The Role of Cognitive Style and Risk Preference on Entrepreneurial Self-Efficacy and Entrepreneurial Intentions

Abstract

The purpose of the current study is to address the distinctive roles of cognitive style and risk preference on four types of entrepreneurial self-efficacy and entrepreneurial intentions. More specifically, we examine how both cognitive style and risk preference separately and interactively contribute to an individual's assessment of his/her own skills and abilities as well as to his/her own entrepreneurial intentions. This study investigated these relationships using an international sample of 528 entrepreneurial students across three universities. Results indicated that individuals with a high risk preference had higher levels of entrepreneurial intentions and opportunity-identification efficacy, whereas individuals with a low risk preference had higher levels of relationship efficacy, and tolerance efficacy. Individuals with an intuitive cognitive style were also found to have lower perceived self-efficacy concerning the establishment of relationship with investors, the economic management of the new venture, and their capacity to tolerate ambiguity. However, intuitive individuals who had a high preference for risk exhibited higher levels of opportunity identification efficacy. Finally, contrary to our final hypothesis, analytic individuals with a low preference for risk had higher levels of relationship and tolerance self-efficacy than intuitive individuals with a high risk preference. Implications of these findings and directions for future research are discussed.

Risk perception matters: why women’s passion may not lead to a business start-up

“…Mills and Pawson's (2012) literature survey confirmed that risk-taking is a critical variable for understanding enterprising behaviour, and they IJGE 7,1 consider the variable to be a cornerstone of any decision to start a business. This is consistent with other previous research that has demonstrated a significant relationship between risk tolerance and entrepreneurial behaviour (Barbosa et al, 2007;Karakowsky and Elangovan, 2001;Keh et al, 2002;Sitkin and Pablo, 1992;Sitkin and Weingart, 1995). One reason businesses are launched may be because of the naive view of involved risks: "If entrepreneurs would carefully calculate all the risk involved in starting a new venture, most new ventures would never be started" (Busenitz, 1999, p. 337).…”

“…Knowledge of the relationship between self-efficacy and risk perception in start-up decisions is limited (Barbosa et al, 2007;Krueger and Dickson, 1994;Zhao et al, 2005). In the present study, we suggest that risk perceptions could be a key variable in the nomological network of perceptional variables that influence the start-up decision.…”

“…A crucial variable related to start-ups is risk preference. Barbosa et al (2007) found that potential entrepreneurs with high-risk preferences are more likely to start new businesses compared to those with lowerrisk preferences; those with high-risk preferences exhibit stronger entrepreneurial intentions. The cultural context here might play an important role because perception of risk can be reflected in the values that most members of a given society share collectively (Hofstede, 2001).…”

“…However, the need still exists for more research in the field (Barbosa et al, 2007;Brindley, 2005;Zhao et al, 2005). Existing studies have less frequently acknowledged motivational constructs such as passion.…”

Endings and Visions of New Beginnings: The Effects of Source of Unemployment and Duration of Unemployment on Entrepreneurial Intent

“…Thompson (2009) did not specify a time frame in the items composing his entrepreneurial intent scale, and he explained why in his study. The lack of a time frame for intentions is also reflected in the measures used by a number of other published entrepreneurial intent studies (e.g., Barbosa et al, 2007;Krueger et al, 2000;Obschonka, Silbereisen, and Schmitt-Rodermund 2010). However, future research could address the issue of time frames by collecting longitudinal data to show whether business creation actually follows entrepreneurial intent, and if so, how long the typical lag is between the formation of substantial intent and actual business founding.…”