Creation of a new business venture is a "gestation" process extended through time (Reynolds & Miller, 1992). From an entrepreneur’s initial intentions (Bird, 1988) to the time the new business organization becomes a legal entity business, organizers are confronted with one obstacle after another (see Bygrave, 1989; Cooper & Gascon, 1992). Some "nascent" entrepreneurs persist to the conclusion of the process, establish their enterprises, and then begin the even more daunting task of making the business succeed. Others, however, elect to cease their organizing activities well before any new venture has been created. During the last 30 years a substantial fraction of entrepreneurship research has attempted to account for these differences. Until recently this literature concentrated primarily on post-founding activities or recollections of pre-founding behaviors. Increasingly, entrepreneurship researchers are recognizing the need for longitudinal research designs that will trace the process of venture creation as it is happening, rather than as the participants remember how it happened (Gartner, 1993; Hansen & Wortman 1989; Katz & Gartner, 1988; Van de Ven, Angle, & Poole, 1989).

A recent study by Gatewood, Shaver, and Gartner (1995) typifies the new approach. That study asked would-be entrepreneurs to explain their choices about entering business. The research was based on principles of attribution theory, an area of social cognition research that attempts to describe how people determine the causes of events. Attribution theory began with the work of Heider (1958), who argued that the production of effects depends on a particular combination of personal force and environmental force. Specifically, Heider proposed that task success requires (a) an intention to perform the task, (b) exertion in the direction of the intention, and (c ) a condition described as "can," which represents a personal level of ability that exceeds the difficulty of the task. Intention, exertion, and ability are all internal to the person, task difficulty and luck are external. These elements were later described by Weiner and his associates (see Weiner, 1995 for a recent review) as representing the two dimensions shown in Table 1:


Dimensional Structure of Causal Attributions

  Stability of the Cause
Internal Ability Effort
External Task Difficulty Luck

The first dimension, locus of causality, describes whether a factor influencing task success is internal to the person or external. The second dimension, stability of the cause, describes whether a potential cause is (or is not) capable of rather immediate change. So, for example, a person’s ability is both internal and stable, because ability does not really change from moment to moment (although it may change slowly over time as a person becomes more skilled). By contrast, effort is internal and variable, because the extent to which a person tries can indeed change from moment to moment. Among the major external "causes," task difficulty (which, of course, is really an obstacle to success) is the relatively stable factor. By contrast, luck is an external factor that by definition varies almost capriciously.

Whether an effect, such as task success or task failure, is attributed to internal causes or external causes will have implications both for emotional reactions such as pride or shame, and for expectations about the future (Weiner, 1986). A person who attributes success to stable internal factors will feel pride, and will expect that in the future the "norm" will continue to be task success. When generalized across a response domain, this set of emotions and expectations is the basis for a feeling of what Bandura (1986) has called "self-efficacy." By contrast, a person who attributes failure to stable internal factors will have low expectations about future performance and may feel shame. Indeed, there is a large body of literature indicating that people who attribute their failures in many domains to internal stable factors are at risk for developing symptoms of clinical depression (this argument originated with Abramson, Seligman, & Teasdale, 1978). So the fact of task success or failure may not be as important a determinant of the individual’s future performance as is that person’s interpretation of the success or failure.

To test the influence of such cognitive variables on persistence in business organizing activities, Gatewood, Shaver, & Gartner (1995) asked 142 pre-venture clients of a Small Business Development Center (SBDC) to answer a brief series of questions that assessed individual levels of locus of control (Paulhus, 1983) and to explain why they wanted to go into business. These explanations were coded according to a detailed protocol derived from principles of attribution theory. Following this protocol, two independent raters quite reliably determined whether each explanation was internal or external, as well as whether it was stable or variable. A year later, the researchers were able to contact over 60% of the initial respondents in order to track their business organizing activities in the intervening year. The 29 separate activities were grouped into five classes: assessing the market, estimating the profits, completing the ground work, structuring the company, and setting up operations.

Respondents were asked whether they had made a sale and collected money from the customer (the operational definition of "success at getting into business"). The sample was then split on participant sex and sale/no-sale, which served as independent variables in analyses of variance. Dependent variables were the categories of organizing activity, the original attribution scores, and the locus of control scores. Results of these analyses showed, among other things, an interaction between sex and sales on the attribution measures. Specifically, females with sales had, a year earlier, given more internal and stable reasons for wanting to go into business, whereas males with sales had, a year earlier, given more external and stable reasons for wanting to go into business. Although these findings have implications both for theory and for practice, there were three limitations of the study.

First, the research may have underestimated the importance of psychological variables in business organizing. Remember that the participants were pre-venture clients of the SBDC. In other words, they had already taken more than a few steps on the road from "wannabe" to incorporation. If engaging in the process develops a momentum of its own, then the real influence of the psychological variables might have occurred earlier in the process, before people decided to become individual counseling clients.

Second, because the research was accomplished during each client’s individual counseling appointment, we chose to minimize the time demands on participants. Consequently, in addition to asking the two questions about which business, and why start, we included only one psychological dimension: locus of control. Even this dimension was not represented by a complete scale, but rather by one of three subscales from the Paulhus (1983) sphere-specific locus of control scale. The results showed virtually no differences associated with locus of control scores, but it would be better to include a wider variety of psychological dimensions in the design.

Third, there were too few minority participants in the study to permit comparisons based on race (within sex). Although the research had been conducted in a large metropolitan area, and the pool of participants included minorities, the distribution was sufficiently uneven to include race as a cross-cutting variable.

The research reported here was designed to address each of these difficulties. First, rather than recruit participants from among the actual clients of an SBDC, we did the recruiting at public workshops offered by an SBDC on how to start a business. The participating SBDC requires attendance at one such class (which lasts for three hours in an evening) before a person can be considered as a potential client of the SBDC. People who attend the classes may have been thinking about opening a business for some time, but the class is really their first contact with any support agency. Thus participants in the present research will almost necessarily be at a point in the "gestation" period that is earlier than the point at which our other data were collected. Second, to expand the range of psychological variables, we included items related to creativity, achievement motivation, and risk aversion as well as locus of control. (These items were in addition to the attributional questions about reasons for starting the business.) Third, we conducted the research in a setting that we hoped would provide a much more even balance across races. The metropolitan area in which the present study was conducted has a minority population of approximately 40%, and we anticipated that this proportion would carry over into the classes. Moreover, the geographic area chosen has not seen a great deal of shift in the population, leading us to hope that when the time comes for a year-later follow-up we will be able to retain race as one of the factors in the analysis of business organizing activities.

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Last Updated 4/25/97 by YuBei Teng

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