A model of business success was developed with motivational resources (locus of control, self-efficacy, achievement motivation, and self-reported personal initiative) and cognitive resources (cognitive ability and human capital) as independent variables, business owners' elaborate and proactive planning as a mediator, and business size and growth as dependent variables. Three studies with a total of 408 African micro and small-scale business owners were conducted in South Africa, Zimbabwe, and Namibia. Structural equation analyses partially supported the hypotheses on the importance of psychological planning by the business owners. Elaborate and proactive planning was substantially related to business size and to an external evaluation of business success and was a (partial) mediator for the relationship between cognitive resources and business success. The model carries important implications for selection, training, and coaching of business owners.
This article advances the understanding of when and how formal status of small-scale entrepreneurs can contribute to higher growth in comparison to their informal counterparts. Our integrative framework suggests that both formal status and personal initiative (PI) behavior have a common pathway to predict firm growth. More importantly, formal firms improve their growth perspectives only if the entrepreneurs show a high degree of PI. The integrative framework was tested using longitudinal data with 2 measurement points with a total of 190 formal and informal entrepreneurs in the Sub-Saharan African country of Zimbabwe. Results show that both formal status and PI have indirect effects on firm growth through available resources. Further, PI has a dual-path moderating effect on the indirect effect of formal status to firm growth such that the indirect effect of formal status on firm growth via available resources is strongest when entrepreneurs have high PI, but there is no indirect effect when PI is low. Our research shows the importance of considering the interplay of institutional and psychological factors for explaining firm growth in developing countries.
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