1. No category

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
Outline
1) Action perspective in entrepreneurship
2) Training from an action perspective
3) Training for entrepreneurial success
4)Training for non-entrepreneurs (BA students) to
develop an entrepreneurial mindset and higher
start-up rates
The action-characteristics-model of entrepreneurship - modified
Personality
•Need for
achievement
•Locus of control
•Autonomy
•Generalized selfefficacy
•Innovativeness
•Stress tolerance
•Risk taking
Intellectual Resoures
•Education (school,
occupational)
•Mental abilities
•Models in family or
environment
Motivational/affective
antecedents
•Passion
•Positive/negative
affect
•Self-efficacy
•Entrepreneurial
orientation
Action
characteristics
•Personal initiative
•Goals/visions
•Search for
opportunities
•Information search
•Planning
•Feedback
processing
•Social networking
•Develop niche
•Develop resources
•Deliberate practice
Cognitive antecedents
•General and specific
knowledge
•Tacit knowledge
•Entrepreneurial
orientation
•Expertise (practical
intelligence)
•Heuristics/biases
National culture
Frese, M., & Gielnik, M. M.
(2014). The psychology of
entrepreneurship. Annual Review
of Industrial and Organizational
Psychology, 1, 413–438.
Entrepreneurial success
•Phase I: opportunity
identification
•Phase II: refinement of
business concept and
resource acquisition –
starting an organization
•Phase III: survival and
growth
• Exit
Environment
•Life cycle
•Dynamism
•Unpredictability
•Hostility
•Industry
The action-characteristics-model of entrepreneurship - modified
Personality
•Need for
achievement
•Locus of control
•Autonomy
•Generalized selfefficacy
•Innovativeness
•Stress tolerance
•Risk taking
Intellectual Resoures
•Education (school,
occupational)
•Mental abilities
•Models in family or
environment
Motivational/affective
antecedents
•Passion
•Positive/negative
affect
•Self-efficacy
•Entrepreneurial
orientation
Action
characteristics
•Personal initiative
•Goals/visions
•Search for
opportunities
•Information search
•Planning
•Feedback
processing
•Social networking
•Develop niche
•Develop resources
•Deliberate practice
Cognitive antecedents
•General and specific
knowledge
•Tacit knowledge
•Entrepreneurial
orientation
•Expertise (practical
intelligence)
•Heuristics/biases
National culture
Frese, M., & Gielnik, M. M.
(2014). The psychology of
entrepreneurship. Annual Review
of Industrial and Organizational
Psychology, 1, 413–438.
Entrepreneurial success
Environment
•Life cycle
•Dynamism
•Unpredictability
•Hostility
•Industry
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
Reactive Strategy in South Africa
% of highly successful
owners
50
39%
40
30
20
10
6%
0
High
Low
Reactive strategy
Reactive Approach and Entrepreneurial
Failures: Vicious Cycle (Spiral)
(Netherlands and Zimbabwe)
Time
Reactive
Non
Success
Reactive
Non
Success
Van Gelderen, Frese, Thurik (2000) Strategies, uncertainty and
Performance of small business startups. Small Business
Economics, 15, 165-181. Zimbabwe data not yet published
Outline
1) Action perspective in entrepreneurship
2) Training from an action perspective
3) 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
Feedback
Information
search
Monitoring
of execution
Planning
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
Outline
1) Action perspective in entrepreneurship
2) Training from an action perspective
3) Training for entrepreneurial success
4)Training for non-entrepreneurs (BA students) to
develop an entrepreneurial mindset and higher
start-up rates
Exercise: Daily routine
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
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.
- 8.45 Waiting for the first customer to come.
9.00
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.
9.30
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.
11.00
Not many customers today, thus calling some friends by phone to use the time for
chatting.
13.00
Cleaning the outside-advertisement and the display.
14.30
20.00
- 20.20
Serving customers.
Closing the store.
27 Counting sales and calculating the turnover for today – not a good day…
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
Facets of Active Performance
Action sequence Self-starting
Proactive
Overcome barriers
Goals /
redefinition of
tasks
-Active goal
redefinition
-Future
-Protect goals
problems and when frustrated
opportunities or taxed by
converted into complexity
goals
Information
collection and
prognosis
-Active search,
i.e. exploration, active
scanning
-Consider
-Keep search
future probup in spite of
lem areas and complexity
opportunities and negative
emotions
Frese, M., & Fay, D. (2001). Personal Initiative (PI): A concept for work
in the 21st century. Research in Organizational Behavior, 23, 133-188.
Facets of Active Performance -2Action
sequence
Self-starting
Proactive
Overcome
barriers
Plan and
execution
-Active plan
-Back-up plans
(action plans
for opportunities ready)
-Overcome
barriers
Quick return
to plan when
disturbed
Feedback
-Selfdeveloped
feedback and
active search
for feedback
-Develop presignals for
potential
problems
and opportunities
-Protect
feedback
search
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)
Behavior Based Measures:
Personal Initiative TG
-.22
control group .19
Sales
.55
-.48
d
Sign.
1.53 **
TG
2.67 M 3.39M
(.30) **
control group lower with time
Number of employees TG
7.88
control group 6.64
10.67
4.98
(.56) **
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.
Overall Business Success (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.
The Mediation Steps of Baron
and Kenny and Preacher
Step 1: Effect of Training on Post Training Overall
Personal Initiative Scale (T3)
Training
Personal
Initiative T3
Success
The Mediation Steps
Step 2: Effect of Training on the Post Training Overall
Success Scale (T3/T4)
Training
Personal
Initiative
Success T4
The Mediation Steps
Step 3: Effect of the Post Training Overall Personal Initiative Scale
(T3/T4) on the Post Training Overall Success Scale (T3/T4)
Training
Personal
Initiative T3
Success T4
The Mediation Steps
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)
Training
Personal
Initiative T3
Success T4
Success Cases
1) 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 Cases
2) 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 Cases
3) 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
Sales - Rand
3.56 Mill
3.5 Mill
3 Mill
2.5 Mill
Experimental
2.13 Mill
2 Mill
1.5 Mill
1 Mill
0.61 Mill
Control
0.56 Mill
0.5 Mill
(p<.10)
Before
training
2 years
after training
(p<.05)
1 year after
Training
Outline
1) Action perspective in entrepreneurship
2) Training from an action perspective
3) 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
T1
Feb 2009
395 students
Interview T1
Training
Feb-May 2009
T2
Jun 2009
T3
Jan – Mar 2010
352 students
Interview T2
319 students
Interview T3
• Randomized control group design: 197 students in training group
and 198 students in control group (no training)
• Gold standard for evaluation of intervention
The STEP training creates entrepreneurs
“Are you currently the owner of a business?”
Business Owner
Business owner (%)
After STEP
Before STEP
51%
35%
24%
Control
Group
16%
STEP
Training
Repeated measures ANOVA: Interaction training * wave significant at p < .01; Eta2 =
.04.
• Increase in
business owners
with STEP
training group:
219%.
• Compared to
Control group:
45%.
Figure 1. The theoretical model
T1
T2
T3
Business
Opportunity
Identification
Business Owner
Entrepreneurial
Action
Action-Oriented
Entrepreneurship
Training
Action Knowledge
Entrepreneurial
Self-Efficacy
Entrepreneurial
Action
Entrepreneurial
Goals
Action Planning
Effect Size
Measure
Before
Training
After
Training
N
M
SD
M
SD
df
F
p
Interaction
effect
Group
effect
after
trainin
g
Eta²
d
Effect of the training at T2
Action knowledge
T1T2
TG
CG
184
153
2.86
2.88
1.56
1.67
4.45
3.38
2.05
1.42
1
17.65
< .01
.05
0.61
Entrepreneurial self-efficacy
T1T2
TG
CG
178
118
7.87
7.79
1.24
1.13
8.29
7.82
1.09
1.05
1
10.44
< .01
.03
0.44
Entrepreneurial goals
T1T2
TG
CG
178
118
4.19
4.17
0.73
0.78
4.26
4.07
0.61
0.63
1
2.88
< .10
.01
0.31
Action planning
T1T2
TG
CG
184
153
2.45
2.24
1.54
1.51
3.39
2.61
1.80
1.50
1
5.53
< .05
.02
0.47
Business opportunity identification
T1T2
TG
CG
184
153
1.65
1.60
0.76
0.84
1.78
1.46
0.83
0.70
1
7.70
< .01
.02
0.42
Entrepreneurial actions
T1T2
TG
CG
184
153
1.07
1.03
1.30
1.08
1.48
1.09
1.53
1.25
1
3.97
< .05
.01
0.28
T1T3
TG
CG
162
142
0.16
0.24
0.37
0.43
0.51
0.34
0.50
0.47
1
14.72
< .01
.05
0.35
Effect of the training at T3
Business owner
Entrepreneurial action at T3
Model 1
Unstandardize
d
Coefficient
SE
Intercept
1.65
0.14
University
0.20
0.26
Entrepreneurial action at T2
0.31**
0.07
Model 2
β
Unstandardize
d
Coefficient
SE
0.19
0.86
0.04
0.25
0.26
0.26
0.30**
Action knowledge
Model 3
β
β
Unstandardize
d
Coefficient
SE
0.14
0.86
0.05
0.21
0.26
0.07
0.24
0.32**
0.07
0.26
0.12*
0.06
0.13
0.12*
0.06
0.13
Entrepreneurial self-efficacy
0.12
0.10
0.08
0.12
0.10
0.08
Entrepreneurial goals
0.04
0.19
0.01
0.05
0.19
0.02
Action planning
-0.07
0.07
-0.06
-0.07
0.07
-0.07
0.18*
0.09
0.12
Entrepreneurial goals x Action
planning
R2
.07
.09
.11
F
10.33
4.73
4.66
Business Owner at T3
Model 1
Model 2
Unstandardized
Coefficient
SE
Unstandardized
Coefficient
SE
Intercept
-0.64
0.15
-1.54
0.33
University
0.22
0.32
0.20
0.33
Business owner at T2
1.45**
0.30
1.32**
0.31
Business opportunity identification at T2
0.35*
0.17
Entrepreneurial action at T2
0.27**
0.09
Nagelkerke’s R2
0.23
0.34
Hit rate
66%
69%
Deviance
367.33
352.33
Change in Deviance (χ2)
25.75
15.00
The STEP training has a positive
impact on all three factors crucial
for venture creation
• The STEP trainees identify 22% more
opportunities to create and pursue a business
than non-trainees.
• The STEP training increases entrepreneurial
confidence significantly; trainees move up
into top 30% of most confident trainees.
• The STEP training causes a 37% increase in
entrepreneurial activities to start-up a
business.
The STEP training creates
entrepreneurs
“Are you currently the owner of a business?”
Business owner (%)
Business Owner
STEP
63%
51%
48%
35%
24%
16%
T1
T3
T4
Repeated measures ANOVA: Interaction training * wave significant at p < .01, Eta 2 = .04 (T3) and p < .01, Eta2 = .04 (T4).
Control
Group
The STEP training creates job
creators
“How many full- / part-time employees do you have?”
Number employees (total)
3
STEP
Control
Group
2
1
0
T1
T2
T3
Repeated measures ANOVA: Interaction training * wave significant at p < .05, Eta 2 = .02 (T3) and p < .05, Eta2 = .02 (T4).
T4
Results from Liberia: Effects are consistent
and generalizable across countries
“Are you currently the owner of a business?”
Business owner (%)
Business Owner
STEP
77%
71%
55%
55%
T3
T4
23%
17%
T1
Repeated measures ANOVA: Interaction training * wave significant at p < .05, Eta 2 = .03 (T3) and < .05, Eta2 = .04 (T4)
Control
Group
After 1 year, STEP trainees remain more
entrepreneurially active; even as owners
2.78
2.28
CG
STEP
T-tests at T4: p < .10 (all students); p < .05 (only business owners)
Entrepreneurial Action at T4
(only business owners)
Entrepreneurial action
Entrepreneurial action
Entrepreneurial Action at T4 (all
participants)
Control Group (CG)
STEP
2.60
1.90
CG
STEP
Continued entrepreneurial activity leads to
portfolio entrepreneurship and more value
• STEP trainees run more businesses at the same time
(portfolio entrepreneurship)
• STEP trainees generate more revenue and jobs across all
their active businesses
Number of firms
per entrepreneur
Monthly revenue
across businesses
# of employees per
business owner
Control Group
STEP Training
1.05
242 USD
1.18
1.19
414 USD
1.98
T-tests at T4: p < .10 (average monthly revenue); p < .05 (number of active businesses, number of employees)
sig.
Margin.sig.
sig.
After 1 year, STEP successfully boosts the total
number of new ventures and new jobs
Number of total businesses per
person (T4)
Number of total employees per
person (T4)
0.90
0.60
CG
STEP
T-tests at T4: p < .01 (number of total businesses, number of total employees)
Number of employees
Number of businesses
Control Group (CG)
1.51
0.67
CG
STEP
STEP
Key factors for start-up: confidence, identifying
opportunities, action, planning
•
What factors explain why some students start a business while others do not?
Entrepreneurial Planning
“What are you planning to
do to start the business?”
Identifying Opportunities
“How many opportunities
for creating a business have
you identified / pursued in
the last three months?”
Entrepreneurial Action
“So far, did you do
anything to get the
business up and
running?”
Entrepreneurial Confidence
“How confident are you
that you can [different
entrepreneurial tasks]
well?”
Number of Jobs Created as a Result of STEP
Training (1 ½ years after training in Uganda)
• Per 100 STEP trainees 38 more jobs were
created within 18 months than in 100
members of the control group
Countries for STEP Training
• Uganda – about 4 different universities, one vocational
trainings school
• Uganda high school (currently)
• Liberia
• Kenya
• Lesotho
• Tanzania
• Ruanda (currently)
• Philippines (currently)
You tube success stories
• We also have some testimonials on the positive
impact of STEP from students who have
participated in the STEP trainings:
• https://www.youtube.com/watch?v=AiyF-R20ywQ
• https://www.youtube.com/watch?v=t9FFZF7X7R
M
•
•
•
•
•
•
•
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
•
African jewelry
•
Eggs, beans, cassava
•
•
Milk, butter, juice
•
Timber, hardware, bricks
Repairing and maintaining
computers (companies / privat
persons)
•
Liquid soap
•
Producing animal feeds
•
Equipment / spare parts cars
•
Piggery / Poultry
•
Soft drinks / airtime
•
Training / consultancy in farming
•
Radios, electronic devices,
computers
•
Producing oil
•
Restaurant
•
Stationery
•
Hair saloon / cosmetic shop
•
Snacks
•
Supply big companies with seeds
•
Company profile cd
•
Secretarial bureau / services
•
Customize cufflings
Janet and Martin: two STEP students of the first
STEP training
Name
Janet
Age
24
Subject
Computer Science (last semester)
Family status
Not married, no kids
Relatives who are business owners
Sister
Janet before the STEP training: a typical nonentrepreneurial 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
Name
Martin
Age
25
Subject
Urban Planning (last semester)
Family status
Not married, no kids
Relatives who are business owners
Uncle
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 “bookselling 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.”
“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.”
Developing a more persistent and positive attitude towards the risks
and challenges of entrepreneurship
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.”
“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.”
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 story
Janet was a typical nonentrepreneur.
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 openingup 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
STEP training
1.60
Control group
1.40
Before
STEP
Directly after
STEP
6 months after
STEP
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
•
•
•
•
•
•
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
•
•
Businesses started by
STEP trainees after
the training
•
•
•
•
•
•
•
•
•
•
•
•
•
•
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
Results of action-oriented entrepreneurship training on long term Business
Start-up (1 year after Taining).
%
Business
owners
Before
(T1)
After
(T3)
Control
group
Before After
(T1) (T3)
Training
group
The training’s content and
schedule
Session
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:
 Product
 Discussion and
description
identification of needs in
 Customer
the market, business
analysis
opportunities, and potential  Competitor
customers
analysis
 Product description
Session
The training’s content and
schedule
Module
Steps in the Group Business
Milestones
3
Leadership &
Strategic
Management
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
Session
Module
Steps in the Group Business
Milestones
5
Managing
Finances
Class:
Prepare budget for Paper Cup
Factory
Action Hour:
Budget for own business
Investment Plan
 Budget
 Investment Plan
6
Marketing II and
Persuasion &
Negotiation
Class:
 Key Marketing Decisions for
Paper Cup Factory
 Role Play: Persuade customer
Action Hour:
 Marketing Strategy for own
business
 Marketing Plan
The training’s content and schedule
Session
Module
Steps in the Group Business
Milestones
7
Finding Starting
Capital
Class:
Discussion: Bootstrapping
Exercise: NPV, ROI
Role Play: Persuade capital
provider
Action Hour:
Discuss Investment Plan
Discuss Sources of Capital
Prepare Starting Capital Plan
 Starting Capital
Plan
8
Overcoming
barriers
Class:
 Discuss problems and setbacks
 Exercise: Emotion management
Action Hour:
 Discussion of Critical Risks
 Critical Risks
The training’s content and schedule
Session
Module
Steps in the Group Business
9
Book-Keeping I
Class:
Exercises: Debtors’ and creditors’
book
Exercise: 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
business
Action Hour:
 Finish Financial Plan
Milestones
 Financial Plan
The training’s content and schedule
Ses
sion
Module
Steps in the Group Business
Milestones
11
Writing the
Business Plan
Class:
The Management Team
Executive Summary
Action Hour:
Assembling exercises to the
business plan
Finish full Business Plan
 Full Business Plan
12
Registering the
Business
Class:
 Presentation of group
businesses
Action 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?
T1
Feb 2009
395 students
Interview T1
Training
Feb-May 2009
T2
Jun 2009
T3
Jan – Mar 2010
352 students
Interview T2
319 students
Interview T3
• Aim 1: Change the mind-set
• Identification of business opportunities
• Entrepreneurial confidence
• Entrepreneurial action
The STEP training has a positive impact on
factors crucial for entrepreneurship
“How many opportunities have you identified?”
Identification of opportunities
After STEP
Number of opportunities
Before STEP
1.80
1.61
1.47
Control
Group
1.67
STEP
Training
Repeated measures ANOVA: Interaction training * wave significant at p < .01; Eta2 = .02.
• Significant
increase in
opportunity
identification
• STEP trainees
identify 22%
more
opportunities
• Significant
Entrepreneurial confidence
The STEP training has a positive
impact on factors crucial for
entrepreneurship
Entrepreneurial
confidence
“How
confident
are you that you can […]
well?”
• Significant
8.30
After
Before STEP
STEP
7.80
7.83
Control
Group
7.88
STEP
Training
Repeated measures ANOVA: Interaction training * wave significant at p < .01; Eta2 = .03.
increase in
entrepreneurial
confidence
• Trainees move
up into the top
30% of the most
confident
• Significant
The STEP training has a positive
impact on factors crucial for
entrepreneurship
Number of activities
action
“So Entrepreneurial
far, what did
you do to get the business
up?”
• Significant
After
Before STEP
STEP
1.04
1.12
Control
Group
1.48
1.08
STEP
Training
Repeated measures ANOVA: Interaction training * wave significant at p < .10; Eta2 = .01.
increase in
entrepreneurial
action
• 37% increase in
entrepreneurial
action
• Significant
impact of STEP
STEP has a positive impact at all universities
where it has been implemented
Institution
Makerere
University &
Uganda
Christian
University
Stud
ents
in
TG /
CG
197 /
200
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)

entrepreneurial self-efficacy 6%

opportunity identification
22%
T3 (1 year after T1; Feb
2010)
50%

entrepreneurial planning
30%

business owner
47%

entrepreneurial action
36%

employees
T4 (1.5 years after T1; Sep
2010)

University of
Liberia
opportunity identification
25%

entrepreneurial planning
17%

business owner

entrepreneurial action
18%

employees
entrepreneurial self-efficacy 3%
38%
business owner
 employees
T3 (1 year after T1; Mar
2012)
121 / 
33

31%
T4 (1.5 years after T1; Aug
2012)

business owner

employees
29%
31%
40%
57%
Training Study in South Africa
Sales - Rand
3.56 Mill
3.5 Mill
3 Mill
2.5 Mill
Experimental
2.13 Mill
2 Mill
1.5 Mill
1 Mill
0.61 Mill
Control
0.56 Mill
0.5 Mill
(p<.10)
Before
training
2 years
after training
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.
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.
(p<.05)
1 year after
Training
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
Methods
I 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 Hs
Edmondson, 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 Implications
In 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 employees
The costs of training should be approx. 500 to 1.000
Euro per participants
Publications can be received from:
www.frese.org
[email protected]
PI Training Results Before/After Training (training/non-training,
ANOVA; significance of interaction) – Uganda
Measures
M(before) M(after)
Behavior Based Measures:
Personal Initiative TG
CG
Overall Success
TG
CG
d
Sign.
-.21
-.21
.57
-.53
1.82 **
-.05
.04
.20
-.25
.66
**
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 than
for employees
- Recently scepticism towards planning; rather
intuition, experimentation, improvisation
- Argument: planning takes too long and produces
a 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
(.40)
(.94)
(.81)
Personal
initiative
(.41)
(.94)
(.00)
Selfefficacy
(.36)
(.88)
(.85)
Need for
achievem.
(.65)
(.72)
(.94)
External
loc. control
(.64)
(.87)
(.99)
Internal
loc. control
(.61)
(.67)
(.64)
Cognitive
ability
.77
.26
.43
.78
.25
1.0
.89
.34
.39
-.59
-.53
-.25
.60
.36
.10
Motivat.
resources
Size
.67*
.50*
.12
Elab/proact
planning
.63
.58
.60
Human
capital
.49
.45
.46
Number
employees
.31
.37
.56
(.80)
(.77)
(.85)
Equipment
value
(.86)
(.92)
(.60)
Interviewer
evaluation
(.00)
(.31)
(.31)
1.0
.83
.83
.37*
(.75)
(.95)
.09
.38*
.53
.52
.28
.54*
.19
.10
Growth
Cognitive
resources
(.72)
(.74)
(.92)
(.00)
(.29)
(.46) (.29)
1.0/.84/.73
-.00
Planning 1
.08
.80/.81/.80
(.37)
Planning 2
(.34)
(.35)
(a) Complete model; Model fit: c2(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.
.24
.18
.02
Elaborate & proactive planning as mediator:
Results from Namibia, South Africa, and Zimbabwe
Motivat.
resources
.00
.19
Elab/proact .54 *
planning
Size
.38 *
Cognitive
resources
.37 *
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.
Personal
initiative
(.43)
Selfefficacy
(.40)
Need for
achievem.
(.41)
External
loc. control
(.70)
.75
.78
.77
(.64)
Cognitive
ability
Motivat.
resources
.06
.57
(.69)
.59*
Elab/proact
planning
.48*
(.77)
Expert
evaluation
.36*
.30
.60
.48
(.62)
.12
Cognitive
resources
Human
capital
(.00)
1.0
-.54
Internal
loc. control
(.67)
Planning 1
.81
Planning 2
(.35)
(b) Model for South Africa with expert evaluation; c2(30, N=117)=39.88, p=.11; RMSEA=.053, CFI=.97
Elaborate & proactive planning as mediator:
Results from South Africa (dependent
variable expert evaluation)
Motivat.
resources
. 06
.12
Elab/proact .36 *
Expert
planning
Evaluation
.48*
Cognitive
resources
.30
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.
Contingency Viewpoint
size success
0.5
0
low
high
-0.5
-1
perceived
environmental
difficulty=high
perceived
environmental
difficulty=low
entreprenerial orientation-overall
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 (evidencebased 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 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)
National Culture
Success
Environment
• Life cycle
• Dynamism
• Hostility
• Industry
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
Facets of Active Performance
Action sequence Self-starting
Proactive
Overcome barriers
Goals /
redefinition of
tasks
-Active goal
redefinition
-Future
-Protect goals
problems and when frustrated
opportunities or taxed by
converted into complexity
goals
Information
collection and
prognosis
-Active search,
i.e. exploration, active
scanning
-Consider
-Keep search
future probup in spite of
lem areas and complexity
opportunities and negative
emotions
Frese, M., & Fay, D. (2001). Personal Initiative (PI): A concept for work
in the 21st century. Research in Organizational Behavior, 23, 133-188.
Facets of Active Performance -2Action
sequence
Self-starting
Proactive
Overcome
barriers
Plan and
execution
-Active plan
-Back-up plans
(action plans
for opportunities ready)
-Overcome
barriers
Quick return
to plan when
disturbed
Feedback
-Selfdeveloped
feedback and
active search
for feedback
-Develop presignals for
potential
problems
and opportunities
-Protect
feedback
search
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 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)
National Culture
Success
Environment
• Life cycle
• Dynamism
• Hostility
• Industry
Relationship Between Personal Initiative and
Entrepreneurial Success in Uganda (Correlation)
r with Success
Initiative
.42**
Replicated several times
Relationship 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
Definitions of Process Innovations
1. Business Process
Reengineering (BPR)
Redesign 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).
2. Supply-Chain Partnering
An informational network with other relevant
companies for the purpose of overlapping company
improvement in customer orientation and resource
utilization (Handfield & Nichols, 1998).
3. Learning Culture
A continuously changing company with the goal of
facilitating constant learning to its employees (Pedler,
Burgoyne, & Boydell, 1991).
4. Just in time production
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).
Gross Return on Assets
Low
High
Level of Innovation
Prof. Dr. M. Frese
13
Pro-Initiative Climate Moderating the Relationship
between Levels of Process Innovation and Economic
Performance of Company
High pro-initiative climate
Moderate
pro-initiative climate
Low pro-initiative
climate
Low
Level of Innovation
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
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 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)
National Culture
Success
Environment
• Life cycle
• Dynamism
• Hostility
• Industry
Entrepreneurial Orientation
- Competitive Aggressivenes
- Autonomy
- Risk Taking
- Innovation
- Proactiveness or Personal Initiative
Entrepreneurial Orientation and Success
Corrected Correlations – Meta-Analysis
Entrepreneurial Orientation general
- Risk Taking
- Innovation
- Proactiveness or Personal Initiative
- EO for high tech business
- EO for low tech business
- EO for Asia
- EO for USA
.192
.110
.154
.140
.314
.183
.320
.207
K=53
N=14259
Rauch, A., Wiklund, J., Lumpkin, G. T., & Frese, M. (2009). Entrepreneurial orientation and
business performance: Cumulative empirical evidence. Entrepreneurship Theory and Practice,
33, 761-787.
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)
National Culture
Success
Environment
• Life cycle
• Dynamism
• Hostility
• Industry
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
Active and Long-Term Goal Setting (Vision)
Baum, Locke & Kirkpatrick, Journal of Applied Psychology, 1998
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)
National Culture
Success
Environment
• Life cycle
• Dynamism
• Hostility
• Industry
Active Information Search
• Path model (Lisrel 2.70)
Creativity
.40**
Crea x AIS
.54**
Active
Information
Search
.41**
Opportunity
Discovery
.25*
Innovativeness
of Innovations
.26*
Venture
Growth
Model
SB-Chi2
RMSEA
SRMR
CFI
Final Model
16.88
.05
.05
.96
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
Active Information Search high
(**)
Active Information Search med
(**)
Active Information Search low (ns)
Creativity
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 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)
National Culture
Success
Environment
• Life cycle
• Dynamism
• Hostility
• Industry
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/proact
planning
Cognitive
resources
Success
Elaborate & proactive planning as mediator:
Results from Namibia, South Africa, and Zimbabwe
Motivat.
resources
.00
.19
Elab/proact .54 *
planning
Size
.38 *
Cognitive
resources
.37 *
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)
Economic
Success
Interviewer
(K=8-11,
(K=6/
N=818 – 1049)
N=679)
N of
employees
(K=6/
N=679)
Growth
(K=5/
N=629)
Size
(K=4/
N=590)
Success
external
(K=3/
N=562)
Compreh.
Planning
.327**
.484**
.359**
.133**
.360**
.317**
Critical
Point
.355**
.302**
.150**
.177**
.236**
.277**
Opportunistic
.063*
.047
.018
.121**
Reactive
-.484**
-.498**
-.285**
-.232**
-.015
-.342**
.077*
-.362**
Reactive Strategy in South Africa
% of highly successful
owners
50
39%
40
30
20
10
6%
0
High
Low
Reactive strategy
Strategies and Entrepreneurial Success – Longitudinal
Study – Betas after Controlling for Prior Success (Zimbabwe)
Beneficial Cycle
Time
Planning
.26*
Success
Vicious Cycle
-.22§
NonReactive
Success
.41*
Planning
Krauss, Frese, in prep.
Success
-.19*
Reactive
NonSuccess
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 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)
National Culture
Success
Environment
• Life cycle
• Dynamism
• Hostility
• Industry
Active Social Strategies - Guanxi
Comprehensive
social
competency
Social skills
Proactive social
strategies
Relational
perseverance
Social Network
Size:
.47
Government
Network size
Business
.40
Success
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, 675–705
Slightly different analysis than article
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)
National Culture
Success
Environment
• Life cycle
• Dynamism
• Hostility
• Industry
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)
National Culture
Success
Environment
• Life cycle
• Dynamism
• Hostility
• Industry
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
Education
Why Are People Active -2-
•Active.45**
approach in learning: deliberate practice –
boundary lines of your skills
•New goal Deliberate
development reduces monotony and
.64** Entrep
.28* Firm
allows newpractice
use of conscious
level
of
regulation
knowledge
growth
.20*
Cognitive
ability
.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 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)
National Culture
Success
Environment
• Life cycle
• Dynamism
• Hostility
• Industry
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)
National Culture
Success
Environment
• Life cycle
• Dynamism
• Hostility
• Industry
growth success
Contingency Viewpoint
0.2
0
-0.2
low
high
-0.4
-0.6
-0.8
perceived
environmental
difficulty=high
perceived
environmental
difficulty=low
entrepreneurial orientation-overall
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 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)
National Culture
Success
Environment
• Life cycle
• Dynamism
• Hostility
• Industry
Reactive (opposite of proactive planning)
Correlation: reactive with business success
r=-.66
0.0
Zambia
-.1
-.2
-.3
Thailand
Zimbabwe
-.4
Namibia
-.5
South Africa
-.6
-.7
3.9
4.0
4.1
4.2
4.3
4.4
4.5
4.6
GLOBE: uncertainty avoidance “as is“ means
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


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)
n/a

rw=.16; K=61; N=13,263 (Stam et al., in press)
n/a

rw=.15; K=29; N=9,066 (Boyd 1991)

r=.20; K=14; N=714 (Schwenk & Shrader
Social Capital
rw=.12; K=6; N=6,706 (Martin et al. 2013)
Strategy
Strategic Planning
1993)

rw=.17; K=42; N=2,283 (Miller & Cardinal
1994)
Business Planning
n/a

rc=.10; K=51; N=11,046 (Brinckmann et al.
2010)
Entrepreneurial Orientation
n/a

rc=.24; K=53; N=14,259 (Rauch et al. 2009)

rc=.26; K=73; N=17,935 (Rosenbusch et al.
2013)4
Innovation
n/a

rw=.13; K=42; N=21,270 (Rosenbusch et al.
2011)
Action Structure: Action Regulation
(cf. Anderson, Hacker, Rasmussen, Schneider &
Shiffrin, Kahneman)
Conscious level (knowledge based, declarative
knowledge, controlled, intellectual)
Flexible action patterns (rule based,
knowledge compilation)
Unconscious/
Skill level (automatic, procedural level)
physical
Bottom up learning tacit learning
Conscious/
idea
Mental model top down learning
Conscious and
automatic
Metacognitive
templates
and heuristics
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.
The action-characteristics-model of entrepreneurship - modified
Personality
•Need for
achievement
•Locus of control
•Autonomy
•Generalized selfefficacy
•Innovativeness
•Stress tolerance
•Risk taking
Intellectual Resoures
•Education (school,
occupational)
•Mental abilities
•Models in family or
environment
Motivational/affective
antecedents
•Passion
•Positive/negative
affect
•Self-efficacy
•Entrepreneurial
orientation
Action
characteristics
•Personal initiative
•Goals/visions
•Search for
opportunities
•Information search
•Planning
•Feedback
processing
•Social networking
•Develop niche
•Develop resources
•Deliberate practice
Cognitive antecedents
•General and specific
knowledge
•Tacit knowledge
•Entrepreneurial
orientation
•Expertise (practical
intelligence)
•Heuristics/biases
National culture
Frese, M., & Gielnik, M. M.
(2014). The psychology of
entrepreneurship. Annual Review
of Industrial and Organizational
Psychology, 1, 413–438.
Entrepreneurial success
•Phase I: opportunity
identification
•Phase II: refinement of
business concept and
resource acquisition –
starting an organization
•Phase III: survival and
growth
• Exit
Environment
•Life cycle
•Dynamism
•Unpredictability
•Hostility
•Industry
The action-characteristics-model of entrepreneurship - modified
Personality
•Need for
achievement
•Locus of control
•Autonomy
•Generalized selfefficacy
•Innovativeness
•Stress tolerance
•Risk taking
Intellectual Resoures
•Education (school,
occupational)
•Mental abilities
•Models in family or
environment
Motivational/affective
antecedents
•Passion
•Positive/negative
affect
•Self-efficacy
•Entrepreneurial
orientation
Action
characteristics
•Personal initiative
•Goals/visions
•Search for
opportunities
•Information search
•Planning
•Feedback
processing
•Social networking
•Develop niche
•Develop resources
•Deliberate practice
Cognitive antecedents
•General and specific
knowledge
•Tacit knowledge
•Entrepreneurial
orientation
•Expertise (practical
intelligence)
•Heuristics/biases
National culture
Frese, M., & Gielnik, M. M.
(2014). The psychology of
entrepreneurship. Annual Review
of Industrial and Organizational
Psychology, 1, 413–438.
Entrepreneurial success
•Phase I: opportunity
identification
•Phase II: refinement of
business concept and
resource acquisition –
starting an organization
•Phase III: survival and
growth
• Exit
Environment
•Life cycle
•Dynamism
•Unpredictability
•Hostility
•Industry
The action-characteristics-model of entrepreneurship - modified
Personality
•Need for
achievement
•Locus of control
•Autonomy
•Generalized selfefficacy
•Innovativeness
•Stress tolerance
•Risk taking
Intellectual Resoures
•Education (school,
occupational)
•Mental abilities
•Models in family or
environment
Motivational/affective
antecedents
•Passion
•Positive/negative
affect
•Self-efficacy
•Entrepreneurial
orientation
Action
characteristics
•Personal initiative
•Goals/visions
•Search for
opportunities
•Information search
•Planning
•Feedback
processing
•Social networking
•Develop niche
•Develop resources
•Deliberate practice
Cognitive antecedents
•General and specific
knowledge
•Tacit knowledge
•Entrepreneurial
orientation
•Expertise (practical
intelligence)
•Heuristics/biases
National culture
Frese, M., & Gielnik, M. M.
(2014). The psychology of
entrepreneurship. Annual Review
of Industrial and Organizational
Psychology, 1, 413–438.
Entrepreneurial success
Environment
•Life cycle
•Dynamism
•Unpredictability
•Hostility
•Industry
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
Active Information Search
• Path model (Lisrel 2.70)
Creativity
.40**
Crea x AIS
.54**
Active
Information
Search
.41**
Opportunity
Discovery
.25*
Innovativeness
of Innovations
.26*
Venture
Growth
Model
SB-Chi2
RMSEA
SRMR
CFI
Final Model
16.88
.05
.05
.96
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
Active Information Search high
(**)
Active Information Search med
(**)
Active Information Search low (ns)
Creativity
Gielnik, M. M., Krämer, A.-C., Kappel, B., & Frese, M. (in prep). Cognitive Capacities and
Their Interplay with Active Information Syracuse
Search2013
in the Opportunity Identification Process.
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
High action
planning
Entrepreneurial action
Low action
planning
Entrepreneurial goal intentions
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 than
for employees
- Recently scepticism towards planning; rather
intuition, experimentation, improvisation
- Argument: planning takes too long and produces
a 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
.00
.19
Elab/proact .54 *
planning
Size
.38*
Cognitive
resources
.37 *
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
. 06
.12
Elab/proact .36 * Expert
planning
Evaluation
.48*
Cognitive
resources
.30
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.
Reactive Strategy in South Africa
% of highly successful
owners
50
39%
40
30
20
10
6%
0
High
Low
Reactive strategy
Strategies and Entrepreneurial Success – Longitudinal
Study – Betas after Controlling for Prior Success (Zimbabwe)
Beneficial Cycle
Time
Planning
.26*
Success
Vicious Cycle
-.22§
NonReactive
Success
.41*
Planning
Krauss, Frese, in prep.
Success
-.19*
Reactive
NonSuccess
Time influences the strength of the joint effects of entrepreneurial goal intentions and action planning on new venture creation.
Context: General intention to start a business
Entrepreneurial
Goal Intentions
x
New Venture
Creation
Action
Planning
Time
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)
Panel A: High action planning
New venture
creation
Spell 5
Spell 1
Panel B: Low action planning
Entrepreneurial goal intentions
New venture
creation
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 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.
Spell 1
Syracuse 2013
Entrepreneurial goal intentions
Outline
1)General overview of what we know about the
psychology of entrepreneurship
2) Action perspective in entrepreneurship
3) Training and action perspective
4) 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, 354379.
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
2.6
2.4
2.2
2
1.8
1.6
1.4
1.2
1
error management
training
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. HumanComputer Interaction, 6, 77-93.
Outline
1)General overview of what we know about the
psychology of entrepreneurship
2) Action perspective in entrepreneurship
3) Training and action perspective
4) 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