PSYCHOLOGICAL FACTORS AND ENTREPRENEURIAL BEHAVIOUR
2.4 Mood (positive)
30 2.3.4 Process towards innovation
This is the portion of the cycle where series of events or result from other part of the cycle determines outcome. Understanding of psychology of entrepreneurship is mandated to pull- off successful business venture. Undeniably, abundant research advocates that optimistic expectations encourage exertion and doggedness (Kappes et al., 2012). Optimism defiles effect of drawbacks or failure as optimistic entrepreneur’s self-motivation will drive them to continue exerting efforts in the face of failure, Ucbasaran et al., (2010) posit that failure has little effect on serial entrepreneur, who see business opportunities even in the failure. In addition, Optimist entrepreneurs shield themselves from negativity, by believing that positive events are permanent because it will continue to generate positive outcomes while negative events are interpreted as a temporary set-back which is seen as opportunity for improvement, thereby improves innovation (Ucbasaran et al., 2013; Seligman, 2012). Another, effect of optimism is the social network opportunity it avails, moreover, the support that comes from such network boost positive expectation and opened business opportunities (Segerstrom, 2007; De Carolis et al., 2009).
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opportunity in every situation (Krizner, 1979). Kaish & Gilad, (1991) described entrepreneurial watchfulness as being able to conceptualise and sieve information to dissect relevant data that can be developed into business opportunities. Gaglio & Katz (2001) described entrepreneurial watchfulness as cognitive schemata that make individuals think in an unconventional way to discern business opportunities. The dynamism of business world, and the ever-changing relationship between demand and supply, constantly create vacuum that watchful entrepreneurs capitalise on to make money. Watchfulness is critical to becoming a successful entrepreneur; inability to identify business opportunity denies the very essence of entrepreneurship. Although there are arguments downplaying entrepreneurial watchfulness as not being too critical to entrepreneurial success, Baron & Ensley (2006) are of the opinion that developing cognitive capacities such as overall intellectual capability and inventiveness (ability to process information constructively to create or design a business model), are more crucial to business identification capabilities (Shane & Venkataraman, 2000). This position was supported by Mitchell et al. (2007), Baron & Tang, 2011; Detienne
& Chandler, 2004; and Gielnik et al., 2014) that inventiveness is paramount in opportunity identification. However, recent studies suggested that neither watchfulness nor inventiveness alone can sufficiently explain the concept of entrepreneurship, therefore integrated approach was advocated (Gielnik et al., 2012; Tang et al., 2012). According to Tang (2012) combining entrepreneurial watchfulness and cognitive aspect of inventiveness can be beneficial to business innovation. Gielnik et al., (2012) conceptualise integrated approach by infusing watchfulness with inventiveness to prove both has positive correlation to business opportunity identification and innovation. Therefore we can assume that the construct business watchfulness requires both behavioural (training oneself in a manner to behave in a certain pattern-always on the look-out for business opportunities) and cognitive inventiveness to becoming a successful entrepreneur.
2.4.2 Entrepreneurial orientation: This is a multidimensional construct categorised by proactivity, autonomy, risk taking, innovativeness and competitiveness aggressiveness (Lumpkin & Dess, 1996). Entrepreneurial orientation has comparable effects both at individual and organisational levels, as both have common denominators (Krauss et al., 2005). Meta-analysis results showed that entrepreneurial orientation compound has positive correlation with performance both at individual and organisational levels (Rauch et al., 2009;
Rosenbusch et al 2013). Having the right mood and orientation is paramount to a successful entrepreneurial venture, reason why new recruits, students or an entrepreneur has to undergo
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a training-like exposition which helps to shape the beliefs, attitudes, or feelings in relation to a new object, event or a new venture. There are cognitive factors which must be harnessed to build the right entrepreneurial orientation, such as knowledge, Practical intelligence/
astuteness, cognitive bias and optimism, out of which optimism is arguably the most important. Optimism is a crucial factor required to foster a successful entrepreneurial endeavour, because engaging in entrepreneurial venture is inherently risky largely due to unpredictable future. Therefore being optimistic in the face of uncertainty will help the entrepreneur forge ahead despite discouraging results which are sometimes inevitable (Markman, 2007). Optimism and overconfidence are two factors that make an entrepreneur
‘thick’. McMullen & Shepherd (2006) suggested that nascent entrepreneurial venture is characterised by limited resources and uncertainty, which makes a new entrepreneur avail himself multiple functions that should be undertaken by experts, this contributes in no small measure to the resilience and chance of survival of the business, therefore the more skilful the entrepreneur is, the better the chance of a successful venture. However, after analysing this assumption critically, it was concluded that this might not be possible in real terms for a single person to effectively undertake multiple functions successfully with no obvious consequence, McMullen & Shepherd (2006) understood this, therefore concluded that nascent entrepreneur needed to pull himself up to the extent of becoming overconfident else, the obvious lapses which are likely to emerge by one person multitasking will discourage venturing into such business.
2.4.3 Knowledge-entrepreneurial orientation is built from knowledge acquired during gestation period, it affords cognitive and psychological leeway necessary to constructively optimise and integrate information to the benefit of the entrepreneur (Fiske & Taylor, 1984).
Knowledge acquisition is a function of learning according to Politis (2005) who posited that knowledge is a function of conscious tutorship by a mentor or business owner where new entrepreneur acquires the necessary skills of business opportunities identification and administration. The acquired knowledge develops intellectual structure which helps in revelatory and understanding of new information crucial to discerning new business opportunity (Mitchell et al., 2007). Knowledge is not only garnered through a structure tutorship as posited by Politis (2005) life experiences, age, exposure, travelling and interactions brings about knowledge, being ‘street wise’ is a crucial part of knowledge needed to succeed in a very competitive business world (Shane, 2000). This position was upheld by (Baron& Ensley 2006; Unger et al., 2011) who believes that explicit knowledge acquired
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through life experiences is of more importance than broad knowledge acquired in a formal school. However, exploring this psychologically, knowledge acquired explicitly through life experiences have serious emotional undertone which may impede rational judgement thereby relying unduly on heuristics and short-cuts seemingly effective in similar previous scenarios which however may proof to be a costly mistake presently due to dynamism in the business world. The risk of containment based on what seems to be known prevents innovativeness needed to successfully steer a successful business (Westhead et al. 2009). Likewise cognitive fixedness tendency arising from over dependence on old experiences may impede integration of new information needed to evolve and stay relevant. Overlooking new information, intellectual entrapment, stereotyped thinking prevents entrepreneurs from achieving his potentials (Gielnik et al., 2012; Parker, 2006; Shepherd & DeTienne, 2005).
2.4.4 Circumflex mood model
Circumflex mood model proposed a systematic grouping of mood into primary poles which are (a) pleasantness versus unpleasantness and (b) activated versus unactivated (Bartel &
Saavedra, 2000; Yik, Russell and Barrett, 1999). The mood pole when crossed reveals four mood states depicted in figure 2.7. The first pole crossing denotes positive mood which is activated-pleasant (cheerful, happy), this mood is associated with creativity and high performance. The second pole crossing describes activated-unpleasant, a portion closely synonymous with (stress, nervousness, mood disorders). Unactivated-pleasant is a state of peacefulness, which happens to be the most suitable mood in selecting entrepreneurial idea because the unactivated part will open the entrepreneur to variety of ideas without over- analyses of pros and cons of the intended business, which can reveal impediments to successful implementation, however the pleasant part will increase excitement and confidence necessary for business ‘take-off’ and lastly, unactivated-unpleasant is mostly associated with boredom (Perry-Smith & Coff, 2011).
34 Figure 2.7 Circumflex mood models
Source: Perry-Smith & Cox, 2011