design to evaluate the STEP training
T1Feb 2009
395 studentsInterview T1
T2Jun 2009
352 studentsInterview T2
TrainingFeb-May 2009
T3Jan – Mar 2010
319 studentsInterview T3
• Randomized control group design: 197 students in training group and 198 students in control group (no training)
• Gold standard for evaluation of intervention
• Increase in business owners with STEP training group: 219%.
• Compared to Control group: 45%.
“Are you currently the owner of a business?”
Business Owner
Bus
ine
ss o
wne
r (%
)
Control Group
STEP Training
51%
35%
16%24%
Repeated measures ANOVA: Interaction training * wave significant at p < .01; Eta2 = .04.
After STEP
Before STEP
The STEP training creates entrepreneurs
T1 T2 T3
Action-Oriented Entrepreneurship
Training
Entrepreneurial Action
Business Opportunity Identification
Action Knowledge
Business Owner
Entrepreneurial Action
Entrepreneurial Self-Efficacy
Entrepreneurial Goals
Action Planning
Figure 1. The theoretical modelFigure 1. The theoretical model
Effect Size
Measure BeforeTraining
AfterTraining
Inter-actioneffect
Groupeffectafter
training
N M SD M SD df F p Eta² d
Effect of the training at T2
Action knowledge T1-T2TGCG
184153
2.862.88
1.561.67
4.453.38
2.051.42
1 17.65 < .01 .05 0.61
Entrepreneurial self-efficacy T1-T2TGCG
178118
7.877.79
1.241.13
8.297.82
1.091.05
1 10.44 < .01 .03 0.44
Entrepreneurial goals T1-T2TGCG
178118
4.194.17
0.730.78
4.264.07
0.610.63
1 2.88 < .10 .01 0.31
Action planning T1-T2TGCG
184153
2.452.24
1.541.51
3.392.61
1.801.50 1 5.53 < .05 .02 0.47
Business opportunity identification T1-T2TGCG
184153
1.651.60
0.760.84
1.781.46
0.830.70 1 7.70 < .01 .02 0.42
Entrepreneurial actions T1-T2TGCG
184153
1.071.03
1.301.08
1.481.09
1.531.25 1 3.97 < .05 .01 0.28
Effect of the training at T3
Business owner T1-T3TGCG
162142
0.160.24
0.370.43
0.510.34
0.500.47 1 14.72 < .01 .05 0.35
Entrepreneurial action at T3
Model 1 Model 2 Model 3
UnstandardizedCoefficient
SE β UnstandardizedCoefficient
SE β UnstandardizedCoefficient
SE β
Intercept 1.65 0.14 0.19 0.86 0.14 0.86
University 0.20 0.26 0.04 0.25 0.26 0.05 0.21 0.26
Potential Policy Implications•Integrate the training into the schools and universities•Integrate the training into other institutions•Offer training whenever entrepreneurs are to receive micro-credits•If there is government support for entrepreneurs (e.g., in Uganda for youth entrepreneurs), offer training as well•Our training may be useful in combination with pure business trainings•Check which investment has higher effects and utility: e.g., investments in developing entrepreurial networks•There is evidence that training reduces the effects of ideas that one does not have enough financial resources for starting a company. Thus, it would be useful to combine our training when providing financial support
Policy Implications•There is evidence that formal businesses only grow more than non-formal business, if the owners show a high degree of Personal initiative. Thus, it may pay off to offer training when entrepreneurs want to formalize their business (without making it mandatory because that would lead to more bureaucratic hurdles). •In the context of unemployment, it may be useful to provide training to enhance the entrepreneurial mindset.•Example of training in Germany: approx 2 Mill small and micro businesses; assume 10% participatation in 3-day course. Each participanting entrepreneur would employ approx 2-3 employees more: This would lead to approx 400,000 new employees at a training cost of approx. 500 to 1.000 Euro per participants (assuming no crowding out effects)
Literature
• Frese, M. (2009). Towards a psychology of entrepreneurship: An action theory perspective. Foundations and Trends in Entrepreneurship, 5, 435–494
• Glaub, M., Frese, M., Fischer, S., & Hoppe, M. (2014). Increasing personal initiative in small business managers/owners leads to entrepreneurial success: A theory-based controlled randomized field intervention for evidence based management. Academy of Management Learning & Education, 13, 354-379
• Gielnik, M. M., Frese, M., Kahara-Kawuki, A., Katono, I. W., Kyejjusa, S., Munene, J., et al. (2015). Action and action-regulation in entrepreneurship: Evaluating a student training for promoting entrepreneurship. Academy of Management Learning & Education, 14, 69–94.
Back-Up
Businesses started by STEP trainees after the training
• African wears, suits, shoes
• Eggs, beans, cassava
• Milk, butter, juice
• Timber, hardware, bricks
• Liquid soap
• Equipment / spare parts cars
• Soft drinks / airtime
• Radios, electronic devices, computers
• Stationery
• Snacks
• African jewelry
• Repairing and maintaining computers (companies / privat persons)
• Producing animal feeds
• Piggery / Poultry
• Training / consultancy in farming
• Producing oil
• Restaurant
• Hair saloon / cosmetic shop
• Supply big companies with seeds
• Company profile cd
• Secretarial bureau / services
• Customize cufflings
Janet and Martin: two STEP students of the first STEP training
NameJanet
Age24
SubjectComputer Science (last semester)
Family statusNot married, no kids
Relatives who are business ownersSister
Janet before the STEP training: a typical non-entrepreneurial student
• “I never thought of becoming a business owner before the STEP training. This has never been a real option for me.”
• “I was very shy and it was a big challenge for me approaching people. I thought I won’t be able to deal with all those challenges you are facing when you are an entrepreneur.”
• “I wasn’t sure whether I could get an employment.”
Typical BA student: suffers from bad job market conditions but entrepreneurship is not considered to be an option.
Janet and Martin: two STEP students of the first STEP training
NameMartin
Age25
SubjectUrban Planning (last semester)
Family statusNot married, no kids
Relatives who are business ownersUncle
Martin before the STEP training: inclined to entrepreneurship but not active yet
• “Over 17 years I spent in school and colleges, but I think I did not benefit from it so much. All the practical bit I got from the STEP training.”
• “I asked myself what do I want? Seeking my whole life to become the employee of the week or month?”
• “STEP was a turning point to my life. I learned how to plan and manage a business, rather than seeking a job.”
BA student inclined to entrepreneurship: interested in setting-up a business but lacking the practical skills
Janet attending the STEP training• Together with five other STEP
students, Janet started a “book-selling business” during the STEP training
• At the end of the STEP training, the team of entrepreneurs made 124,000 UGX profits (amount of starting capital: 200,000 UGX)
• ROI: 62%
Martin attending the STEP training
• Entrepreneurial team of six STEP students producing and selling fruit juice
• Profit of 70,000 UGX at the end of the training
• ROI: 35%
The most important learning experiences
“I learned how to overcome challenges. If your business collapses, you must start anew. Think what the problem was, what made the business collapse, then start anew.”
Developing a more persistent and positive attitude towards the risks and challenges of entrepreneurship
“I used to fear everything. STEP gave me determination and courage. If I fail, don’t give up, if you fail again, learn. There are still risks, but I don’t fear the risks any more.”
“I used to fear borrowing money. Now I have got the skills and knowledge. Now I know if I borrow money, I am able to pay back.”
The most important learning experiences
“You can use the people around you to get starting capital. You don’t have to go to banks, people can supply you. It was helpful that we learned how to approach people.”
Skills in raising starting capital and investing the money sensibly
Janet’s success story• 3 months after the STEP training:
started a poultry farm with 200 chicken in Eastern Uganda
• Supplies shops near the farm and hotels in Kampala with eggs
• Investment: 3,000,000 UGX (approx. 1,400 USD)
• Revenues: 360 – 680 USD per month
• Employs 5 people
• Currently sets-up a new business: fish firm
Janet’s success storyJanet was a typical non-entrepreneur.
The STEP training changed her attitude towards entrepreneurship.
She is now a successful portfolio entrepreneur.
Martin’s success story: stepwise to the ultimate business
• First business: restaurant in Nansana (Uganda)
• “Nansana is a busy town but we had to walk a long distance to have lunch. I got funds from my sister and some friends and opened-up a restaurant. I made good money that I could use to set-up second business.”
Martin’s success story: stepwise to the ultimate business
• Second business: restaurant in Kampala (Uganda)
• “I decided to go to Kyambogo University to open-up the second restaurant. Now I am the owner of ‘Super Restaurant’ and it is profitable. I make 20,000-30,000 per day.”
Martin’s success story: stepwise to the ultimate business
• Third business: selling construction materials
• “I want to use the money I make with my ‘Super Restaurant’ for opening-up a construction shop.”
• “I will supply bricks and other construction materials. I already looked for partnerships with factories and industry directors.”
Martin’s success story: stepwise to the ultimate business
Martin wanted to become an entrepreneur but he feared the challenges.
The STEP training provided him with skills and confidence.
He started from scratch and is now a successful serial entrepreneur.
He re-invests the profits to set-up new higher quality businesses.
Feedback by the Trainees of the first STEP Training
“The training really changed my perspective […] on business and success. Already, I am working on registering my foundation so that I can begin to partner with others.”
Turyatemba Alex, STEP student
“The training was much helpful even to those of us who thought we would never do business.”
“The practical bit of the training has introduced me to the world of entrepreneurs.”
Anonymous STEP students
The continuous identification of business opportunities
• Number of opportunities identified by STEP trainees and control group before and after the STEP training.
1.80
1.60
1.40Before STEP
Directly after STEP
6 months after STEP
Control group
STEP training
Micro businesses started during the STEP training
• Popcorn• Delicious Breakfast
Cookies• Liquid Soap• Local Brew• Selling Fruits / Fruit salad• Tema sausages• Juice• Airtime• Selling books
• Creating Greeting Cards
• Designing African Jewelry
• Consultancy at schools / drug prevention
• SPSS
• Recording prayers
• T-shirts
Businesses started by STEP trainees after
the training
• African wears, suits, shoes
• Eggs, beans, cassava
• Milk, butter, juice
• Timber, hardware, bricks
• Liquid soap
• Equipment / spare parts cars
• Soft drinks / airtime
• Radios, electronic devices, computers
• Stationery
• Snacks
• African jewelry
• Repairing and maintaining computers (companies / privat persons)
• Producing animal feeds
• Piggery / Poultry
• Training / consultancy in farming
• Producing oil
• Restaurant
• Hair saloon / cosmetic shop
• Supply big companies with seeds
• Company profile cd
• Secretarial bureau / services
• Customize cufflings
% Business owners
Control group
Training group
Before(T1)
After(T3)
Before(T1)
After(T3)
Results of action-oriented entrepreneurship training on long term Business
Start-up (1 year after Taining).
Results of action-oriented entrepreneurship training on long term Business
Start-up (1 year after Taining).
The training’s content and schedule
Ses-sion Module Steps in the Group Business Milestones
1 Introduction & Identifying Opportunities
Class:Coming-up with business ideas
Action Hour:Preparation and presentation of elevator talk
Organizing founding team (randomly)
Coming-up with business idea
2 Marketing I Action Hour: Discussion and
identification of needs in the market, business opportunities, and potential customers
Class:Develop Vision and Business Strategy for Paper Cup
Action Hour:Vision and Business Strategy for own business
Company Description
Industry Analysis Business Strategy
4 Planning and Implementing Plans
Class: Prepare an Operations Plan for
Paper Cup Factory Development Plan for own bus.Action Hour: Operations Plan for own business Set Milestones
Operations Plan Development plan Milestones for
starting the enterprise and plan for the necessary steps*
The training’s content and schedule
Ses-sion
Module Steps in the Group Business Milestones
5 Managing Finances
Class:Prepare budget for Paper Cup Factory
Action Hour:Budget for own businessInvestment Plan
Budget Investment Plan
6 Marketing II and Persuasion & Negotiation
Class: Key Marketing Decisions for
Paper Cup Factory Role Play: Persuade customerAction Hour: Marketing Strategy for own
business
Marketing Plan
The training’s content and schedule
Ses-sion
Module Steps in the Group Business Milestones
7 Finding Starting Capital
Class:Discussion: BootstrappingExercise: NPV, ROIRole Play: Persuade capital provider
Action Hour:Discuss Investment PlanDiscuss Sources of CapitalPrepare Starting Capital Plan
Starting Capital Plan
8 Overcoming barriers
Class: Discuss problems and setbacks Exercise: Emotion managementAction Hour: Discussion of Critical Risks
Critical Risks
The training’s content and schedule
Ses-sion
Module Steps in the Group Business Milestones
9 Book-Keeping I Class:Exercises: Debtors’ and creditors’ bookExercise: Income and expenditures
Action Hour:Prepare Financial Plan
10 Book-Keeping II Class: Calculate costs for the Paper Cup
Factory Profit and Loss Statement own
businessAction Hour: Finish Financial Plan
Financial Plan
The training’s content and schedule
Ses-
sionModule Steps in the Group Business Milestones
11 Writing the Business Plan
Class:The Management TeamExecutive Summary
Action Hour:Assembling exercises to the business planFinish full Business Plan
Full Business Plan
12 Registering the Business
Class: Presentation of group
businessesAction Hour: Organization of contact
information
Start operating
Action oriented teaching: Principles for Teachers
– Teach less theory but more principles of action!
– Explain why the content is useful for them!
– Show how the students can apply the action knowledge for their micro-business!
– Assign the trainees to work on the business plan exercise sheets! However, depending on the entrepreneurial phase trainees are in, let the trainees work on their current issues!
– Encourage the students to go ahead with their venture!
– Assign them to go out! (e.g., collect information, discuss idea with others, contact customers or capital providers)
Action oriented teaching: Principles for Teachers
• Feedback structure
– High degree of feedback necessary for learning
– Therefore: High trainer feedback in the beginning
– Phasing it out: Replaced by group feedback and self-feedback
During Action Hour: presentations by students of their current state & feedback and discussion in the class
How does the STEP training contribute to becoming a successful entrepreneur?
T1Feb 2009
395 studentsInterview T1
T2Jun 2009
352 studentsInterview T2
TrainingFeb-May 2009
T3Jan – Mar 2010
319 studentsInterview T3
• Aim 1: Change the mind-set
• Identification of business opportunities
• Entrepreneurial confidence
• Entrepreneurial action
• Significant increase in opportunity identification
• STEP trainees identify 22% more opportunities
• Significant impact of STEP training on opportunity identification
“How many opportunities have you identified?”
Identification of opportunities
Num
ber
of
opp
ortu
nitie
s
Repeated measures ANOVA: Interaction training * wave significant at p < .01; Eta2 = .02.
After STEP
Before STEP
The STEP training has a positive impact on factors crucial for entrepreneurship
1.80
1.471.671.61
Control Group
STEP Training
• Significant increase in entrepreneurial confidence
• Trainees move up into the top 30% of the most confident
• Significant impact of STEP training on entrepreneurial confidence
“How confident are you that you can […] well?”Entrepreneurial confidence
Ent
rep
rene
uria
l con
fide
nce
Repeated measures ANOVA: Interaction training * wave significant at p < .01; Eta2 = .03.
After STEP
Before STEP
The STEP training has a positive impact on factors crucial for
entrepreneurship
8.30
7.83 7.887.80
Control Group
STEP Training
• Significant increase in entrepreneurial action
• 37% increase in entrepreneurial action
• Significant impact of STEP training on entrepreneurial action
“So far, what did you do to get the business up?”Entrepreneurial action
Num
ber
of
activ
itie
s
Repeated measures ANOVA: Interaction training * wave significant at p < .10; Eta2 = .01.
After STEP
Before STEP
The STEP training has a positive impact on factors crucial for
entrepreneurship
1.48
1.12 1.081.04
Control Group
STEP Training
STEP has a positive impact at all universities where it has been implemented
Institution
Students in TG / CG
Short-term effects on entrepreneurial mind-set (comparison TG vs. CG after training)
Long-term effects on business owners and employees (comparison TG vs. CG after training)
Makerere University & Uganda Christian University
197 / 200
entrepreneurial self-efficacy
opportunity identification
entrepreneurial planning
entrepreneurial action
6%
22%
30%
36%
T3 (1 year after T1; Feb 2010)
business owner
employees
T4 (1.5 years after T1; Sep 2010)
business owner
employees
50%
47%
31%
38%
University of Liberia
121 / 33
entrepreneurial self-efficacy
opportunity identification
entrepreneurial planning
entrepreneurial action
3%
25%
17%
18%
T3 (1 year after T1; Mar 2012)
business owner
employees
T4 (1.5 years after T1; Aug 2012)
business owner
employees
29%
31%
40%
57%
Uganda Martyrs University
133 / 49
entrepreneurial self-efficacy
opportunity identification
entrepreneurial planning
entrepreneurial action
13%
39%
16%
24%
Kenyatta University
175 / 126
entrepreneurial self-efficacy
opportunity identification
entrepreneurial planning
entrepreneurial action
12%
35%
7%
9%
University of Liberia
103 / --
entrepreneurial self-efficacy
opportunity identification
entrepreneurial planning
entrepreneurial action
2%
70%
13%
14%
Training Study in South Africa
0.5 Mill
1 Mill
1.5 Mill
2 Mill
2.5 Mill
3 Mill
3.5 Mill3.56 Mill
2.13 Mill
0.61 Mill 0.56 Mill
Sales - Rand
Beforetraining
2 yearsafter training
Experimental
Control
(p<.10)
Goosain, S., Frese, M., Friedrich, C., & Glaub, M. (2013). Can personal initiative training improve small business success? A longitudinal South African evaluation study. Entrepreneurship and Innovation, 141, 235- 248.
1 year after Training
(p<.05)
Frese, M., Hass, L., & Friedrich, C. (2014). Training business owners in personal initiative: Evaluation study in a developed country. NUS Business School and Lueneburg: submitted for publication.
Translating good evidence into practical support for action
First, establish a valid model based on meta-analysis and good evidence• Second, develop model that allows to deduce interventions• Third, translate theory and model into principles of actions• Fourth, translate principles of action into concrete change actions• Fifth, test with randomized controlled experiments• Provide examples of good actions• Provide examples of typical mistakes in these actions• Discuss potential context issues (possibly supported by moderator analysis in meta-analysis)• Provide a case study to explain how intervention can work concretely in a firm• Know that there is no recipe but only action principles
What do managers and policy makers do?
They use substitutes instead of best evidence:
-“obsolete knowledge (based on an education obtained many years ago)
-personal experience
-specialist skills (generalized to the situation)
-Hype (most recent book that everyone talked about)
-Dogma (there is no alternative)
-Mindless mimicry of top performers …” (such as benchmarking) (after Pfeffer & Sutton, 2007, p. 16).
Rynes et al. (2007) showed empirically: Managers often do not have the right knowledge (e.g., on HR)
Little understand and simply faddish use of the latest idea in the management market (David & Strang, 2006) – example of Total Quality Management
Evidence- Based Entrepreneurship
• For practitioners and policy makers•Beyond N=1 – beyond personal experience• Beyond N=2 – beyond benchmarking• Beyond k=1 – beyond the one (maybe even best) study• Beyond the biases of narrative reviews• For researchers: Develop consideration for use science: actionable knowledge
Science Based
• Psychologists – and charlatans• Top- down – from general science to practical knowledge• Bottom – up : from practical knowledge to scientific laws; from a phenomenon to science knowledge – example goal setting research• In each case – hard work to show that the new knowledge holds against legitimate alternative explanations
Action Principles
• Can be science based (Locke, 2004)• It function is to translate knowledge into action • Action regulation theory suggests to use the following aspects of how to make an idea actionable: action sequence, hierarchy of regulation• Hierarchy of regulation: Most important: learning how to use action principle requires action – connection between higher level and lower level processing• Action sequence: Only by knowing and acting on all aspects of the action sequence are we able to fully act – alignment of action sequence• Example: Personal Initiative (central for action regulation theory)
Combining Abstract Knowledge with Concrete Knowledge : abstract knowledge and muscle movement; abstract conceptual knowledge with routines
This does not come automatically, it must be carefully translated to overcome the knowledge doing gap in individuals
Action Principles, e.g., in the Area of Planning • Self-starting: your plan must imply that you can execute it without waiting for things to happen. Make an active plan!• Proactive: future thinking! What opportunities may occur in the future? Make a plan for future opportunities and problems! Develop a back-up plan.• Overcoming barriers: anticipate possible problems and return to plan quickly when disrupted • consider what you need to reach the goal • Write down actions • Weekly plans with next steps•While doing this, also practice the use of creativity techniques on own business problems (DeTienne & Chandler, 2004)•Participants develop the plans or practice the techniques on their own, before sharing it with a partner, and subsequently within the group.
Want to Achieve With This Talk:
1)Behavior: A critical evaluation of behavior research in entrepreneurship 2) Dynamics of entrepreneurship careers 3) Entrepreneurial environment 4) In-born entrepreneurial traits vs. change entrepreneurship through training. 5)Evidence based approaches to entrepreneurship
6)ADD-ON Methods
MethodsI said something in session with grad students and post-docs that was not quite right with re to qualitative work in I/O Psych. I do not want to belittle qualitative approaches.
In contrast: I wanted to suggest that EVERYONE uses qualitative approaches first, before doing quantitative studies.
I often use mixed methods approaches: Qualitative interviewing that is coded into numbers or a survey study and a qualitative study
Otherwise, I agree with Edmondson and McManus that qualitative approaches should be used when little knowledge and quantitative when testing HsEdmondson, A. C., & McManus, S. E. (2007). Methodological fit in management field research. Academy of Management Review, 32, 1155-1179.
Misunderstandings of an Active Performance Concept
• Equating to doing more, showing more physical activities (“being overactive”): the opposite for our concept of very efficient and effective worker/entrepreneur (higher efficiency)• Equating to proactive (often proactive behavior is used in the literature): proactive means that one is active now for future purpose (pro=before)• Equating behavior with personality – “proactive personality”: Personality is one factor contributing to active performance, but only one • Equate with motivation in general (or intrinsic motivation): Active performance may well be oriented towards achieving external rewards
Policy ImplicationsIn Germany approx 2 Mill business of the type studied in the German study
If 10% participate in this 3-day training course, the result might be that each participant would employ approx 2 employees more: This might lead to approx 400,000 new employeesThe costs of training should be approx. 500 to 1.000 Euro per participantsPublications can be received from:
PI Training Results Before/After Training (training/non-training, ANOVA; significance of interaction) – Uganda
Measures M(before) M(after) d Sign.
Behavior Based Measures:
Personal Initiative TG -.21 .57 1.82 **
CG -.21 -.53
Overall Success TG -.05 .20 .66 **
CG .04 -.25
Personal Initiative proved to be a Mediator for success--------------------------------------------------------------------------TG= Training group, CG= Control Group, d= group differences after training; z-standardized scales
Glaub, M., Fischer, S., Klemm, M., & Frese, M. (2011). Training personal initiative to business owners. NUS: submitted
Measuring Personal Initiative: Interview, Coded Answers
• Retrospective initiative and prompts• Overcoming barriers: Situational interview – performance measure within interview• Initiative in continuing education - now• Overall rating by interviewer (includes behavior during interview)
Fay, D., & Frese, M. (2001). The concept of personal initiative: An overview of validity studies. Human Performance, 14(1), 97-124.
Why Are People Active?•An ontological given (orientation reflex, curiosity, mastery motive)•Goal directed behavior is active because it produces new environments (goal refers to something that does not yet exist)•Active approach leads to:
•better learning •better handling of errors•to an action oriented mental model•better knowledge of the situation (exploration)•better survival (including sexual procreation and through active work)
Informal Planning of Business Owners- Business owners work in an unstructured
situation planning more necessary thanfor employees
- Recently scepticism towards planning; rather intuition, experimentation, improvisation
- Argument: planning takes too long and producesa certain amount of rigidity, environment too erratic (formal planning?)
- Counterargument: Not necessarily contradiction:intuition depends on stored, routinized plans(expertise research); explicit conscious planning may help in experimentation
Positive Functions of Informal Planning• Translates goals into actions and to mobilize extra effort
(Gollwitzer, 1996), • Amplifies persistence and decreases distraction (Diefendorff & Lord, 2004), • Helps to stay on track and ensures that the goal is not lost or forgotten (Locke & Latham, 1990)• Leads to focus on priorities (Tripoli, 1998), • Reduces load during actions because actions are planned
beforehand (actions run more smoothly), • Motivates owners to deal with problems, • Prepares owners to have Plan B if something goes wrong
Positive Functions of Proactive Planning• Prepares for future opportunities and problems now• Leads to earlier presence in important markets• Makes better use of scarce resources • Changes and influences the environment • Leads to original and often unusual solutions – not copies of others• Helps a person to receive more and better feedback than
when using a reactive or passive approach (Ashford & Tsui, 1991).
Measure of Elaborate and Proactive Planning
• In-depth structured interview (max 40 min)• First, rank order common business goals (e.g., increasing profits used as stimulus material)• Second, describe the two most important goal areas in detail to understand subgoals (e.g., buying a machine to expand production) – these subgoals loosely related to the stimulus material on cards • Third, asking owners to describe how they want to go about achieving their goals (2 goals) • Fourth, prompts, for example, What do you mean by ....? Can you
give me an example? What have you done so far to reach…? • Measures: substeps and number of issues thought about and how much thinking about future opportunities and threats and preparing for them now (high inter-rater reliability and Alphas)
Antecedents of Elaborate and Active Planning: Cognitive ability and Qualifications
• Working memory, • Acquisition of knowledge and skills,• Speeds up decision making (Ackerman & Humphreys, 1990), • Makes complex planning possible (elaborate and active conscious planning) (Kanfer & Ackerman, 1989).• Makes it possible to think of more relevant issues and about the relationships between these issues. • Qualification increases skills: ready-made routinized responses available (Frese & Zapf, 1994) • Qualifications reduce processing capacity (Kahneman, 1973). • Frees up cognitive resources which are available to develop elaborate and active plans to achieve goals.
Antecedents of Elaborate and Active Planning: Motivational Resources
• Feasibility (internal locus of control, self-efficacy) and desirability (achievement motivation and proactive personality) • Outcome and competency expectancies make it useful to
plan well, e.g. an internal locus of control leads to more elaborate and active planning because it makes sense to be active and to plan one’s actions (Skinner, 1997), and leads to higher entrepreneurial performance because entrepreneurship requires to be self-motivated and not to wait for others to tell what to do • Self-efficacy - belief to competently perform actions - makes it useful to develop elaborate and active plans which contributes to high performance.
Antecedents of Elaborate and Active Planning: Motivational Resources – 2 –
• Achievement motivation implies to want to have an impact and not to give up easily (McClelland & Winter, 1971); therefore, more develop active plans and guards from switching tasks. • Proactive Personality (subjective personal initiative) makes active and elaborate planning desirable
Personal initiative
Self-efficacy
Need for achievem.
External loc. control
Internal loc. control
Motivat.resources
Elab/proact planning
Size
Growth
.54*
.10
(.29)
(.95)
(.75)
Cognitiveresources
.09
.08
.37*
-.00
.19
.38*
Planning 2
Planning 1
Number employees
Equipmentvalue
Interviewer evaluation
.24 .18 .02
(.80)(.77)(.85)
(.86)(.92)(.60)
(.00)(.31)(.31)
.49 .45 .46
.31 .37 .56
1.0 .83 .83
(.40)(.94)(.81)
(.41)(.94)(.00)
(.36)(.88)(.85)
(.65)(.72)(.94)
(.64)(.87)(.99)
.78 .25 1.0
.77 .26 .43
.89 .34 .39
-.59 -.53 -.25
.60 .36 .10
Cognitiveability
Humancapital
(.61)(.67)(.64)
(.72)(.74)(.92)
.63 .58 .60
.53 .52 .28
.67* .50* .12
(.00)(.29)(.46)
1.0/.84/.73
.80/.81/.80(.37)(.34)(.35)
(a) Complete model; Model fit: 2(192, N1=215, N2=123, N3=70)= 266.12, p <.01; RMSEA=.054, CFI=.95; numbers in measurement models refer to samples from South Africa, Zimbabwe, and Namibia, respectively.
Elaborate & proactive planning as mediator: Results from Namibia, South Africa, and Zimbabwe
Motivat.resources
Elab/proactplanning
Size
Cognitiveresources
.00
.54 *
.37 *
.38 *
.19
Frese, M., Krauss, S., Keith, N., Escher, S., Grabarkiewicz, R., Unger, J., et al. (2006). Business Owners' Action Planning and Its Relationship to Business Success in Three African Countries. Giessen: Dept. of Psychology, submitted.
(b) Model for South Africa with expert evaluation; 2(30, N=117)=39.88, p=.11; RMSEA=.053, CFI=.97
Personal initiative
Self-efficacy
Need for achievem.
External loc. control
Internal loc. control
Motivat.resources
Elab/proact planning
Expertevaluation
.75
.78
.77
-.54
.57
(.43)
(.40)
(.41)
(.70)
(.67)
(.62)
(.69)
Cognitiveability
Humancapital
Cognitiveresources
.60
.48
(.64)
(.77)
.12
.48*
.06
.36*
.30
Planning 2 (.35)
.81
1.0
Planning 1 (.00)
.59*
Elaborate & proactive planning as mediator: Results from South Africa (dependent
variable expert evaluation)
Motivat.resources
Elab/proactplanning
Expert Evaluation
Cognitiveresources
. 06
.36 *
.30
.48*
.12
Unger, J. M., Zinsberger, P., Frese, M., & Rosenbusch, N. (2006). Social capital and entrepreneurial success: A meta-analytical review. Giessen: to be submitted for publication.
Frese, M., Brantjes, A., & Hoorn, R. (2002). Psychological success factors of small scale businesses in Namibia: The roles of strategy process, entrepreneurial orientation and the environment. Journal of Developmental Entrepreneurship, 7, 259-282.
Disadvantages of Personal Initiative at Work
• Employees with high Personal Initiative may be difficult employees
• High Initiative employees may sometimes not be liked by their colleagues
• Personal Initiative implies that one goes beyond the task given, also beyond what managers expect – unwanted outcomes
• Under which condition can personal initiative turn against the company (e.g., repeated punishment for initiative, little commitment to company, etc.)
Disadvantages of Personal Initiative at Work -2-
• If wrong goal is taken
• If knowledge, skills (and maybe mental ability) are inadequate: negative effects of Personal Initiative
• Persistence (as part of Personal Initiative) has negative effects in non-achievement situations, e.g. relationships (there are situations where it is useful to give up, e.g., wisdom)
• Risk taking and Personal Initiative: Risks too high?
Summary• Personal Initiative: Reciprocal effects: change of the job conditions (job crafting and job change)• Planning has a positive effect on firm success – the most negative effect is from a reactive approach• Training Personal Initiative leads to positive effects (evidence-based management)• We can understand entrepreneurship better with the concept of personal initiative
Literature: Frese, M. (2009). Towards a psychology of entrepreneurship: An action theory perspective. Foundations and Trends in Entrepreneurship, 5, 435–494.Frese, M., Garst, H., & Fay, D. (2007). Making Things Happen: Reciprocal Relationships between Work Characteristics and Personal Initiative (PI) in a Four-Wave Longitudinal Structural Equation Model. Journal of Applied Psychology, 92, 1084-1102.
Misunderstandings of an Active Performance Concept
• Equating to doing more, showing more physical activities (“being overactive”): the opposite for best-worker (higher efficiency)• Equating to proactive (often proactive behavior is used in the literature): proactive means that one is active now for future purpose (pro=before)• Equating behavior with personality – “proactive personality”: Personality is one factor contributing to active performance, but only one • Equate with motivation in general (or intrinsic motivation): Active performance may well be oriented towards achieving external rewards
Characteristics of active behavior: • Personal initiative• Newness and self-starting nature: Entrepreneurial orientation• Active goals & visions• Active information search• Active and long-term action planning • Active social strategy for networking• Active feedback seeking • Active approach to learning (deliberate practice)
Success
Environment• Life cycle• Dynamism• Hostility• Industry
National Culture
Characteristics of active behavior and entrepreneurial success
Active personality
• Need for achievement; passion for work
• Energy
• Self-efficacy and internal control, need for autonomy
• Proactive personality
• Innovativeness
• Stress tolerance
• Risk taking
The following steps:• First: Hypothesis: An active approach to action characteristics (personal initiative) has a positive influence on success • Second: This hypothesis turns out to be empirically correct for the whole action process in entrepreneurship • Third: We can change the active nature of action characteristics with the help of an intervention via action principles derived from theory• Fourth: This change of the action characteristics leads to an increase of success in the long term.
Active Performance = Personal Initiative
• Self-starting• Pro-active (future oriented)• Overcoming barriers• Changing the environment
The Opposite of Personal Initiative Is the Reactive Approach:• Does what one is told• Is oriented towards now, not future• Stops when difficulties arise• Reacts to environment
Meaning of Self-Starting
• Self-starting is different from the “normal” or obvious approaches (social comparison approach) • Doing the obvious self-starting is low• If a high ranking manager takes up an innovation that is “in the air”, that other managers also talk about, it is not self-starting
Meaning of Pro-Active
• Scanning for opportunities and problems that may appear in the future
• Preparation now for dealing with these future problems and exploiting future opportunities
Meaning of Overcoming Barriers
• Protecting one’s goals and adapting one’s plans to overcome problems on the way towards the
goal • Active dealing with problems instead of giving up• Dealing with own anxieties and frustrations – self-regulation
Frese, M., & Fay, D. (2001). Personal Initiative (PI): A concept for work in the 21st century. Research in Organizational Behavior, 23, 133-188.
Action sequence
Goals / redefinition of tasks
Information collection and prognosis
Self-starting
-Active goal redefinition
-Active search, i.e. explora- tion, active scanning
Proactive
-Future problems and opportunitiesconverted into goals
-Consider future prob- lem areas and opportunities
Overcome barriers
-Protect goals when frustrated or taxed by complexity
-Keep search up in spite of complexity and negative emotions
Facets of Active Performance
Action sequence
Plan and execution
Feedback
Self-starting
-Active plan
-Self-developed feedback and active search for feedback
Proactive
-Back-up plans (action plans for oppor-tunities ready)
-Develop pre- signals for potential problems and oppor- tunities
Overcome barriers
-Overcome barriers Quick return to plan when disturbed
-Protect feedback search
Facets of Active Performance -2-
The following steps:
• First: Hypothesis: An active approach to action characteristics has a positive influence on success. • Second: This hypothesis turns out to be empirically correct for the whole action process in entrepreneurship • Third: We can change the active nature of action characteristics with the help of an intervention via action principles derived from theory• Fourth: This change of the action characteristics of leads to an increase of success in the long term.
Characteristics of active behavior: • Personal initiative• Newness and self-starting nature: Entrepreneurial orientation• Active goals & visions• Active information search• Active and long-term action planning • Active social strategy for networking• Active feedback seeking • Active approach to learning (deliberate practice)
Success
Environment• Life cycle• Dynamism• Hostility• Industry
National Culture
Characteristics of active behavior and entrepreneurial success
Active personality
• Need for achievement; passion for work
• Energy
• Self-efficacy and internal control, need for autonomy
• Proactive personality
• Innovativeness
• Stress tolerance
• Risk taking
Relationship Between Personal Initiative and Entrepreneurial Success in Uganda (Correlation)
r with Success
Initiative .42**
Replicated several timesRelationship of initiative with individual entrepreneurial orientation
(DeReu, Koop, Frese, 1998)
Company Level: Climate for Initiative Items
• People in our company actively attack problems.
• Whenever something goes wrong, people in our company search for a solution immediately.
• Whenever there is a chance to get actively involved, people in our company take it.
• People in our company take initiative immediately – more often than in other companies.
• People in our company use opportunities quickly in order to attain goals.
Climate for Initiative and Return on Assets of Medium-Sized Firms
Holding constant Process Innovativeness, Size, and Industry codes, prior Return on Assets predicting future Return on Assets: R .30**
Baer, M. & Frese, M. (2003) Innovation is not enough: Climates for initiative and psychological safety,process innovations, and firm performance; Journal of Organizational Behavior, 24, 45-68
1. Business Process Reengineering (BPR)
2. Supply-Chain Partnering
3. Learning Culture
4. Just in time production
Definitions of Process InnovationsRedesign and slim down operations and production processes to eliminate unnecessary procedures. Characteristics: customer orientation, process-related teamwork, and the transition from highly specialized workers to teams (Hammer & Champy, 1993).
An informational network with other relevant companies for the purpose of overlapping company improvement in customer orientation and resource utilization (Handfield & Nichols, 1998). A continuously changing company with the goal of facilitating constant learning to its employees (Pedler, Burgoyne, & Boydell, 1991). Material and information flow to attain a customer demand-oriented delivery service. Characteristics: integrated information processing, manufacturing segmentation, production-synchronized supply, and reduction of storage costs (Womack, Jones & Roos, 1990).
Prof. Dr. M. Frese 13
Low Level of Innovation High
Gro
ss R
etu
r n o
n A
sse t
s
Baer & Frese (2003) Innovation is not enough: Climates for initiative and psychological safety, process innovations, and firm performance. Journal of Organizational Behavior, 24, 45-68
High pro-initiative climate
Low Level of Innovation
Gr o
s s R
e tu
rn o
n A
sse t
s
High
Low pro-initiative climate
Moderate pro-initiative climate
Pro-Initiative Climate Moderating the Relationship between Levels of Process Innovation and Economic
Performance of Company
Meta-Analysis for Individual Personal Initiative and Employee Performance
r (corr) = .28*
Tornau, K., & Frese, M. (2013). Construct clean-up in proactivity research: A meta-analysis
on the nomological net of work-related proactivity concepts and their incremental validities.
Applied Psychology: An International Review, 62, 44–96.
Characteristics of active behavior: • Personal initiative• Newness and self-starting nature: Entrepreneurial orientation• Active goals & visions• Active information search• Active and long-term action planning • Active social strategy for networking• Active feedback seeking • Active approach to learning (deliberate practice)
Success
Environment• Life cycle• Dynamism• Hostility• Industry
National Culture
Characteristics of active behavior and entrepreneurial success
Active personality
• Need for achievement; passion for work
• Energy
• Self-efficacy and internal control, need for autonomy
• Proactive personality
• Innovativeness
• Stress tolerance
• Risk taking
Entrepreneurial Orientation
- Competitive Aggressivenes
- Autonomy
- Risk Taking
- Innovation
- Proactiveness or Personal Initiative
Entrepreneurial Orientation and SuccessCorrected Correlations – Meta-AnalysisEntrepreneurial Orientation general .192
- Risk Taking .110
- Innovation .154
- Proactiveness or Personal Initiative .140
- EO for high tech business .314
- EO for low tech business .183
- EO for Asia .320
- EO for USA .207Rauch, A., Wiklund, J., Lumpkin, G. T., & Frese, M. (2009). Entrepreneurial orientation and business performance: Cumulative empirical evidence. Entrepreneurship Theory and Practice, 33, 761-787.
K=53N=14259
Characteristics of active behavior: • Personal initiative• Newness and self-starting nature: Entrepreneurial orientation• Active goals & visions• Active information search• Active and long-term action planning • Active social strategy for networking• Active feedback seeking • Active approach to learning (deliberate practice)
Success
Environment• Life cycle• Dynamism• Hostility• Industry
National Culture
Characteristics of active behavior and entrepreneurial success
Active personality
• Need for achievement; passion for work
• Energy
• Self-efficacy and internal control, need for autonomy
• Proactive personality
• Innovativeness
• Stress tolerance
• Risk taking
Goals
• Goals as anticipated results – motivator of action• The better visualized, the more motivation• The more active, the better the goal • The higher the goal, the higher performance, the higher entrepreurial success
Baum, Locke & Kirkpatrick, Journal of Applied Psychology, 1998
Active and Long-Term Goal Setting (Vision)
Characteristics of active behavior: • Personal initiative• Newness and self-starting nature: Entrepreneurial orientation• Active goals & visions• Active information search• Active and long-term action planning • Active social strategy for networking• Active feedback seeking • Active approach to learning (deliberate practice)
Success
Environment• Life cycle• Dynamism• Hostility• Industry
National Culture
Characteristics of active behavior and entrepreneurial success
Active personality
• Need for achievement; passion for work
• Energy
• Self-efficacy and internal control, need for autonomy
• Proactive personality
• Innovativeness
• Stress tolerance
• Risk taking
.41**
Active Information Search• Path model (Lisrel 2.70)
Creativity
Active Information
Search
Opportunity Discovery
Innovativeness of Innovations
Venture Growth
Crea x AIS
Model SB-Chi2 RMSEA SRMR CFI
Final Model 16.88 .05 .05 .96
.40**
.54**
.25* .26*
Gielnik, M. M., Krämer, A.-C., Kappel, B., & Frese, M. (2013, in press). Antecedents of business opportunity identification and innovation: Investigating the interplay of information processing and information acquisition. Applied Psychology: An International Review;AIS= Active information search, Crea= creativity.
Moderating effect of Active Information Search on the relationship between Creativity and Opportunity Discovery
Opportunity Discovery
Creativity
Active Information Search high (**)
Active Information Search med (**)
Active Information Search low (ns)
Gielnik, M. M., Krämer, A.-C., Kappel, B., & Frese, M. (2013, in press). Antecedents of business opportunity identification and innovation: Investigating the interplay of information processing and information acquisition. Applied Psychology: An International Review.
Characteristics of active behavior: • Personal initiative• Newness and self-starting nature: Entrepreneurial orientation• Active goals & visions• Active information search• Active and long-term action planning • Active social strategy for networking• Active feedback seeking • Active approach to learning (deliberate practice)
Success
Environment• Life cycle• Dynamism• Hostility• Industry
National Culture
Characteristics of active behavior and entrepreneurial success
Active personality
• Need for achievement; passion for work
• Energy
• Self-efficacy and internal control, need for autonomy
• Proactive personality
• Innovativeness
• Stress tolerance
• Risk taking
Everyday Informal Planning (not written business plans)
•Detailedness and proactiveness
• Detailedness: Means I think of many aspects of what I need to do, including back-up plans• Proactiveness: I think of long-term issues and prepare myself for future opportunities and problems (anticipation range)
Measure of Elaborate and Proactive Planning
• In-depth structured interview (max 40 min)• First, rank order common business goals (e.g., increasing profits used as stimulus material)• Second, describe the two most important goal areas in detail to understand subgoals (e.g., buying a machine to expand production) – these subgoals loosely related to the stimulus material on cards • Third, asking owners to describe how they want to go about achieving their goals (2 goals) • Fourth, prompts, for example, What do you mean by ....? Can you
give me an example? What have you done so far to reach…? • Measures: substeps and number of issues thought about and how much thinking about future opportunities and threats and preparing for them now (high inter-rater reliability and Alphas)
Elaborate & proactive planning: Theoretical mediational model
Motivat.resources
Elab/proactplanning
Success
Cognitiveresources
Elaborate & proactive planning as mediator: Results from Namibia, South Africa, and Zimbabwe
Motivat.resources
Elab/proactplanning
Size
Cognitiveresources
.00
.54 *
.37 *
.38 *
.19
Frese, M., Krauss, S., Keith, N., Escher, S., Grabarkiewicz, R., Luneng, S. T., et al. (2007). Business Owners' Action Planning and Its Relationship to Business Success in Three African Countries. Journal of Applied Psychology, 92, 1481-1498.
Meta-analytic Results of the Relationship of Action Characteristics and Various Measures of Success, All
Studies by Frese and Co-workers (8-11 Studies, Reliability-Adjusted r)
0
10
20
30
40
50
High Low
Reactive strategy
% o
f hi
ghly
suc
cess
ful
owne
rs
Reactive Strategy in South Africa
6%
39%
Strategies and Entrepreneurial Success – Longitudinal Study – Betas after Controlling for Prior Success (Zimbabwe)
Planning
Planning
Reactive
Reactive
Success
Success Non-Success
Non-Success
Time
Beneficial Cycle Vicious Cycle
.41*
.26*
-.19*
-.22§
Krauss, Frese, in prep.
Meta-Analysis for Planning and and Firm Performance
d (corr) = .20*
Brinckmann, J., Grichnik, D., & Kapsa, D. (2010). Should entrepreneurs plan or just storm
the castle? A meta-analysis on contextual factors impacting the business planning–
performance relationship in small firms. Journal of Business Venturing, 25, 24-40.
Characteristics of active behavior: • Personal initiative• Newness and self-starting nature: Entrepreneurial orientation• Active goals & visions• Active information search• Active and long-term action planning • Active social strategy for networking• Active feedback seeking • Active approach to learning (deliberate practice)
Success
Environment• Life cycle• Dynamism• Hostility• Industry
National Culture
Characteristics of active behavior and entrepreneurial success
Active personality
• Need for achievement; passion for work
• Energy
• Self-efficacy and internal control, need for autonomy
• Proactive personality
• Innovativeness
• Stress tolerance
• Risk taking
Active Social Strategies - Guanxi
Comprehensive social competencySocial skillsProactive social strategiesRelational perseverance
Social Network Size:
Government Network size
Business
Success.40.47
Zhao, X.-Y., Frese, M., & Giardini, A. (2010). Business owners' network size and business growth in China: The role of comprehensive social competency. Entrepreneurship & Regional Development, 22, 675–705Slightly different analysis than article
Characteristics of active behavior: • Personal initiative• Newness and self-starting nature: Entrepreneurial orientation• Active goals & visions• Active information search• Active and long-term action planning • Active social strategy for networking• Active feedback seeking • Active approach to learning (deliberate practice)
Success
Environment• Life cycle• Dynamism• Hostility• Industry
National Culture
Characteristics of active behavior and entrepreneurial success
Active personality
• Need for achievement; passion for work
• Energy
• Self-efficacy and internal control, need for autonomy
• Proactive personality
• Innovativeness
• Stress tolerance
• Risk taking
Characteristics of active behavior: • Personal initiative• Newness and self-starting nature: Entrepreneurial orientation• Active goals & visions• Active information search• Active and long-term action planning • Active social strategy for networking• Active feedback seeking • Active approach to learning (deliberate practice)
Success
Environment• Life cycle• Dynamism• Hostility• Industry
National Culture
Characteristics of active behavior and entrepreneurial success
Active personality
• Need for achievement; passion for work
• Energy
• Self-efficacy and internal control, need for autonomy
• Proactive personality
• Innovativeness
• Stress tolerance
• Risk taking
Active learning strategy – deliberative practice
• How do business owners improve their skills? And enhance their competency? • Walking through the store and trying to see things with the eyes of the customer• Trying things out whether they work or do not work • Mentally simulating • Asking customers for feedback• Professional reading
Why Are People Active -2-
•Active approach in learning: deliberate practice – boundary lines of your skills•New goal development reduces monotony and allows new use of conscious level of regulation
Education
Deliberatepractice
Entrepknowledge
Firm growth
Cognitive ability
.45**
.64** .28*
.20* .26**
Fit statistics: GFI=.99, RMSEA=.026, Unger, J. M., Keith, N., Hilling, C., Gielnik, M., & Frese, M. (2009).
Deliberate practice among South African small business owners: Relationships with education, cognitive ability, knowledge, and success.
Journal of Occupational and Organizational Psychology, 82, 21-44.)
Characteristics of active behavior: • Personal initiative• Newness and self-starting nature: Entrepreneurial orientation• Active goals & visions• Active information search• Active and long-term action planning • Active social strategy for networking• Active feedback seeking • Active approach to learning (deliberate practice)
Success
Environment• Life cycle• Dynamism• Hostility• Industry
National Culture
Characteristics of active behavior and entrepreneurial success
Active personality
• Need for achievement; passion for work
• Energy
• Self-efficacy and internal control, need for autonomy
• Proactive personality
• Innovativeness
• Stress tolerance
• Risk taking
Characteristics of active behavior: • Personal initiative• Newness and self-starting nature: Entrepreneurial orientation• Active goals & visions• Active information search• Active and long-term action planning • Active social strategy for networking• Active feedback seeking • Active approach to learning (deliberate practice)
Success
Environment• Life cycle• Dynamism• Hostility• Industry
National Culture
Characteristics of active behavior and entrepreneurial success
Active personality
• Need for achievement; passion for work
• Energy
• Self-efficacy and internal control, need for autonomy
Frese, M., Brantjes, A., & Hoorn, R. (2002). Psychological success factors of small scale businesses in Namibia: The roles of strategy process, entrepreneurial orientation and the environment. Journal of Developmental Entrepreneurship, 7, 259-282.
Characteristics of active behavior: • Personal initiative• Newness and self-starting nature: Entrepreneurial orientation• Active goals & visions• Active information search• Active and long-term action planning • Active social strategy for networking• Active feedback seeking • Active approach to learning (deliberate practice)
Success
Environment• Life cycle• Dynamism• Hostility• Industry
National Culture
Characteristics of active behavior and entrepreneurial success
Active personality
• Need for achievement; passion for work
• Energy
• Self-efficacy and internal control, need for autonomy
• Proactive personality
• Innovativeness
• Stress tolerance
• Risk taking
r=-.66
GLOBE: uncertainty avoidance “as is“ means
4.64.54.44.34.24.14.03.9
Co
rrel
atio
n:
reac
tive
wit
h b
usi
nes
s su
cces
s 0.0
-.1
-.2
-.3
-.4
-.5
-.6
-.7
Zimbabwe
South Africa
Namibia
Zambia
Thailand
Reactive (opposite of proactive planning)
The following steps:
• First: Hypothesis: An active approach to action characteristics has a positive influence on success. • Second: This hypothesis turns out to be empirically correct for the whole action process in entrepreneurship • Third: We can change the active nature of action characteristics with the help of an intervention via action principles derived from theory• Fourth: This change of the action characteristics leads to an increase of success in the long term.
Human and Social Capital Effects on Business Creation Effects on Business Performance
Human Capital rw=.12; K=6; N=6,706 (Martin et al. 2013) rc=.10; K=70; N=24,733 (Unger et al. 2011)
rc=.21; K=68; N=12,163 (Crook et al. 2011)3
rw=.17; K=9; N=5,790 (Martin et al. 2013)
Social Capital n/a rw=.16; K=61; N=13,263 (Stam et al., in press)
Frese, M. (2005). Grand theories and mid-range theories: Cultural effects on theorizing and the attempt to understand active approaches to work. In M. A. Hitt & K. G. Smith (Eds.), Great minds in management: The process of theory development (pp. 84 - 108). Oxford: Oxford University Press.
Action characteristics
•Personal initiative•Goals/visions•Search for opportunities•Information search•Planning•Feedback processing•Social networking•Develop niche•Develop resources•Deliberate practice
Entrepreneurial success•Phase I: opportunity identification•Phase II: refinement of business concept and resource acquisition – starting an organization•Phase III: survival and growth• Exit
Intellectual Resoures•Education (school, occupational)•Mental abilities•Models in family or environment
Cognitive antecedents•General and specific knowledge•Tacit knowledge•Entrepreneurial orientation•Expertise (practical intelligence)•Heuristics/biases
National culture
The action-characteristics-model of entrepreneurship - modified The action-characteristics-model of entrepreneurship - modified Frese, M., & Gielnik, M. M. (2014). The psychology of entrepreneurship. Annual
Review of Industrial and Organizational Psychology, 1,
413–438.
Action characteristics
•Personal initiative•Goals/visions•Search for opportunities•Information search•Planning•Feedback processing•Social networking•Develop niche•Develop resources•Deliberate practice
Entrepreneurial success•Phase I: opportunity identification•Phase II: refinement of business concept and resource acquisition – starting an organization•Phase III: survival and growth• Exit
Intellectual Resoures•Education (school, occupational)•Mental abilities•Models in family or environment
Cognitive antecedents•General and specific knowledge•Tacit knowledge•Entrepreneurial orientation•Expertise (practical intelligence)•Heuristics/biases
National culture
The action-characteristics-model of entrepreneurship - modified The action-characteristics-model of entrepreneurship - modified Frese, M., & Gielnik, M. M. (2014). The psychology of entrepreneurship. Annual
Review of Industrial and Organizational Psychology, 1,
413–438.
Action characteristics
•Personal initiative•Goals/visions•Search for opportunities•Information search•Planning•Feedback processing•Social networking•Develop niche•Develop resources•Deliberate practice
Intellectual Resoures•Education (school, occupational)•Mental abilities•Models in family or environment
Cognitive antecedents•General and specific knowledge•Tacit knowledge•Entrepreneurial orientation•Expertise (practical intelligence)•Heuristics/biases
National culture
The action-characteristics-model of entrepreneurship - modified The action-characteristics-model of entrepreneurship - modified Frese, M., & Gielnik, M. M. (2014). The psychology of entrepreneurship. Annual
Review of Industrial and Organizational Psychology, 1,
413–438.
Mapping the Environment: Information Search, Prognosis, and Signals
• Action is situated – we react to signals in the environment, we also establish and determine signals in the environment• Active information search: We determine the information we receive from the environment• In a social situation, the “others” are the situation in which we act• Unconscious, intuitive understanding of situation
Syracuse 2013
The more we use active strategies of information search, the better are is our opportunity perception and realization –
again a concept related to action regulation theory: use of active strategies instead of just noticing things in the sense of a more
passive alertness
Syracuse 2013
.41**
Active Information Search• Path model (Lisrel 2.70)
Creativity
Active Information
Search
Opportunity Discovery
Innovativeness of Innovations
Venture Growth
Crea x AIS
Model SB-Chi2 RMSEA SRMR CFI
Final Model 16.88 .05 .05 .96
.40**
.54**
.25* .26*
Gielnik, M. M., Krämer, A.-C., Kappel, B., & Frese, M. (in prep). Cognitive Capacities and Their Interplay with Active Information Search in the Opportunity Identification Process;AIS= Active information search, Crea= creativity.
Moderating effect of Active Information Search on the relationship between Creativity and Opportunity Discovery
Opportunity Discovery
Creativity
Active Information Search high (**)
Active Information Search med (**)
Active Information Search low (ns)
Gielnik, M. M., Krämer, A.-C., Kappel, B., & Frese, M. (in prep). Cognitive Capacities and Their Interplay with Active Information Search in the Opportunity Identification Process.Syracuse 2013
Plans
•Plan as mental simulation of an action (Probehandlung)•Plan: Bridge between thought and action (Miller, Galanter and Pribram, 1960)•Plan producing implementation intention (Gollwitzer & Heckhausen) •Detailedness (= specificity of goals in goal setting theory, setting subgoal may be planning, cf. Locke & Latham)•Costs of planning
Syracuse 2013
Entrepreneurial goal intentions
Low action planning
High action planning
Entrepreneur-ial action
Gielnik, M. M., Frese, M., Kahara-Kawuki, A., Katono, I. W., Kyejjusa, S., Munene, J., et al. (2015). Action and action-regulation in entrepreneurship: Evaluating a student training for promoting entrepreneurship. Academy of Management Learning & Education, 14, 69–94.
Informal Planning of Business Owners- Business owners work in an unstructured
situation planning more necessary thanfor employees
- Recently scepticism towards planning; rather intuition, experimentation, improvisation
- Argument: planning takes too long and producesa certain amount of rigidity, environment too erratic (formal planning?)
- Counterargument: Not necessarily contradiction:intuition depends on stored, routinized plans;planning may help in experimentation
Positive Functions of Informal Planning• Translates goals into actions and to mobilize extra effort
(Gollwitzer, 1996), • Amplifies persistence and decreases distraction (Diefendorff & Lord, 2004), • Helps to stay on track and ensures that the goal is not lost or forgotten (Locke & Latham, 1990)• Leads to focus on priorities (Tripoli, 1998), • Reduces load during actions because actions are planned
beforehand (actions run more smoothly), • Motivates owners to deal with problems, • Prepares owners to have Plan B if something goes wrong
Positive Functions of Proactive Planning• Prepares for future opportunities and problems now• Leads to earlier presence in important markets• Makes better use of scarce resources • Changes and influences the environment • Leads to original and often unusual solutions – not copies of others• Helps a person to receive more and better feedback than
when using a reactive or passive approach (Ashford & Tsui, 1991).
Elaborate & proactive planning as mediator: Results from Namibia, South Africa, and Zimbabwe
Motivat.resources
Elab/proactplanning
Size
Cognitiveresources
.00
.54 *
.37 *.38*
.19
Frese, M., Krauss, S., Keith, N., Escher, S., Grabarkiewicz, R., Luneng, S. T., et al. (2007). Business Owners' Action Planning and Its Relationship to Business Success in Three African Countries. Journal of Applied Psychology, 92, 1481-1498.
Elaborate & proactive planning as mediator: Results from South Africa (dependent
variable expert evaluation)
Motivat.resources
Elab/proactplanning
Expert Evaluation
Cognitiveresources
. 06
.36 *
.30.48*
.12
Frese, M., Krauss, S., Keith, N., Escher, S., Grabarkiewicz, R., Luneng, S. T., et al. (2007). Business Owners' Action Planning and Its Relationship to Business Success in Three African Countries. Journal of Applied Psychology, 92, 1481-1498.
0
10
20
30
40
50
High Low
Reactive strategy
% o
f hi
ghly
suc
cess
ful
owne
rs
Reactive Strategy in South Africa
6%
39%
Strategies and Entrepreneurial Success – Longitudinal Study – Betas after Controlling for Prior Success (Zimbabwe)
Planning
Planning
Reactive
Reactive
Success
Success Non-Success
Non-Success
Time
Beneficial Cycle Vicious Cycle
.41*
.26*
-.19*
-.22§
Krauss, Frese, in prep.
Time influences the strength of the joint effects of entrepreneur-ial goal intentions and action planning on new venture creation.Time influences the strength of the joint effects of entrepreneur-ial goal intentions and action planning on new venture creation.
Context: General intention to start a business
Time
New Venture Creation
Entrepreneurial Goal Intentions
ActionPlanning
x
Gielnik, M. M., Barabas, S., Frese, M., Namatovu-Dawa, R., Scholz, F. A., Metzger, J. R., et al. (2014). A temporal analysis of how entrepreneurial goal intentions, positive fantasies, and action planning affect starting a new venture and when the effects wear off. Journal of Business Venturing, 29, 755-772.
Gielnik, M. M., Barabas, S., Frese, M., Namatovu-Dawa, R., Scholz, F. A., Metzger, J. R., et al. (2014). A temporal analysis of how entrepreneurial goal intentions, positive fantasies, and action planning affect starting a new venture and when the effects wear off. Journal of Business Venturing, 29, 755-772.
Relationship between intentions and actual start of a firm depends on action planning: Different spells from early (1= 1-6 mo) to late (5 = 25 – 30 mo)Relationship between intentions and actual start of a firm depends on action planning: Different spells from early (1= 1-6 mo) to late (5 = 25 – 30 mo)
Spell 1
Spell 5
Spell 1
Spell 5
Gielnik, M. M., Barabas, S.Frese, M., Namatovu-Dawa, R. Scholz, F. A., Metzger, J. R., et al. (2014). A temporal Analysis of how entrepreneurialgoal intentions, positive fantasies, and action planning affect starting a new ventureand when the effects wear off. Journal of Business Venturing, 29, 755-772.
Outline1)General overview of what we know about the psychology of entrepreneurship 2) Action perspective in entrepreneurship3) Training and action perspective4) Training for entrepreneurial success 5)Training for development of an entrepreneurial mindset and higher start-up rates
Facets of Action Training (Action Regulation Theory)
1) Developing an action-oriented mental model - cognitive representation is based on ”rules of thumbs” (principles of actions)
2) Learning by doing: Active and exploratory approach to learning from action
3) Cognitive apparatus is built for action; exercises have to be connected to principles of actions which can only be learnt, when connected to actions
4) Feedback: Both positive and negative feedback is provided by the trainer.
Facets of Action Training – 2 – 5) Negative feedback is given in contrast to
Skinner’s learning theory; negative feedback has a positive motivational and cognitive effect (understanding, how not to do certain things and being motivated that one still needs to improve skills); both aware and tacit learning
6) Supporting failure and errors in the sense of error management training
• Frese, M., Beimel, S., & Schoenborn, S. (2003). Action training for charismatic leadership: Two evaluation studies of a commercial training module on inspirational communication of a vision. Personnel Psychology, 56, 671-697
• Glaub, M., Frese, M., Fischer, S., & Hoppe, M. (2014). Increasing personal initiative in small business managers/owners leads to entrepreneurial success: A theory-based controlled randomized field intervention for evidence based management. Academy of Management Learning & Education, 13, 354-379.
• Keith, N., & Frese, M. (2008). Performance effects of error management training: A meta-analysis. Journal of Applied Psychology, 93, 59-69.
Facets of Action Training – 3 – 7) Necessity to routinize behavior: New skills
developed during the training compete with old skills that have been routinized. Therefore, routinization of the new behavior needs to be encouraged both in the exercises and afterwards
8) Supporting transfer: Principles of actions are adjusted to real life tasks. Connection to real life tasks is established throughout the training (thinking about how principles can be used in everyday actions and by asking participants whether they used the newly acquired skills); application contract
Positive Effects of Errors • Disrupts flow of action, maybe a negative surprise, but helps to recalibrate and rethink
•Stop automatic processing – renewed conscious thinking, deeper level processing, meta-cognition, reflexivity • The emotionality of errors can help to make one think again, but it can also lead to defensiveness and over-emotionality (internal dialogue, Ellis)
• Errors with major negative consequences may increase these positive effects of errors and lead to more learning
• Learning from errors may be more important than learning from positive events.
Error Management Instructions/Heuristics •I have made an error: Great
•There is always a way out of any error situation •The more errors you make, the more you learn •Errors are a natural part of the learning process! They inform you what you are still able to learn
Competence 5-point-training)difficult task
11.21.41.61.8
22.22.42.6
error managementtraining
error avoidance training
Frese, M., Brodbeck, F., Heinbokel, T., Mooser, C., Schleiffenbaum, E., & Thiemann, P. (1991). Errors in training computer skills: On the positive function of errors. Human-Computer Interaction, 6, 77-93.
Outline1)General overview of what we know about the psychology of entrepreneurship 2) Action perspective in entrepreneurship3) Training and action perspective4) Training for entrepreneurial success 5)Training for development of an entrepreneurial mindset and higher start-up rates
Intervention to Increase Initiative• Using the Facet Model of Personal Initiative• Teaching active, high, and long term goal setting (vision)• Teaching active information search • Teaching active and long term planning • Teaching active feedback seeking
All of this is done by: • Business project and planning/goal setting (4 – 6 mo project)• Check situations for how you can structure them (strategic focus)• Love it, leave it, or change it• Take responsibility for everything you do• Think of how you can do things differently• Proactively think of opportunities and problems and prepare today• You can do it (self-efficacy)• Don’t allow the negative emotions to dominate you, you should regulate them