In terms of the natural environment, respect for nature refers to “prudence in the management of all living species and natural resources,” so they can be “preserved and passed on to our descendants” as well as the realization that “current patterns of production and consumption are unsustainable and must be changed” (United Nations General Assembly 2000). Finding an opportunity that could damage the natural environment to be highly appealing is likely to be contradictory to these overall values . Thus, when provided with information about an opportunity that will negatively affect the natural environment, entrepreneurs with stronger pro-environmental values will focus more attention on that information and will emphasize it more in their opportunity evaluations than entrepreneurs with weaker pro-environmental values . Indeed, we and a colleague (Shepherd et al. 2013) revealed that when entrepreneurs assess opportunities’ attractiveness, the stronger their pro-environmental values, the more they emphasize the specific harm to the natural environment resulting from the opportunities in their decision making.
However, having strong pro-environmental values does not guarantee that entrepreneurs will not try to exploit opportunities that damage the natural environment; some entrepreneurs disengage such values during the decision-making process. For instance, people who feel they lack control over their own lives but believe that events and experiences in life are controlled by fate and luck instead of their own initiative (Detert et al. 2008; Levenson 1981) tend to disengage their values more readily. These beliefs in one’s capacity to exercise control include both beliefs about one’s ability to effectively complete essential tasks and the belief that this performance influences ensuing events and outcomes.
Entrepreneurial Self-Efficacy
Self-efficacy refers to the personal belief that one can achieve whatever he or she sets out to accomplish and can thus successfully meet one’s goals (Utsch et al. 1999; Zhao et al. 2005). This belief that one can achieve whatever goals he or she sets—particularly, that one can successfully start and manage a business (i.e., entrepreneurial self-efficacy [Chen et al. 1998])—may make people more likely to disengage their pro-environmental values for several reasons.
Self-regulation centers on the notion that people do things that “give them satisfaction and a sense of self-worth, and they refrain from behaving in ways that violate their moral standards because such conduct will bring self-condemnation” (White et al. 2009: 42). People’s feelings of satisfaction and self-worth typically improve when they take on tasks they believe they can accomplish, and actually completing those tasks further improves their perceived competence (Ryan and Deci 2000, 2001). Consequently, “self-efficacy beliefs function as an important set of proximal determinants of human self-regulation” (Bandura 1991: 257). In terms of entrepreneurship, entrepreneurial self-efficacy denotes one’s belief that he or she is able to perform the tasks involved in starting and successfully managing a venture (Chen et al. 1998). Indeed, researchers have found that entrepreneurial self-efficacy is positively related to the intention to act entrepreneurially (Zhao et al. 2005; Zhao et al. 2010) and to entrepreneurial action (Boyd and Vozikis 1994).
While one important entrepreneurial task (i.e., innovation) includes developing new ideas, products, processes, and markets, the other activities representing the subcomponents of entrepreneurial self-efficacy are associated with effective opportunity exploitation (Chen et al. 1998). Individuals are usually attracted to activities they can competently complete (Bandura and Schunk 1981; Ryan and Deci 2000), and people with high self-efficacy are frequently drawn to challenging tasks that test and develop their skills (Csikszentmihalyi 1978) as well as to experiences that offer personal fulfillment (Srivastava et al. 2010). After all, such people believe—often passionately—that they can successfully complete these challenging tasks. Thus, when presented with opportunities that could damage the natural environment, individuals with high entrepreneurial self-efficacy frequently want to seize the chance to utilize their capabilities to actively exploit them. Still, as mentioned above, individuals’ moral values may ultimately limit such actions. As a result, in such situations, individuals are confronted with a conflict between actions that will enhance their satisfaction and self-worth but will concurrently breach their moral guidelines and lead to self-censure. As Bandura (2006: 171) stated, “selective moral disengagement is most likely to occur under moral predicaments in which detrimental conduct brings valued outcomes.”
For individuals with low entrepreneurial self-efficacy, in contrast, there is minimal tension between satisfaction and self-worth on the one hand and moral values on the other when evaluating the appeal of opportunities that cause harm to the natural environment. Such individuals have doubts about whether the benefits of such opportunities will pan out because they are not confident in their ability to successfully exploit them. In general, people with low self-efficacy are easily deterred by obstacles (Gist 1987), which—in this context—could include their own pro-environmental values. Such individuals are also likely to feel that they have minimal control over the entrepreneurial situation and outcomes (Markman et al. 2002).
Perceived Industry Munificence
Individuals exercise agency through self-efficacy and within the bounds of system conditions (Bandura 1991). System conditions refer to “the changeability or controllability of the environment … [and represent] the opportunity structures to exercise personal efficacy and the ease of access to those opportunity structures” (Bandura 1991: 269). A significant system condition for entrepreneurs is the industry, specifically industry munificence, or the “scarcity or abundance of critical resources needed by (one or more) firms operating within an environment” (Castrogiovanni 1991: 542; cf. Dess and Beard 1984).
Some industries have plentiful resources and represent a decision context in which poor and good judgments lead to similar outcomes. In other words, in such cases, high levels of industry munificence can make up for entrepreneurial and strategic weaknesses (Tsai et al. 1991). Due to their greater environmental capacity, munificent environments support growth and stability and allow businesses to develop a cushion in case of future hardship (Dess and Beard 1984). In fact, some have described these resource-rich industries as producing a tide that raises all boats (Wasserman et al. 2001). Less munificent environments (i.e., industries with less environmental capacity) (Dess and Beard 1984), on the other hand, are characterized by intense competition (Aldrich 1979), few exploitable opportunities (Covin and Slevin 1989), and hostility (Khandwalla 1976, 1977; Miller and Friesen 1983). Consequently, these resource-poor industries are more “selective,” and decision makers’ choices have a stronger influence on performance outcomes than in more munificent industries (Covin and Slevin 1989; Tushman 1977; Zahra and Covin 1995). Thus, there are likely to be higher personal agency beliefs in environments individuals perceive as being less munificent (in comparison to environments perceived as being more munificent) because people are more likely to feel that decisions will have a greater influence on relevant outcomes (including preventing unwanted performance outcomes).
The industry munificence individuals perceive may directly affect how much they disengage their pro-environmental values . Firms in munificent industries can grow and profit in a variety of ways (Brittain and Freeman 1980; Tushman and Anderson 1986). Thus, acting on opportunities that damage the natural environment is likely to be only one of many means to improve firm performance. Additionally, individuals may view opportunity exploitation itself as an unreasonably risky way to enhance firm performance (Covin and Slevin 1989). As a result, there is minimal conflict between the cost of passing up an opportunity and the values underlying one’s assessment. Thus, under perceived conditions of munificence, individuals tend to keep their pro-environmental values fully engaged, and there is a lower likelihood that entrepreneurs will be attracted to opportunities that could cause harm to the natural environment.
In contrast, industries with less munificence are characterized by a “paucity o
f readily exploitable market opportunities” (Zahra and Covin 1995: 48) and very limited maneuverability. In these environments, businesses have fewer means to improve growth and profitability. This means that opportunities that could cause damage to the natural environment are part of a substantially smaller set of opportunities that could be pursued. Indeed, scholars have found that corporate entrepreneurship plays a more salient role in firm performance in resource-scarce industries than in industries with greater munificence (Covin and Slevin 1989; Miller and Friesen 1983; Zahra and Covin 1995). Therefore, when individuals perceive an industry as being less munificent, the importance of pursuing an opportunity that may harm the environment is likely to conflict with their pro-environmental values more than in more munificent contexts. In turn, this increased conflict between values and beliefs about outcomes makes decision makers more likely to disengage their values when evaluating opportunities. Such decision makers, for instance, may claim that after developing the environmentally unfriendly opportunity and/or when the industry improves, they will be better positioned to pursue only environmentally friendly opportunities in the future.
Individual Values and Entrepreneurial Motivation
Although the search for a direct association between personality traits and entrepreneurship has led to an unclear picture, the entrepreneur is clearly an essential part of the entrepreneurial process (Shook et al. 2003). During the recent revival of studies on entrepreneurs’ personal characteristics, scholars have gone past looking for “trans-situational consistency in personality traits” (Shaver and Scott 2002) and have begun exploring deeper models of individual characteristics, motivation, cognition, and behavior (e.g., Baron 2004; Baum and Locke 2004; Baum et al. 2001; Busenitz and Barney 1997; Mitchell et al. 2004; Rauch and Frese 2007; Zhao et al. 2005). Take, for example, Baum et al. (2001) and Baum and Locke (2004) who showed individual characteristics such as tenacity and passion do not have a direct association with new firm growth but that these variables are associated with growth-related motivation. In addition, Rauch and Frese (2007) and Zhao and Seibert (2006) used meta-analyses to illustrate the necessity for researchers to explore more proximal moderators and mediators instead of the direct association between individual characteristics and entrepreneurial outcomes. A stronger understanding of the association between entrepreneurs and proximal outcomes, including cognition, motivation, and decision making, is likely to yield a more vivid and comprehensive view of the entrepreneurial process (Shane et al. 2003). We examine in this section how personal values motivate entrepreneurial decisions. We explore personal values since extant literature on psychology finds that one’s values and his or her choices among alternatives are closely connected (Feather 1990). Therefore, a focus on personal values offers a comprehensive framework for studying decisions (Rohan 2000).
Personal values are at the core of motivated choice (Judge and Bretz 1992). Values constitute the lens through which individuals view potential actions, including how attractive these actions are. As such, personal value priorities generate valences (i.e., desirability) for prospective outcomes (Feather 1982) and “cause decisions” (Rohan 2000: 270). Thus, individuals’ values influence how they define situations, evaluate alternative possibilities, and finally decide on a course of action. As entrepreneurs decide on an entrepreneurial endeavor, it is highly likely that the weight they place on the attractiveness of a successful outcome will (to some extent) depend on their personal values (Holland and Shepherd 2013).
Individuals’ values stem from their cognitive representations of fundamental needs (Rokeach 1973; Schwartz 1992). Although scholars have studied values for many decades, Milton Rokeach (1973) is generally credited with starting a stream of research on values with his Rokeach Value Survey. Rokeach’s work drew on the assumption that a finite number of “terminal human values” serve as individuals’ internal reference points, which are the basis for judgment and motivation (Rohan 2000). Expanding Rokeach’s (1973) work, Schwartz (1992) built a more comprehensive theory of values. This theory comprises an overarching structure for the value system. The theory predicts decisions and actions in numerous practical situations (Bardi et al. 2008). We call upon individual-level Schwartz values theory (1992) in this chapter. According to Schwartz (1992), there are ten basic universal value types. These value types include power, achievement, hedonism, stimulation, self-direction, universalism, benevolence, tradition, conformity, and security. Based on the differences and similarities between these values’ motivational structures, Schwartz (1992) outlined four higher-order value types, specifically openness to change, self-transcendence, self-enhancement, and conservation. Higher-order values are organized in a circular manner such that adjacent values will have motivational commonalities whereas values on opposite sides of the circle will have motivations that are not compatible. While Schwartz (1992) does not expect opposing values to be negatively correlated, if an individual holds opposing values at the same time, conflicting motivations may increase internal conflict during the decision-making process (Schwartz 1992). Researchers have empirically verified that the theoretical structure of Schwartz’s value types is reliable and can be generalized to various samples (Morris et al. 1998). Due to this integrated value structure, researchers can explore how related value sets impact the desirability of the financial and non-financial returns, as well as switching costs, associated with persisting with entrepreneurship (Feather 1995).
Self-Enhancement
In regard to the four higher-order values, self-enhancement comprises the values of power, achievement, and hedonism. These values center on developing one’s own interests—even if it is associated with costs for others (Schwartz 1992). Thus, entrepreneurs high in self-enhancement will strive for extreme success of their ventures because they want to gain social status and recognition. These individuals are frequently prepared to dedicate substantial time and energy to display ability and success in what they are doing (Bardi and Schwartz 2003). Individual with high levels of self-enhancement generally relish in having control over resources and employees, and they recognize that creating a flourishing business can lead to a positive public image and prominent positions in society (Scheinberg and MacMillan 1988).
In the business context, achievement and power are usually associated with a firm’s financial performance, often generating higher incomes and wealth. Individuals who value self-enhancement may obtain satisfaction from the opportunities for self-indulgence available to the wealthy. Looking beyond merely fulfilling their basic needs, such people are likely to seek out opportunities that satisfy wants and luxuries (Bardi et al. 2008). Indeed, many entrepreneurs maintain that the potential for high financial income and recognition are primary motivations for entering into an entrepreneurial career (Carter et al. 2003; Kuratko et al. 1997). Thus, for individuals who value power, achievement, and self-indulgence, financial returns are likely to play a more significant role in decisions regarding the attractiveness of an entrepreneurial career than for individuals who emphasize self-enhancement values to a lesser extent (Holland and Shepherd 2013).
Openness to Change
The values comprising openness to change include stimulation, hedonism, and self-direction. People who appreciate openness favor independent thought and action and derive joy from life’s challenge and excitement (Schwartz 1992). These people like to try new approaches and are not scared of challenging and ultimately eliminating traditional roles or systems. In addition, individuals who are open to change find learning stimulating and enjoy using their intellectual capabilities to create innovative products (Shane et al. 1991). They also tend to have a higher promotion focus in terms of their self-regulatory system. They often seek growth and improvement toward their ideal selves (Brockner et al. 2004). Thus, people who value openness to change will emphasize the non-financial benefits of entrepreneurial action, such as self-realization and learning through experience.
People who appreciate self-enhancement and people who appreciate
openness to change share the value of hedonism. Yet, they go about gratifying their desires and seeking pleasure in different ways (Schwartz 1992). Individuals who value self-enhancement receive greater satisfaction from power and achievement, whereas those who value openness to change explore new experiences and the autonomy to set their own objectives (Bardi et al. 2008). In addition, entrepreneurs drawing on openness as a principle guiding their lives will find pleasure in the freedom provided by their entrepreneurial career (Carter et al. 2003). Liberty to control one’s own schedule and work life and the chance to wear many “different hats” produces psychic benefits that many entrepreneurs value as much (or more) than financial rewards. Thus, entrepreneurs who value openness to change are likely to emphasize these types of non-economic benefits from entrepreneurial action in their decision- making process more than individuals who do not value openness (Holland and Shepherd 2013).
Entrepreneurial Cognition Page 11
